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.