By Joe Taylor
The Restricted Zone has one of the least welcoming names in Mexican real estate, and it describes something far friendlier than it sounds. It's a constitutional boundary drawn along the coast and the borders, and rather than closing the door to foreign buyers, it simply routes them through a specific and well-established structure. Every property I sell in Los Cabos sits inside it, which makes this the first thing worth understanding.
Key Takeaways
- The Restricted Zone covers land within 50 kilometers of the coastline and 100 kilometers of an international border
- All of Los Cabos falls inside it, so the rules apply to every purchase here
- Foreign buyers acquire residential property in the zone through a bank trust, which is routine rather than exceptional
- The boundary shapes the paperwork rather than the property itself
What Exactly Is the Restricted Zone?
The Restricted Zone is defined by Article 27 of the Mexican Constitution and covers land lying within 50 kilometers, or about 31 miles, of any coastline, along with land within 100 kilometers, roughly 62 miles, of an international border.
The provision dates to a period when Mexico was thinking hard about sovereignty over its coasts and frontiers, and while the boundary has remained, the way foreign buyers work within it has evolved considerably since then.
The provision dates to a period when Mexico was thinking hard about sovereignty over its coasts and frontiers, and while the boundary has remained, the way foreign buyers work within it has evolved considerably since then.
What the Boundary Covers
- Coastal land within 50 kilometers of the shoreline, which takes in essentially every beach town in the country
- Border land within 100 kilometers of an international boundary
- All of Los Cabos, from Cabo San Lucas through the Corridor and San José del Cabo, plus the East Cape and the Pacific side
- Residential property specifically, which is the category most buyers here are shopping in
How Does It Affect Buying in Los Cabos?
It determines the structure of your purchase rather than your access to the market. Foreign buyers acquire residential property inside the zone through a bank trust, known as a fideicomiso, with a Mexican bank holding title as trustee while you hold the beneficial rights.
That's the whole practical effect, and it's why buyers from the United States and Canada purchase here every week without difficulty. The properties, the negotiations, and the ownership experience all look familiar once the structure is in place.
That's the whole practical effect, and it's why buyers from the United States and Canada purchase here every week without difficulty. The properties, the negotiations, and the ownership experience all look familiar once the structure is in place.
What Changes and What Doesn't
- The paperwork changes, since your purchase runs through a trust rather than a direct deed in your name
- A federal permit becomes part of the process, handled as a normal step by your notario
- Your rights don't change in any way that affects daily life, including the right to rent, renovate, sell, and bequeath
- The property search doesn't change at all, whether you're looking at Pedregal or anywhere else along the coast
Are There Other Ways to Hold Property Here?
There are, and which one suits you depends on what you're buying and why. A Mexican corporation is a common route for commercial property and for buyers holding several income properties, while individual buyers purchasing a home or condo almost always use the trust.
These are decisions worth making with your notario and your own advisors rather than from an article, since the right answer turns on your tax situation, your plans for the property, and how long you intend to hold it.
These are decisions worth making with your notario and your own advisors rather than from an article, since the right answer turns on your tax situation, your plans for the property, and how long you intend to hold it.
Questions to Bring to Your Advisors
- Whether the property is residential or commercial, since that shapes which structures are available
- How you intend to use it, particularly if rental income is part of the plan
- Your holding horizon, and whether the property is likely to pass to family
- How the structure interacts with your tax position at home, which is a conversation for your own accountant
Frequently Asked Questions
Can foreigners buy property in Cabo San Lucas?
Absolutely, and thousands do. The Restricted Zone means the purchase runs through a bank trust rather than a direct deed, and beyond that the process feels much like buying anywhere else.
Is the Restricted Zone going away?
It's written into the Constitution, so I'd plan around it rather than expecting a change. The good news is that the trust structure has been working smoothly for decades and is thoroughly established.
Does the Restricted Zone apply to condos as well as homes?
It applies to residential property throughout the zone, so yes to both. Many condo developments in Los Cabos hold a master trust, which can make the process at your end even more straightforward.
Contact Joe Taylor Today
The Restricted Zone is one of those topics that sounds like an obstacle right up until someone explains it, at which point it becomes a paperwork detail you'll barely think about again. I've walked buyers through it for years, and I'd rather you hear it plainly than piece it together from forums.
Have a look at the neighborhoods across Los Cabos and then reach out to me, Joe Taylor. We'll talk through the structure and the properties in the same conversation, which is usually when it all clicks.
Have a look at the neighborhoods across Los Cabos and then reach out to me, Joe Taylor. We'll talk through the structure and the properties in the same conversation, which is usually when it all clicks.
