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I have been told that when buying property in Mexico, lots of trouble, hassle and expenses can be avoided by using a mexican national help with the title and in fact, title the property in his/her name.
Is it legal? How can one protect oneself if the relationship goes sour? Any comments/experience?

The practice is called "presta nombre" and is illegal. If you do a web search with that term, you should find a lot of information.
Here is one article that may be useful:
http://www.mexicomatters.net/mexicor...ransaction.php

Thanks. Interesting. It appears the law on this particular is not enforced as I get lots of comments on the benefits -some cons- of this illegal practice.

My comment is.....would you do this in the US?????....if not, why do it in Mexico????

There is only ONE legal way for a foreigner to own property in the restricted zone, and the entire Baja peninsula is in the restricted zone. That is with a fideicomiso.
The Mexican constitution was changed to make it safe for foreigners to buy real estate in the restricted zones ( near the coast or borders).

Why would you circumvent the law in a foreign country? Why would you circumvent the law anywhere?
Why would you spend a big chunk of money on property then hand it to someone else?
When you use a presta nombre you are giving them the legal ownership of your property.A presta nombre is the actual, legally recognized owner of the property NOT YOU. It does not matter if you have a contract with them. And if they die, leave the area or become mentally incompetent their heirs can step in and take their relative's property. Remember the presta nombre is the legal owner.

If a real estate agent or any seller is suggesting that you use a presta nombre run in the other direction, they are crooks.
And while I am at it, land leases are also illegal.
You can only legally own property in Baja with a fideicomiso.

I repeat: There is only one legal way for foreigners to own residential property in Baja.
Read my book: Margarita Mind: How to Avoid It; A Guide to Buying Mexico Real Estate Safely & Sanely.

So you save some fees, and a fideicomiso costs (between $400-$600) plus the normal closing costs on any legal transaction. So to save a couple thousand dollars you would risk even more money?
Did you ever hear of the Punta Banda scandal of 2000?

My Mantra:
Pay a little now, or pay BIG TIME later.
And remember: if you do something stupid like this, the US government cannot and will not help you.
Harsh words, I know, but it is stupid to knowingly break the law.
Get informed.
Don't leave your brains at the border.

I get a lot of inquiries from folks asking about buying property. I really prefer to recommend them to a local real estate attorney as I truly believe the few hundred dollars spent paying an attorney who specializes in real estate to represent you in a property purchase in Mexico is money VERY WELL SPENT, whether you are just buying some land or found that home for sale with an ocean view that you always dreamed of.

A few things I will give my two cents worth as I believe there continues to be a lot of misconception.

1. Yes, a foreigner may buy property in the restricted zone in Mexico; it just needs to be set up via a bank trust that you control directly as the owner of the trust. The restricted zone is land that lies within 100 km (62 miles) of any international border and 50 km (31 miles) of the coastline.

2. Yes, you can lease land in Mexico. The maximum term for any one lease is only 10 years. If the property owner signs one for longer it is not a valid lease in Mexico and will not be recognized as such in the Mexican courts. Although I have many friends who lease land in Mexico and seem to be happy with the arrangement / their landlord, I tell folks to just buy instead if they can. What happens when the landlord dies / divorces / gets a better offer? My guess is that there is a good chance your lease may not be renewed and you chance losing any / all improvements made to the property.

3. You can buy land using a presta nombre (a Mexican citizen who puts their name on the property). I know a few who have done this and have enjoyed using their property for many years without a problem. Obviously this would have to be done using a presta nombre that you know very well and trust but my basic problem with this method is the same with leases as I stated in the paragraph above.

4. Ejido land - this has been a hot potato for many and most gringos cringe at the mere mention of Ejido as they have been trained to run at the very sound of the word. Land that was part of an Ejido can be bought safely as long as it has gone through the federal and state process to properly remove it from the ejido land use status, set it up on the state property register and obtain a property tax ID number (predial). It is not a simple process and another reason why you need to have a local attorney who specializes in real estate help you in the purchase process.

5. No matter how much you are excited about a property, DO NOT SIGN ANYTHING OR MAKE A DEPOSIT ON ANYTHIIG WITHOUT FIRST TALKING TO AN ATTORNEY. Did I make that clear enough?

6. There are lots of great places on this planet and I happen to really like it here in Baja - I have been living here now for many years. But that is just me and it may not predict your experience. Great vacation spots don't always equal great retirement spots. That is why I tell everybody who is considering retirement down here to rent first for awhile to see if the place is still what they envisioned after the new car smell wears off.

Okay, so go ahead and do what you were going to do anyway...

Good informative post Bajagringo.

Originally Posted by BajaGringo

I get a lot of inquiries from folks asking about buying property. I really prefer to recommend them to a local real estate attorney as I truly believe the few hundred dollars spent paying an attorney who specializes in real estate to represent you in a property purchase in Mexico is money VERY WELL SPENT, whether you are just buying some land or found that home for sale with an ocean view that you always dreamed of.

A few things I will give my two cents worth as I believe there continues to be a lot of misconception.

1. Yes, a foreigner may buy property in the restricted zone in Mexico; it just needs to be set up via a bank trust that you control directly as the owner of the trust. The restricted zone is land that lies within 100 km (62 miles) of any international border and 50 km (31 miles) of the coastline.

2. Yes, you can lease land in Mexico. The maximum term for any one lease is only 10 years. If the property owner signs one for longer it is not a valid lease in Mexico and will not be recognized as such in the Mexican courts. Although I have many friends who lease land in Mexico and seem to be happy with the arrangement / their landlord, I tell folks to just buy instead if they can. What happens when the landlord dies / divorces / gets a better offer? My guess is that there is a good chance your lease may not be renewed and you chance losing any / all improvements made to the property.

3. You can buy land using a presta nombre (a Mexican citizen who puts their name on the property). I know a few who have done this and have enjoyed using their property for many years without a problem. Obviously this would have to be done using a presta nombre that you know very well and trust but my basic problem with this method is the same with leases as I stated in the paragraph above.

4. Ejido land - this has been a hot potato for many and most gringos cringe at the mere mention of Ejido as they have been trained to run at the very sound of the word. Land that was part of an Ejido can be bought safely as long as it has gone through the federal and state process to properly remove it from the ejido land use status, set it up on the state property register and obtain a property tax ID number (predial). It is not a simple process and another reason why you need to have a local attorney who specializes in real estate help you in the purchase process.

5. No matter how much you are excited about a property, DO NOT SIGN ANYTHING OR MAKE A DEPOSIT ON ANYTHIIG WITHOUT FIRST TALKING TO AN ATTORNEY. Did I make that clear enough?

6. There are lots of great places on this planet and I happen to really like it here in Baja - I have been living here now for many years. But that is just me and it may not predict your experience. Great vacation spots don't always equal great retirement spots. That is why I tell everybody who is considering retirement down here to rent first for awhile to see if the place is still what they envisioned after the new car smell wears off.

Okay, so go ahead and do what you were going to do anyway...

I have to weigh in here.
And I will ruffle some feathers, but THE ONLY LEGAL WAY FOR A FOREIGNER TO BUY A RESIDENTIAL PROPERTY IN THE RESTRICTED ZONE FOR RETIREMENT OR VACATION USE IS IN A FIDEICOMISO. The ONLY WAY!

I have been the closing director for a major cross border mortgage company. I have worked at the corporate level with banks, lenders, and developers and their attorneys.
Do not buy your property any other way.
Land leases are not legal, presta nombres are not legal, and they are risky for all of the reasons that Baja Gringo just pointed out.
Once ejido land has been regularized...and the entire ejido must be regularized, and all ejiditarios must vote on this, then you can buy it in a fideicomiso. The individual ejiditario will have a titulo which gives her the legal right to sell the land.
Unless and until that titulo exists it is illegal to market, sell or buy ejido land.

For $19.99 you can get my book it is precise , fully researched and correct. And you will also get discounts on closing fees, and a free 15 minute consultation with an English-speaking closing attorney, plus a discount on her fees.
Do it the right way, and you will truly enjoy life in your new home.
I am not here to only flog my book.
I am an expert in this field. It makes me crazy when people try to circumvent the law, and especially when buying via a fideicomiso is cheap and safe.

Originally Posted by safogel

...Land leases are not legal, presta nombres are not legal, and they are risky for all of the reasons that Baja Gringo just pointed out.

Sorry Safogel, but I have to take issue with your post. I do agree with your point that the best way is to buy property handled via a bank trust / fideicomiso but to imply that leasing land or using a "presta nombre" is illegal is in fact wrong.

Land leases are completely legal in the Mexican courts, only that the maximum legal term is 10 years for any one lease.

Prestanombres are not illegal. How could they be? What has been done to break the law? If a property was bought, registered in a Mexican citizens name and taxes paid; no law has been broken. The Mexican government/courts could care less if that Mexican property owner wants to let a gringo use the property for themselves.

I don't recommend to anyone that they use either technique in lieu of a bank trust but to imply that either method is illegal is simply wrong.

Maybe you should go back and edit that chapter in your book before peddling it online...

Here is my last entry on this subject.
The Mexican constitution was changed in order to create a safe, legal vehicle for foreigners to buy property in the restricted zone. Article 27,is the section to read. Have you read it?
The Mexican constitution states clearly that no foreigner may own land near the borders and coastlines.
But the foreign investor wants beachfront.
So the fideicomiso was adapted to allow foreigners to buy coastal land.
So land leases are legal for MEXICANS.
If you have not heard of the Punta Banda(in Ensenada) mass eviction of 200 people that built their homes on lease land. Read about it.This happened in 2000.


When I come across people that want to circumvent the fideicomiso, because some
"expert" told them they could do it another way. I ask them to get a written statement form those people, signed in front of the notario and registered. And have the document say they will make up any financial losses because of this bad advice. See how quickly their stories and uber helpful attitudes change.

If you cannot get a fideicomiso on the property you want, DON"T BUY IT.
If the word of notarios, fiduciarias, real estate attorneys, and a practitioner in the industry is not good enough, then proceed at your own risk.

Oh, and read the Calvo Clause. It is part of real estate documents the world over, it states that when you buy property in a foreign country you are subject to their rules and laws, and for purposes of the real estate law, you are considered a national and your government cannot and will not help you. Being considered a national in application of the Calvo Clause, does not give you the same property owning rights as a Mexican citizen.

There are plenty of wonderful properties all over Mexico that can be purchased in a fideicomiso, those are the only ones a foreigner can buy.

Remember fideicomisos are used only in the restricted zone. Or in the case of a mortgage anywhere in Mexico ( for a foreigner) there will be a guarantee fideicomiso, that protects the bank.
Just as those people in Punta Banda were properly advised not to do what they did, I am giving notice that the only legal way for a foreigner to own a primary residence or vacation home is in a fideicomiso.

And while I am at it, corporations are for commercial properties. If you buy your vacation home in a corporation there are strict rules of usage and huge capital gains when you sell, and they do not fall under the homeowner tax exemption.
Get properly informed and do it right.
FIDEICOMISO.

No argument from me Safogel that a fideicomiso is the best way to go for a foreigner to buy real estate in Mexico within 50 km of the coastline or 100 km of the border.

I only took exception to the fact that you declared land leases / presta nombres illegal, when in fact they are not...

Safogel....can you tell us the story of Punta Banda (in Ensenada) that you refer to????????