Foreign Investment

Restricted Zone in Mexico: Limits, Exceptions and Options for Investors

March 15, 2026 — Enrique Benet-Gregg

The Constitutional Framework of the Restricted Zone

Article 27 of the Political Constitution of the United Mexican States establishes, in its first paragraph, that the ownership of lands and waters within the limits of the national territory corresponds originally to the Nation. It is in that same first paragraph where the constitutional text reserves direct dominion over a specific territorial strip and expressly provides that foreigners may not acquire direct dominion over lands and waters within a strip of one hundred kilometers along the borders and fifty kilometers along the coasts. This strip constitutes the restricted zone. The location of this prohibition in the first paragraph of article 27 is the prevailing interpretation in legal doctrine and notarial practice; references found in some texts to a supposed “eighth paragraph” do not correspond to the numbering of the consolidated text in force published in the Official Gazette of the Federation and should be considered imprecise.

For the foreign investor with interests in Quintana Roo and the Riviera Maya, this constitutional mandate is the mandatory starting point for any acquisition structure analysis. The entirety of the Mexican Caribbean coastline is included within the restricted zone, which makes compliance with this framework a structural requirement, not a secondary consideration.

Applicable Legal Regime: Law and Regulations

The Foreign Investment Law (LIE), published in the Official Gazette of the Federation on December 27, 1993 and last amended on June 15, 2023, develops the constitutional mandate in its articles 10 through 16. Article 10 of the LIE reiterates the prohibition on direct acquisition of dominion by foreigners within the restricted zone. Articles 11 and 12 regulate the two structural exceptions to the prohibitive regime: real property trust and Mexican legal entities with a clause excluding foreigners.

The Regulations of the Foreign Investment Law and of the National Registry of Foreign Investments (RLIE), with the last amendment published in the DOF on May 31, 2019, develops the procedural requirements applicable to both mechanisms, including authorization timelines, reporting obligations to the Ministry of Economy, and grounds for rescission of the trust. The provisions of the RLIE regarding expiration and renewal of the trust are of particular practical importance and are analyzed in the following section.

The Real Property Trust: Structure, Scope, and Limits

The mechanism most used by foreign individuals and legal entities to access real property in the restricted zone is the real property trust regulated in articles 11 and 12 of the LIE. Under this structure, an authorized Mexican fiduciary institution acquires formal title to the real property, while the foreigner acts as beneficiary with full capacity to use, enjoy, and economic disposition of the asset.

Structural aspects that the investor must understand:

Administrative authorization: Article 11 of the LIE requires authorization from the Ministry of Foreign Affairs (SRE) for the establishment of the trust. In practice, the notary manages this authorization as part of the deed execution protocol.
Term and renewal — critical risk: Pursuant to article 12 of the LIE, in conjunction with the authorization regime of article 11, the trust has a maximum duration of fifty years, renewable for equal periods through express application to the SRE. It is imperative to emphasize that renewal is not automatic. The RLIE provides that the renewal application must be submitted before the expiration of the current term; failure to complete this formality may result in termination of the trust and the consequent obligation to liquidate or transfer the asset under the terms that the fiduciary and the authority determine. This risk, frequently underestimated by long-term investors, has serious patrimonial consequences that require a system of expiration controls from the moment of the trust’s establishment.
Nature of the right: The beneficiary does not acquire dominion. Federal courts have been consistent in distinguishing between fiduciary title and the rights of the beneficiary, clarifying that the latter do not constitute property in strict civil sense, but rather beneficiary rights with patrimonial effects equivalent for practical purposes.
Tax obligations: The establishment of the trust does not exempt the investor from the Tax on Acquisition of Real Property (ISAI), regulated in Quintana Roo by the Tax Law of the State of Quintana Roo, nor from the Income Tax (ISR) applicable to the gain in the eventual transfer.

Mexican Legal Entities: The Corporate Alternative

Article 10, Section II, of the FIL permits Mexican legal entities with a clause excluding foreign nationals to acquire direct ownership of real property in restricted zones. However, when the capital of such entity is majority or entirely foreign-owned, the acquisition of real property in restricted zones requires express authorization from the SRE in accordance with Article 8 of the FIL. As a condition of admission, the entity is obligated to execute before the SRE an admission agreement in the terms of Article 15 of the FIL, whereby foreign shareholders or partners commit to be considered as Mexican nationals with respect to the participations, assets, rights, concessions, and activities of the entity, and to not invoke the protection of their country of origin under penalty of forfeiting in favor of the Nation the rights and assets they may have acquired.

It is important to clarify that this admission agreement is the specific instrument contemplated by the current FIL and differs conceptually from the Calvo Clause in its classical sense. The Calvo Clause, developed by Argentine jurist Carlos Calvo in the nineteenth century and historically incorporated into Article 27 of the Constitution, is a broad principle of waiver of diplomatic protection that has doctrinal roots and constitutional scope. The admission agreement of the FIL is its concrete and specific procedural expression in the corporate context: both concepts should not be confused, although they share the same constitutional ratio.

This structure is preferred in hotel development, real estate, or large-scale tourism projects, where direct ownership by a legal entity facilitates the obtaining of financing, the structuring of real security interests, and the eventual participation of investment funds.

Institutional Structures: REITs and Large-Scale Investment Vehicles

The foregoing analysis covers the two most common access structures for the individual or medium-scale business investor. However, institutional investment in the Riviera Maya corridor increasingly operates through Real Estate Investment Trusts (REITs) and private equity fund or fund-of-funds structures that add regulatory and tax layers distinct from those of the FIL regime.

REITs, regulated by the Securities Market Law and by the tax provisions of Articles 187 and 188 of the Income Tax Law, constitute collective investment vehicles in real property that are listed on the Mexican Stock Exchange and allow foreign institutional investors to participate indirectly in Mexican real estate assets with differentiated tax treatment. Their structuring requires specialized analysis that exceeds the scope of the FIL and restricted zone and involves securities, trust, and tax regulation of considerable complexity. An investor evaluating large-scale hotel or tourism development projects in Quintana Roo should verify whether a REIT structure or a private investment vehicle would be more efficient for its return, liquidity, and exit objectives. IBG Legal advises on the comparative evaluation of these structures and can guide the investor toward the specialized team that each regulatory layer requires.

Anti-Money Laundering Prevention Obligations and Controlling Beneficial Owner Disclosure

Any real property acquisition in the coastal zone of Quintana Roo is subject, regardless of the FIL structure chosen, to a set of obligations regarding the prevention of operations with illicit-source resources that the sophisticated investor cannot disregard.

The Federal Law for the Prevention and Identification of Operations with Illicit-Source Resources (LFPIORPI, known as the “Anti-Money Laundering Law”), in its Article 17, Section VIII, classifies as a vulnerable activity the transmission or creation of real rights over real property when the value of the transaction equals or exceeds 8,025 Investment Units (UDIs). In transactions that reach this threshold, the notary public who executes the transaction acts as an obligated subject in accordance with Article 18 of the same law, and is obligated to file a Notice with the Financial Intelligence Unit (UIF) of the Ministry of Finance and Public Credit. Non-compliance with this obligation generates joint and several liability for the notary and may result in administrative and criminal sanctions.

Additionally, when the acquisition is carried out through a legal entity, whether a Mexican corporation with foreign capital or any other legal entity, the Tax Administration Service (SAT) requires the identification and registration of the controlling beneficial owner in accordance with articles 32-B Ter, 32-B Quáter, and 32-B Quinquies of the Federal Tax Code, incorporated through amendments published in the Official Gazette on November 12, 2021. The obligation applies to all legal entities, trusts, and similar legal arrangements, and requires maintaining updated information on the controlling beneficial owner in the SAT registry, with penalties that may exceed one million pesos for non-compliance. The notary, the trust institution, and legal advisors must coordinate compliance with these obligations as an integral part of the closing protocol for any real estate transaction in the area.

Environmental and Territorial Planning Layer: Additional Necessary Condition

Compliance with the LIE and constitutional framework is a necessary but not sufficient condition for the legal viability of a real estate acquisition on the coast of Quintana Roo. A significant proportion of transactions that present correct legal structure from the perspective of foreign investment fail or generate serious contingencies due to omission of environmental and territorial planning analysis.

The coastal corridor of the Riviera Maya is subject to concurrent restrictions derived from the General Law on Ecological Balance and Environmental Protection (LGEEPA), which establishes the federal regime of Protected Natural Areas and environmental impact applicable to developments in coastal zones. Any work or activity that may cause ecological imbalance in federal coastal zones requires environmental impact authorization from the Secretariat of Environment and Natural Resources (SEMARNAT). Additionally, the property must be verified against the Territorial Ecological Planning Program (POET) applicable to the region, as well as against the corresponding municipal urban development program and the provisions of the Secretariat of Agrarian, Territorial, and Urban Development (SEDATU) regarding coastal land use.

Practice in the area has demonstrated that properties with trusts or correctly established corporate structures may result in non-buildable or subject to severe use restrictions due to incompatibility with the POET or due to being located in buffer polygons of protected natural areas. Due diligence prior to any acquisition in the coastal zone must include, without exception, verification of these regulatory layers as part of the standard protocol.

Relevant Judicial Criteria

The First Chamber of the Supreme Court of Justice of the Nation has held in reiterated criteria that the restricted zone constitutes a public order limitation on the principle of free acquisition of property, and therefore its interpretation must be strict and does not admit extensions by analogy. The Collegiate Courts of the XXVII Circuit (Quintana Roo) have confirmed that the nullity of a direct acquisition by a foreigner in a restricted zone is absolute, not validatable by agreement of the parties or by the passage of time, as it constitutes an express constitutional prohibition.

These criteria reflect an interpretation consistent with doctrine in the competent federal judicial bodies. Nevertheless, it must be clarified that the criteria mentioned have not been able to be located under isolated thesis or jurisprudence registered with a specific identification number in the Federal Judicial Weekly as of the publication date of this article. Its content is presented as a reflection of the interpretation consolidated in the legal and notarial practice of the corridor, and not as citation of an identifiable binding precedent in the thesis system of the Federal Judicial Branch. Readers who require binding precedents for litigation purposes should conduct a direct search in the thesis search engine of the Federal Judicial Weekly available at sjf2.scjn.gob.mx.

Pre-Acquisition Protocol: Five Operational Steps

The foregoing analysis can be translated into a concrete operational sequence that the investor must follow before formalizing any acquisition in the restricted coastal zone of Quintana Roo:

Constitutional verification of the zone: Confirm through georeferenced survey and cadastral certificate that the property is located within the fifty-kilometer coastal strip. This verification must be conducted based on official coordinates and not exclusively on boundary descriptions.
Selection of legal structure: Assess whether the investor’s profile, the intended use, the scale of the project, and the exit strategy make the trust under Article 12 LIE, the Mexican legal entity under Article 10 Section II LIE, or an institutional FIBRA-type structure more appropriate. This decision must be adopted with simultaneous legal and tax advisory services, not sequentially.
Management of SRE authorization and admission agreement: Initiate the authorization procedure before the Secretaría de Relaciones Exteriores with sufficient notice prior to the scheduled closing. The administrative timelines of the SRE must be integrated into the transaction calendar. In the case of a legal entity with foreign capital, coordinate the execution of the admission agreement under Article 15 LIE as a condition precedent to the execution of the deed.
Notarial protocol and anti-money laundering compliance: Coordinate with the notary public the filing of the Notice to the UIF in accordance with the LFPIORPI if the transaction exceeds the threshold of 8,025 UDIS, as well as the identification of the controlling beneficiary for purposes of the Federal Tax Code. Verify that the deed correctly reflects the authorized structure and the commitments derived from the admission agreement or trust.
Post-closing obligations and deadline monitoring: Establish a tracking system for the trust term in order to manage renewal before expiration; comply with periodic reports to the Secretaría de Economía in accordance with the RLIE; keep the controlling beneficiary registry updated with the SAT; and verify continuous compliance with the environmental conditions and land use requirements established in the applicable SEMARNAT and POET authorizations.

Operational Implications for the Investor

The choice between a trust and a corporate structure is not neutral: it depends on the investor’s profile, the intended use of the property, the scale of the project, and the long-term tax strategy. A trust offers simplicity and clarity for the individual buyer; a corporate structure with direct access to ownership is more appropriate when the project requires structured financing, multiple partners, or development phases. In both cases, the absence of a correct legal structure exposes the investor to absolute nullity of title, with the patrimonial and procedural consequences that this entails. To these structural contingencies are added the risks of trust termination due to failure to renew on a timely basis, the sanctions arising from non-compliance with the LFPIORPI and the controlling beneficiary regime, and the environmental restrictions that may limit or prevent the use of the property regardless of the correctness of title.

IBG Legal has structured acquisition transactions in restricted zones that have required the simultaneous resolution of preexisting nullity contingencies, reconstitution of expired trusts not renewed on a timely basis, and management of authorizations for land use changes in polygons subject to POET restrictions in the Cancún-Tulum corridor. This experience in managing transactions with overlapping layers of risk is what distinguishes our practice from exclusively transactional advisory services. For structuring acquisitions in restricted zones, integrated environmental viability analysis, or resolution of title contingencies in the Riviera Maya corridor, please contact us.

Sources and References

Legislation

Political Constitution of the United Mexican States, article 27, first paragraph (prohibition of direct acquisition in restricted zone). Last reform: DOF May 28, 2021.
Foreign Investment Law, articles 8, 10, 11, 12, 15 and 16. DOF December 27, 1993; last reform: DOF June 15, 2023.
Regulations of the Foreign Investment Law and the National Registry of Foreign Investments. DOF September 8, 1998; last reform: DOF May 31, 2019.
Tax Code of the State of Quintana Roo, provisions applicable to the Real Estate Acquisition Tax. Official Gazette of the State of Quintana Roo; last reform published in 2024.
Income Tax Law, articles 187, 188 (FIBRA regime) and applicable provisions for the transfer of real property. DOF December 11, 2013; last reform: DOF November 12, 2021.
Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (LFPIORPI), articles 17 section VIII and 18. DOF October 17, 2012; last applicable reform.
Federal Tax Code, articles 32-B Ter, 32-B Quáter and 32-B Quinquies (controlling beneficiary). Reform DOF November 12, 2021.
General Law on Ecological Balance and Environmental Protection (LGEEPA), applicable provisions on environmental impact and coastal zones. DOF January 28, 1988; last applicable reform.

Judicial Criteria

First Chamber of the Supreme Court of Justice of the Nation: consolidated doctrinal interpretation regarding restricted zone as a public order limitation to the principle of free acquisition of property; strict interpretation criterion without extension by analogy. Note: not located under registered thesis number in the Judicial Weekly of the Federation as of publication date; search verifiable at sjf2.scjn.gob.mx.
Collegiate Courts of the XXVII Circuit (Quintana Roo): doctrinal interpretation on absolute and uncorrectable nullity of direct acquisition by foreigners in restricted zone. Note: not located under registered thesis number in the Judicial Weekly of the Federation as of publication date; search verifiable at sjf2.scjn.gob.mx.

Doctrine

Ministry of Economy. Guide for Foreign Investment in Mexico. General Directorate of Foreign Investment, current edition.
Financial Intelligence Unit (UIF), SHCP. Guide of Obligations for Obligated Subjects under the LFPIORPI: Vulnerable Real Estate Activities. Current edition available at uif.hacienda.gob.mx.
Tax Administration Service (SAT). Guide for Compliance with the Obligation to Identify the Controlling Beneficiary. Current edition available at www.sat.gob.mx.

Official Sources

Federal Official Gazette (DOF): www.dof.gob.mx
Official Gazette of the State of Quintana Roo: www.po.qroo.gob.mx
Judicial Weekly of the Federation, thesis and case law search engine: sjf2.scjn.gob.mx
Ministry of Foreign Affairs, General Directorate of Legal Affairs: information on authorizations for trusts in restricted zone and admission agreements pursuant to article 15 FIL.
Ministry of Economy, General Directorate of Foreign Investment: registration and reports pursuant to the FIL and the RLIE.
SEMARNAT, General Directorate of Environmental Impact and Risk: environmental impact authorizations for developments in coastal zone pursuant to the LGEEPA.
SEDATU: Territorial Ecological Ordering Programs (POET) and coastal land use applicable to the Quintana Roo corridor.