The 99-Year Lease in Mexico: One of the Biggest Myths About Buying Property in Baja

If you're thinking about buying property in Mexico, especially in Baja California Sur, you've probably heard some version of this:

“Foreigners can’t really own property in Mexico. You only get a 99-year lease.”

We hear this all the time.

And it simply isn't an accurate description of how foreign property ownership works in Mexico.

There is no standard “99-year lease” that Americans, Canadians, or other foreign buyers receive when purchasing residential property in Mexico.

What people are usually referring to is a fideicomiso, or Mexican bank trust. And understanding the difference is important if you're considering buying a home in Cabo, Todos Santos, Cerritos Beach, Pescadero, La Paz, the East Cape, or another coastal area of Mexico.

Can foreigners own property in Mexico?

Yes.

Foreigners can legally acquire property rights in Mexico.

The process depends primarily on where the property is located.

Outside Mexico's federally defined Restricted Zone, foreigners can generally acquire real estate directly, subject to Mexico's applicable legal requirements.

Inside the Restricted Zone, foreign buyers purchasing residential property typically acquire their rights through a fideicomiso, commonly called a Mexican bank trust.

Mexico's Restricted Zone encompasses land within 50 kilometers, approximately 31 miles, of Mexico's coastline and 100 kilometers, approximately 62 miles, of an international border.

That means most of the places our clients are interested in throughout Baja California Sur fall within the Restricted Zone.

Think Cabo San Lucas, San José del Cabo, Todos Santos, Cerritos, Pescadero, Los Barriles, La Ventana, the East Cape and many other coastal communities throughout Baja.

So what exactly is a fideicomiso?

A fideicomiso is a bank trust authorized by the Mexican government that allows a foreign buyer to acquire the use and enjoyment rights to residential real estate located within Mexico's Restricted Zone.

A Mexican banking institution serves as the trustee, while the foreign purchaser is named as the beneficiary of the trust.

This is where some of the confusion begins.

Because the bank technically acts as trustee and holds title within the trust structure, buyers sometimes assume that means the bank “owns their house.”

That's not a particularly useful way to think about it.

As the beneficiary of the fideicomiso, the foreign buyer holds extensive rights to the property.

In practical terms, the beneficiary can generally:

• live in the property
• remodel or improve it, subject to applicable permits and regulations
• rent it, subject to applicable Mexican tax and regulatory requirements
• sell their beneficial interest
• designate substitute beneficiaries
• transfer their rights to heirs
• use the property as a second home, full-time residence or investment property, depending on the property's permitted use

So when someone says, “You never really own property in Mexico,” they're leaving out a very important part of the story.

And no, it isn't a 99-year lease.

This is probably the biggest misconception we encounter.

A residential fideicomiso in Mexico's Restricted Zone is generally established for a term of up to 50 years, not 99 years.

And importantly, the trust term can be extended or renewed.

That is very different from saying:

“You get to use the property for 50 years, and then Mexico takes it back.”

That is not how the system is designed to operate.

The 50-year period relates to the term of the trust authorization, not to an expiration date after which your property simply disappears.

Where did the “99-year lease in Mexico” myth come from?

There probably isn't one single source.

Part of the confusion comes from trying to describe Mexico's real estate system using terminology that feels more familiar in the United States or Canada.

Because the property is held through a bank trust rather than directly in the foreign buyer's individual name, some people incorrectly translate that into:

“It's basically a lease.”

It isn't.

A fideicomiso is a legal trust structure created specifically to allow foreign buyers to hold rights to residential property within Mexico's Restricted Zone.

That is fundamentally different from renting or leasing property from someone else.

Can an American own beachfront property in Mexico?

This is another question we hear constantly.

An American, Canadian or other foreign national can acquire rights to residential coastal property within the Restricted Zone through a fideicomiso.

That includes many homes and condominiums near the beach throughout Baja California Sur.

So when you hear someone say:

“Americans can't own beachfront property in Mexico,”

the more accurate explanation is:

Foreigners cannot generally hold direct title in their individual names to residential property inside the Restricted Zone, but they can acquire the property rights through a fideicomiso.

That distinction matters.

Does the Mexican bank control your property?

This is another common misconception.

The bank acts as the fiduciary or trustee within the fideicomiso structure.

It does not move into your guest room.

It does not decide when you can use your home.

And it does not simply get to sell your property because it feels like it.

The trust operates according to its legally established terms, and the buyer is named as beneficiary.

Certain transactions are processed through the trustee because the bank is part of the legal trust structure. That is very different from the bank functioning as the beneficial owner who controls your day-to-day use of the property.

Can you sell a property held in a fideicomiso?

Yes.

A foreign owner can sell their beneficial interest in a property held through a fideicomiso.

Depending on the transaction, the existing fideicomiso may be assigned, modified or replaced as part of the closing process.

This is completely normal in markets with significant international ownership, including Los Cabos and the Pacific side of Baja California Sur.

For buyers searching questions such as “Can I resell property in Mexico?” or “Can foreigners sell property in Mexico?”, the answer is yes.

A fideicomiso does not prevent you from selling your property.

Can your children inherit property in Mexico?

A properly structured fideicomiso can include substitute beneficiaries, which is one of the reasons estate planning should be discussed when the trust is created.

This allows the beneficial rights to the property to pass according to the trust structure rather than simply ending when the original beneficiary dies.

That can be an important consideration for foreign buyers purchasing a retirement home, second home or long-term family property in Mexico.

As with any cross-border estate planning, buyers should discuss their individual circumstances with qualified legal and tax professionals.

Is a fideicomiso the same as a lease?

No.

This is perhaps the simplest way to clear up the entire misconception.

A lease generally gives someone contractual permission to occupy or use a property owned by someone else for a defined period.

A fideicomiso is a legal trust structure through which qualifying foreign buyers acquire rights to real estate in Mexico's Restricted Zone.

They are fundamentally different arrangements.

So describing a fideicomiso as a “99-year lease” isn't simply an oversimplification. It can leave buyers with the completely wrong understanding of what they are purchasing.

What happens after the 50-year fideicomiso term?

The trust term can be extended.

This is another area where the internet has created unnecessary confusion.

People sometimes hear “50-year trust” and assume that means their ownership rights vanish at the end of 50 years.

That is not an accurate way to understand the fideicomiso.

The trust has a defined term, and that term can be extended or renewed in accordance with Mexican law and the applicable trust documentation.

So the better questions are:

When was the current fideicomiso established?

How much time remains on it?

Will the existing trust be assigned or will a new trust be established at closing?

What are the bank's annual and transfer fees?

What does my closing attorney recommend?

Those are useful due-diligence questions.

How much does a fideicomiso cost?

A fideicomiso does have associated costs.

Typically, there is an initial setup or transfer fee and an annual bank trustee fee.

Those fees vary depending on the bank, the property and the structure of the transaction.

For most foreign buyers purchasing coastal real estate in Baja California Sur, the fideicomiso is simply another cost to include when budgeting for the purchase.

Your closing team should provide you with a breakdown of fideicomiso fees and other closing costs before you complete the transaction.

Do you need a fideicomiso everywhere in Mexico?

No.

The fideicomiso structure we're discussing applies specifically to qualifying foreign ownership within Mexico's Restricted Zone.

That distinction is especially important for people searching online for questions like:

Can Americans buy property in Mexico?

Can Canadians own property in Mexico?

Can foreigners own a house in Mexico?

Can foreigners buy beachfront property in Mexico?

The answer depends partly on where the property is located.

For buyers looking at Baja California Sur real estate, however, most of the coastal communities people are drawn to fall within the Restricted Zone, so the fideicomiso is a very normal part of the purchasing process.

What is the Restricted Zone in Mexico?

Mexico's Restricted Zone generally includes property located within 50 kilometers of the coastline and 100 kilometers of an international border.

Because Baja California Sur is surrounded by coastline, this rule applies to many of the area's most desirable residential real estate markets.

That includes popular destinations such as:

Cabo San Lucas, San José del Cabo, Todos Santos, Cerritos Beach, Pescadero, the East Cape, Los Barriles and La Ventana.

For foreign buyers purchasing residential real estate in these areas, the fideicomiso is the standard ownership structure used to acquire the property rights.

Buying real estate in Baja isn't unusual. You just need to understand the system.

Thousands of foreign buyers have purchased homes throughout Mexico, and places such as Los Cabos, Todos Santos, Cerritos and Pescadero have well-established international real estate markets.

The important thing is not to try to force the Mexican system into U.S. or Canadian terminology.

It's different.

Different doesn't automatically mean risky.

What creates risk is buying something you don't understand or relying on someone's casual explanation instead of getting clear information from qualified professionals.

And that's exactly why we spend so much time educating our clients before they ever write an offer.

The bottom line: Do foreigners only get a 99-year lease in Mexico?

No.

There is no blanket rule giving foreign buyers a 99-year lease on Mexican property.

Foreign buyers can acquire real estate in Mexico, and within Mexico's coastal Restricted Zone, residential purchases are commonly structured through a fideicomiso, or Mexican bank trust.

The fideicomiso is generally established for a term of up to 50 years and can be extended. The beneficiary holds extensive rights to use, enjoy, sell and transfer the property.

So the next time someone tells you:

“You can't really own property in Mexico. It's just a 99-year lease.”

You can tell them there's a little more to the story.

And understanding that story could make the difference between dismissing Mexico based on an internet myth and realizing that buying a home here is much more straightforward than you thought.

Thinking About Buying Property in Baja California Sur?

We're Karina and Ron of Baja House Hunters, a husband-and-wife real estate team living and working full-time on the Pacific side of Baja California Sur.

We help buyers understand not only what properties are available, but how buying and owning real estate in Mexico actually works, including fideicomisos, the Restricted Zone, closing costs, pre-construction opportunities and the realities of living in Baja.

If you're considering real estate in Todos Santos, Cerritos Beach, Pescadero, Cabo San Lucas, San José del Cabo or elsewhere in Baja California Sur, we'd love to help you start with the right questions.

Reach out to Baja House Hunters, or subscribe to our YouTube channel for more straight-talk conversations about buying, building and living in Baja.

This article is provided for general educational purposes and is not legal, tax or financial advice. Real estate laws, regulations and individual circumstances vary. Buyers should obtain independent advice from qualified Mexican legal, tax and real estate professionals before completing a transaction.