Puerto Vallarta, Jalisco, Mexico - For nearly a century, Article 27 of the Mexican Constitution has prohibited foreigners from acquiring direct title of property in what is known as the restricted zone (50 kilometers from the coast and 100 km from the border.) In 1971 the Mexican Government solved this problem, by creating the Fideicomiso.

A Fideicomiso is a legal concept that allows foreigners to acquire property in the restricted zone through a bureaucratic process in which they set up a Mexican bank trust. The bank actually holds the deed. Through the trust, foreigners enjoy basically the same rights as Mexican citizens.

Now, change is in the air, and it could save money for thousands of American retirees and other foreigners who want to buy their piece of paradise in Mexico.

On April 8, 2013, Senator Manlio Fabio Beltrones put forth a proposal to amend Article 27 of the Mexican constitution. The proposed amendment would do away with the necessity of foreigners having to use a trust (Fidecomiso) to purchase residential property in Mexico.

On April 23rd, the lower house of Congress (Camera de Diputados) approved the bill to amend Article 27 of the Constitution. The measure, which passed 356-119 in the Chamber of Deputies, still needs approval from the Senate and a majority of the country's 32 state legislatures to become law.

Of course this would be wonderful news for Mexico which, through the efforts of the new President Enrique Peña Nieto, is trying to make the republic more competitive with other countries looking for foreign investment and growth.

Mexico’s healthy economy has become very attractive for foreign investors, but the fact that 9 out of 10 US citizens believe that you cannot hold title to real property in Mexico is making the country miss out on a larger piece of the pie - and that is foreign investment.

Doing away with the restriction of holding property in a trust for foreigners has an incredible upside, but it can also have its downside if US citizens who own property in Mexico do not have a will and testament created in Mexico for the inheritance of real property - if the amendment passes. Meanwhile, it is important that you seek proper legal counsel if you are planning on acquiring property in Mexico.

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With more than 35 years of combined experience in Mexico real estate sales, management, property services, and perhaps most importantly, sound analysis for every aspect of Mexican property ownership, Timothy Real Estate Group is unequaled in its professionalism and experience with foreign investors. For more information, visit TimothyRealEstateGroup.com.

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