Restricted Zone: Guide for Foreign Buyers

What is the restricted zone?

Article 27 of the Mexican Constitution, complemented by the Foreign Investment Law (LIE), prohibits foreigners from directly owning land and water within the so-called restricted zone.

The restricted zone covers a strip of 100 km along land borders and 50 km along coastlines. Tijuana, located just a few kilometers from the U.S. border, falls entirely within this zone.

This does not mean foreigners cannot buy — it means they must do so through the legal mechanism designed for this purpose: the bank trust (fideicomiso) authorized by the Ministry of Foreign Affairs (SRE).

What is a bank trust (fideicomiso)?

The real estate bank trust (fideicomiso) is the legal vehicle authorized by the SRE for foreigners to exercise rights over property in the restricted zone. Here is how it works:

• An authorized Mexican bank acts as fiduciaria (nominal title holder of the property).
• The foreign buyer is the fideicomisario (beneficiary): they hold all rights to use, enjoy, rent, sell, and inherit the property.
• The bank cannot use or dispose of the property without instructions from the beneficiary.

This is a robust and widely used structure in Baja California — hundreds of thousands of foreigners own property through a fideicomiso in Mexico.

Duration of the trust

The trust has a maximum initial term of 50 years, renewable indefinitely for equal periods. Renewal is filed before expiration and, in practice, trusts are renewed without issue as long as the beneficiary or their heirs request it.

Upon the death of the beneficiary, rights can be transferred to heirs designated in the trust instrument itself — no need to dissolve or liquidate the trust.

What can you do with the property?

As a fideicomisario (beneficiary) you can:

• Live in, use, and enjoy the property freely.
• Rent it out (vacation or long-term rental).
• Sell the trust rights to another buyer (foreign or Mexican).
• Designate substitute beneficiaries and heirs within the same trust.
• Make improvements and constructions with the applicable municipal permits.

How to pick the bank trustee

You can choose any authorized credit institution in Mexico. The most commonly used banks for real estate trusts in Tijuana are:

• BBVA México
• Banamex / Citibanamex
• Banorte
• Santander México
• Scotiabank México

Each bank charges a different annual administration fee. We recommend quoting at least two institutions before deciding. Typical fees range from $500 to $1,500 USD per year, though they can vary.

Steps to set up the trust

1. SRE permit application via SIPAC27 — The permit to constitute the fideicomiso is filed online through the SIPAC27 system (sipac27.sre.gob.mx) of the Ministry of Foreign Affairs. Your bank can handle this step on your behalf.
2. Obtain the SRE permit — The SRE issues the permit to constitute the trust. Processing times vary; check updated timelines at portales.sre.gob.mx.
3. Sign the trust deed before a notary — Once the permit is in hand, the fideicomiso contract is formalized before a Mexican notary public (notario). The notario drafts the instrument and it is signed by the bank, the seller, and the buyer.
4. Register at the RPPC — The notario registers the fideicomiso at the Registro Público de la Propiedad y del Comercio (RPPC) in Tijuana, perfecting the title.

Estimated costs

Costs vary by bank, notary, and property value. Plan for the following:

• SRE fee — Set by Art. 25 of the Federal Rights Law (LFD) and updated annually in the December Fiscal Miscellaneous Resolution (RMF). Check the current amount at portales.sre.gob.mx — costs and timelines.
• Bank setup fee — One-time fee paid at trust constitution. Varies by bank; request a quote directly from each institution.
• Annual administration fee — Typical range: $500–$1,500 USD/year depending on the bank and property value.
• Notary fees — Calculated on the transaction value; the notarial fee schedule in Baja California is state-regulated.
• Acquisition tax (ISAI) — Paid by the buyer; the rate in Tijuana is set by the municipality (typically 2%–3% of the cadastral value).

For the current SRE fee per the applicable RMF, visit sre.gob.mx — Permit to constitute fideicomiso directly.

Disclaimer: This content is informational and does not substitute legal advice from a real estate attorney. Laws and costs may change; always consult a qualified professional and the official SRE portals before starting your process.