If you are a foreigner planning to live in Mexico, buying a piece of property to use as a second or permanent home, might seem in many ways a dream come true. However, in case that piece of property you are planning to acquire is considered ejido land under Mexican law, it is probable that your dream might turn in to a nightmare. 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 mostly 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. Foreigners cannot be members of the 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, which is commonly known as “regularization” and where many legal provisions have to be fulfilled, can take several months and in some cases even years, to be properly concluded.
• Once the regularization process is concluded, you may acquire the piece of property you are being offered to purchase. However, in case this piece of property is located in the restricted zone (50 km from the shore), you will need a Mexican trust (Fideicomiso) to acquire the land. On the date this article is written, an initiative for a constitutional reform is being discussed in the Mexican Congress in order to eliminate the provision which forbids foreigners to acquire direct title over land located in the restricted zone. In case this constitutional reform is approved in Congress and by the majority of the state legislatures, you won’t need a Fideicomiso anymore.
And finally, keep in mind that acquiring property under someone else’s name in order to get your way around the regularization process and the Fideicomiso, will only put your investment at risk since you will have absolutely no legal rights over the property and, in the worst case scenario, you could be evicted from your property as soon as you take possession of it.
Roberto Ortiz de Montellano F.
April 21st, 2013.
All rights reserved.
