Since 1973 foreigners had been able to buy land in Mexico in a straightforward escritura (deed), if the property is in the interior, away from the shoreline, water ways or national border.
Giving foreigners the right to acquire land in the interior did not stop many foreigners from wanting the coastline. Somehow the technique of using the “presta nombre” (borrowed name) was introduced as a way to acquire use of land inside the restricted coastline area.
In 1994, foreigners were finally able to legally acquire the use of coastal land through the fideicomiso trust. This legal structure made the use of a “presta nombre” a fraudulent and criminal act punishable under Mexican law.
Presta Nombre Part I
June 15th, 2009
If you have ever thought of investing or have invested in Mexican real estate you have probably heard the word “presta nombre” used. But what is a “presta nombre”? Literally it means “name lender” and that is a good description. A Mexican citizen takes the foreigner’s place on the application to buy land still with the ejido, and if the titulo or title is issued, it is in the name of the Mexican citizen. Most people who have used one describe it as: “the man or woman whose name my property is in”. In short, it is buying a property and putting it in someone else’s name. Why would anyone want to do this? The bigger question: is this legal?
Advice to a Mexican
June 13th, 2009
A boat docked in a tiny Mexican village. An American tourist complimented the Mexican fisherman on the quality of his fish and asked how long it took him to catch them.
“Not very long,” answered the Mexican.
“But then, why didn’t you stay out longer and catch more?” asked the American.
The Mexican explained that his small catch was sufficient to meet his needs and those of his family.
The American asked, “But what do you do with the rest of your time?”
“I sleep late, fish a little, play with my children, and take a siesta with my wife. In the evenings, I go into the village to see my friends, have a few drinks, play the guitar, and sing a few songs. I have a full life.”
The American interrupted, “I have an MBA from Harvard and I can help you! You should start by fishing longer every day. You can then sell the extra fish you catch. With the extra revenue, you can buy a bigger boat.”
“And after that?” asked the Mexican..
“With the extra money the larger boat will bring, you can buy a second one and a third one and so on until you have an entire fleet of trawlers. Instead of selling your fish to a middle man, you can then negotiate directly with the processing plants and maybe even open your own plant. You can then leave this little village and move to Mexico City, Los Angeles or even New York City! From there you can direct your huge new enterprise.”
“How long would that take?” asked the Mexican.
“Twenty, perhaps twenty-five years,” replied the American.
“And after that?”
“Afterwards? Well my friend, that’s when it gets really interesting,” answered the American, laughing. “When your business gets really big, you can start buying and selling stocks and make millions!”
“Millions? Really? And after that?” asked the Mexican.
“After that you’ll be able to retire, live in a tiny village near the coast, sleep late, play with your children, catch a few fish, take a siesta with your wife and spend your evenings drinking and enjoying your friends.”
And the moral of this story is: …Know where you’re going in life…you may already be there.
