The Perils of 'Prestanombres': Protecting Your Assets in Ecuador Through Legal Channels

A "prestanombre" arrangement involves having an Ecuadorian national or a resident with a cédula register property or a vehicle in their name, while the funds are provided by an expatriate. The informal understanding is that the expat is the "real" owner.

From a legal standpoint, this is a form of simulación (simulation or sham transaction) under the Ecuadorian Civil Code. The registered owner is the only owner recognized by law. Any private contract or verbal agreement you hold is legally subordinate to the public deed registered at the Registro de la Propiedad (Property Registry). This creates an immediate and dangerous chasm between your financial investment and your legal standing.

Legal Risks in Property Transactions

When purchasing real estate, the name on the Escritura Pública (public deed) is paramount. Using a name-lender exposes you to these specific risks:

Total Loss of Ownership: The "prestanombre," as the legal owner, can legally sell, mortgage, or use the property as collateral for a loan without your consent. Your investment could vanish overnight, and you would have little to no legal recourse.
Creditor Claims and Seizure: If your "prestanombre" accumulates personal or business debt, the property registered in their name is a seizable asset. Ecuadorian courts will enforce a creditor's right to place an embargo (lien) on the property and force its sale to satisfy the debt.
Inheritance by Rightful Heirs: Upon the death of the "prestanombre," the property automatically becomes part of their estate and passes to their legal heirs (herederos forzosos). Your claim, based on an informal agreement, will likely not prevail against the legally mandated inheritance rights of a spouse or children.
Money Laundering Red Flags: Such arrangements can attract the attention of the UAFE (Unidad de Análisis Financiero y Económico), Ecuador's financial intelligence unit. Using a third party to obscure the true source of funds is a classic money laundering indicator, potentially leading to a criminal investigation under the Ley Orgánica de Prevención, Detección y Erradicación del Delito de Lavado de Activos.
Future Sale Gridlock: To sell the property, you are entirely dependent on the "prestanombre's" availability and willingness to sign the legal documents. If they are deceased, have left the country, or simply refuse to cooperate, you will face a protracted and expensive legal battle to prove your beneficial ownership, with no guarantee of success.

Legal Risks in Vehicle Purchases

The risks for vehicle purchases are just as severe and are governed by the Agencia Nacional de Tránsito (ANT):

Ownership Belongs to the Registrant: The legal title, the Matrícula Vehicular, will be in the "prestanombre's" name. They can legally sell the vehicle at any time. A common scam involves the "prestanombre" reporting the vehicle as stolen after you've paid for it, leaving you with no vehicle and no money.
Liability for Accidents and Fines: All traffic violations, fines, and—most critically—civil and criminal liability from accidents are legally tied to the registered owner. You could be driving, but your "prestanombre" is the one who will be sued or face legal consequences, which they will inevitably pass on to you.
Insurance Invalidity: An insurance policy may be voided if the primary driver and beneficial owner is not the registered owner named on the policy. In the event of a major accident, the insurer could deny the claim, leaving you with massive personal liability.

The Unyielding Authority of Ecuadorian Law

Ecuador's legal framework prioritizes formal registration as the ultimate proof of ownership. Circumventing this is not an option.

Artículo 599 of the Civil Code (Código Civil) defines dominio (ownership) as the real right to a corporeal thing, to enjoy and dispose of it. This right is granted by registration, not by informal agreement.
Artículo 702 of the Civil Code states that the transfer of real estate ownership is perfected by its inscription in the Registro de la Propiedad. The notary's deed alone is insufficient.
Artículo 1740 of the Civil Code mandates that the sale of real estate must be solemnized by a public deed (escritura pública). Any other form of agreement is null.
The Law of the National System of Public Data Registry (Ley del Sistema Nacional de Registro de Datos Públicos) grants public faith to registered information. What is in the registry is presumed true and legally enforceable against everyone.

These laws are not mere formalities; they are the bedrock of secure asset ownership in Ecuador.

Your Actionable Path to Secure Ownership

Legitimate and secure pathways exist for expatriates to own property and vehicles. They require diligence, not shortcuts.

For Property Acquisition:

Visa and Identification: While you can purchase property on a tourist visa with a passport, transactions are significantly smoother with a temporary or permanent residency visa and a corresponding cédula.
Professional Due Diligence: Engage an independent Ecuadorian lawyer. The first step is to obtain a Certificado de Gravámenes from the municipal Registro de la Propiedad. This document, which typically costs around $15-$20, reveals the property's legal history, its current legal owner, and whether any liens, mortgages, or legal restrictions exist.
Formal Agreements: Sign a Promesa de Compraventa (promissory purchase agreement), notarized to make it a binding legal instrument.
Closing at the Notary: The final transfer occurs via an Escritura Pública de Compraventa signed before a Notario Público. Your name must be on this document as the comprador (buyer). Be prepared to pay transfer taxes, which include the municipal alcabala (typically 1% of the sale price) and plusvalía (capital gains for the seller).
Crucial Final Step: Registration: A common and costly mistake is assuming the transaction is complete after leaving the notary's office. Your lawyer's final, most important task is to take the escritura to the Registro de la Propiedad for its official inscription. Only when the property is registered in your name are you the undisputed legal owner.

For Vehicle Acquisition:

Direct Purchase: Purchase the vehicle from a reputable dealer or private party. You will sign a formal sales contract (contrato de compraventa).
Notarized Transfer: Both you and the seller must have your signatures on the contract recognized by a notary. This often includes a declaration that the vehicle is free of fines and liens.
ANT Registration: The transfer of ownership must be registered with the ANT. This process transfers the Matrícula Vehicular into your name. Having a cédula greatly simplifies this process at ANT offices.

⚠️ Legal Alert: When to Stop and Consult an Attorney

Immediately halt any transaction and seek qualified legal counsel if:

Anyone—an agent, a "friend," or an intermediary—suggests putting the asset in someone else's name "temporarily" or "to make it easier."
You are asked to sign a poder especial (special power of attorney) that grants broad, irrevocable powers to another person to manage or sell the property.
You are pressured to hand over funds before a formal, notarized Promesa de Compraventa is signed.
A seller refuses to provide a recent Certificado de Gravámenes or obstructs your lawyer's due diligence.
You are asked to sign any Spanish-language document without a certified translation and a full explanation from your own trusted legal advisor.

Conclusion

The "prestanombre" is a siren song that leads directly to financial ruin and legal chaos. The illusion of convenience masks the reality of complete vulnerability. The Ecuadorian legal system provides clear, secure, and robust mechanisms for expatriates to own property and build a life here. By following these established procedures, engaging qualified legal professionals, and prioritizing due diligence, you can ensure your investment is not just a dream, but a legally protected reality.

Navigating Ecuador's legal landscape requires local expertise and a commitment to procedural correctness. If you are considering an investment in Ecuador, protect yourself from preventable risks.

Ready to secure your assets in Ecuador the right way? Schedule a consultation to discuss a legally sound strategy for your property or vehicle purchase.