In Mexico we have a saying: “Lo barato sale caro”, which would translate into “What is cheap in the end will be expensive”. When shopping, we all want to make the best use of our money and get bargains. This can also happen in real estate deals. But what happens if you are buying property in Mexico and you are offered a bargain, a piece of land that eventually will be worth much more and that is called “Ejido”? In this case, you should consider really carefully paying any money to the seller, since most surely you will never get title.
So what is Ejido?
Ejido land comprises a high percentage of the total Mexican territory and there are certain limitations applicable when acquiring this type of land that can disrupt your purchase process and put your investment at risk. The main aspects you should be aware of when planning to purchase ejido land, are the following:
• Ejido land is not private property, which means that it cannot be purchased freely through direct title. The ejido legal system was created for agricultural purposes and is a type of “communal ownership”, where the members of the ejido own rights of use (and not direct title) over an undetermined part of the total area of the ejido.
• Ejido rights can be subject to purchase and transfer, however this can only take place between members of the ejido. Non-Mexican nationals cannot be members of the ejido.
So how can I acquire land that is Ejido?
Ejido land can be transformed into private property and then sold to any individual who is not a member of the ejido, either national or foreign. This process is commonly known as “regularization” and must meet many legal requirements. The regularization of ejido land can take months and in some cases years. Once the regularization process is concluded, you may acquire (through a land trust) the piece of property you are being offered to purchase.
You should keep in mind that acquiring Ejido under the name of a Mexican national in order to get your way around the regularization process and the Fideicomiso, will put your investment at risk since you will have absolutely no legal rights over the property, and yes, you might get a bargain but in the end you run the risk of never getting title.