In order to understand how each method functions and affects land purchase by a foreigner, it is necessary to know a little about the history of land ownership and land reform in Mexico.

Mexican Property Laws
Federal law in Mexico prohibits the owning of properties within 100 kms of any national border or 50 kms of the coast by foreigners. However, there are two methods by which a non-national of Mexico may be recognized as the legal possessor--abeit not "owner"--of the land:


Bank Trust (Fidecomiso)
Name Lending (Prestanombre)

Prior to the mid-40's, huge tracts of land in Mexico were owned by a very few individuals. In 1945, President Lázaro Cárdenas enacted sweeping land reform laws that converted large portions of these privately-owned lands to communal properties that were administered under a system known as the ejido. The ejido was (and is) repsonsible for the land distribution, tax collection, transfers of property rights, road construction, utilities installation and maintenance, and all legal matters related to the properties under its jurisdiction. Lands that were not part of the ejido system fell under the control of CORET, the federal agency charged with the same responsibilities in adminstering urban tracts or PRESEDE, which adminsters agricultural lands.

The major difference between the systems--Ejido, CORET and PROSEDE--is that while income produced by taxes and legal fees received from ejido lands remain within the ejido and the local community, CORET land generates fees that go into the national coffers and those of PROSEDE are returned to the municipality. It is important to know which agency administers the land you are planning to purchase because that will determine which method you will use to legally buy the land. Property administered by the ejido may ONLY be purchased using the Prestanombre method; it cannot be purchased through a bank trust. Property administered by CORET or PROSEDE is most often purchased through a Bank Trust.

Headquarters for the ejido charged with administering lands in Lo de Marcos is located in Sayulita; CORET administrative offices are in Tepic (tax payments are made in Bucerías); PROSEDE administrative offices are located in Compostela.


Property Purchase
If using a prestanombre, you should be fully aware that, by law, the name of the prestanombre will appear on all legal documents relating to your purchase. This means, in effect, that the prestanombre, NOT you the purchaser, is the registered legal owner of the property. In order to protect your interests in the property you have purchased, you will want to create a convenio, a legal document that assigns you all rights and responsibilities relating to the property. A standard form is available from and will be validated by the ejido offices for a fee of approximately US $75 (effective March, 2005). THIS IS A VERY IMPORTANT DOCUMENT. Be aware that while you may reside on the property, order construction done, contract services and/or sell the property, it may NOT be passed on to a non-Mexican national as an inheritance. Be sure to include a clause in the document that allows you the right to name another prestanombre in the case of death of the individual listed as the legal owner, otherwise "your" property will become a part of the estate of the prestanombre.

You may expect to incur the following ESTIMATED costs (all in US dollars) when purchasing property administered by the Ejido. For illustration purposes, a purchase price of $50,000 and a property of 600 m2 are assumed:
Purchase price: $50,000
Prestanombre fee: $300
Convenio Document fee: $75
Title Document fee: $70
Title Transfer fee: $1,500
Yearly Land Use taxes (Derecho de piso): $20
Water & Electricity deposits: $150

Total fees: $2,115 (3%-5% of purchase price)
If buying CORET or PROSEDE land through a Fidecomiso, legal fees and taxes will probably be slightly higher:
Purchase price: $50,000
Bank and Notary fees: $5000*
Title Transfer fee: $750
Yearly Land Use taxes (Predial): $100
Water & Electricity deposits: $150

Total fees: $6,000 (10%-12% of purchase price)
*In addition to the initial fee for setting up the trust account, banks charge $300-$500 a yearly maintenance fee.