Mexico: How are we holding title?

In Mexico, properties within 50km of a coast cannot currently be owned directly by foreigners according to law. It appears the Mexican government is trending towards making direct ownership possible, but that requires a change to their constitution. In the meantime, the common practice is to use a Mexican bank trust (fideicomiso). Essentially, a trust managed by a bank owns the property and the foreign "owners" become beneficiaries of the trust. There are fees, and lots of paperwork, but it's doable. So who is the "beneficiary"?

In our case, the desire was a 50/50 partnership where Brenda and I have 50%, and our friend has 50%. We also wanted to manage the property and associated rentals as a business.

We set up a new Limited Liability Company (LLC) in Arizona, 50% owned by an existing LLP that my wife and I have; and 50% owned by an LLC that our friend already has. The new LLC is the sole beneficiary of the Mexican fidiecomiso. We will see if this stands up as the best solution over time, but the reasoning is as follows.

One legal entity (LLC) to manage the property

Possibility of transferring ownership by selling the LLC instead of changing the Mexican fidiecomiso when it comes time to sell

Liability is contained by the new LLC

Our LLP and our friend's LLC that each own 50% already exist

In our case (Canadians), any income will come through the existing LLP to avoid double taxation (see previous post about LLCs)

If our partner was not a resident of the US, we may have avoided involvement of a US entity at all in the ownership to contain the relationship to Mexico and Canada.

If we did not already have a US LLP in place, we may have used a net new LLP instead of a net new LLC to manage he property. I just would have had to convince my US friend that an LLP is pretty much the same as an LLC from his perspective. Hey, they use the same 1065 tax form!