What is an Ejido?
A few things are usually different when you visit another country. The food, the language, maybe the rules for tipping–-these are the discrepancies you expect. What you might not expect, however, are entirely different rules regarding property ownership. One wrinkle that might throw you for a bit of a loop is the ejido, a quintessentially Mexican real estate concept that you might need to understand as you consider buying property in Mexico. Far Homes can connect you to a local agent now who can walk you through the details:
What is an Ejido?
An ejido is a piece of land that collectively belongs to members of a community in Mexico. This land–used primarily for agriculture–is maintained by the community, whose members farm designated plots.
Although the ejido has roots in practices dating back to the Aztecs, it’s a relatively young real estate institution in modern Mexico. After centuries under the encomienda system, almost all the farmland in Mexico was concentrated in the hands of a small population of elites. In the years following the Mexican Revolution of 1917, many of these large plots were reclaimed by the government and turned into ejidos–communal land–so that Mexican citizens would have access to agricultural resources. Now ejidos and the farming communities that manage them comprise over 40% of Mexico’s total land area.
Can I Buy Ejido Land?
Foreigners cannot technically hold title over ejido land–but that doesn’t mean they can’t purchase and live on it. Ejido land holdings are extensive and varied. All the land is governed by the community, but there are three different types of parcels within the ejido system: land for community development, common land, and individually-possessed parcels. Community development land is essentially untouchable, while common land can be converted into individual parcels designed for families to live on. Under certain circumstances, these residential parcels, or solares, can actually be privatized (more on that later). If you’re the kind of person who likes living off the beaten path, there’s a possibility you will find yourself drawn to the property that happens to be on ejido land.
Living on these parcels requires that you purchase the residence on agrarian terms. Agrarian refers to a more rural system of property management that’s administered separately from the conventional forms of property ownership run by the Mexican government. Under agrarian terms, you purchase the right to possess the property, but this possession comes with a few interesting caveats.
First, remember that you do not have title over the property, so not every right associated with ownership will necessarily apply to you–remember the community makes the rules on how property is to be used and developed. Also, you’ll have to purchase outright in cash, as no mortgages are available for untitled properties. Since the property doesn’t belong to you, you can’t use it as collateral and it may not be possible to insure it. Check with your insurance company to confirm that they insure untitled property before you get too far in the process of obtaining insurance.
Fortunately, although the original agrarian terms regarding possession stay in place, you can transfer the property to an heir. You can also make money off the sale of the property.
Moving Forward With An Ejido Land Purchase
Congratulations, the property you love is on ejido land, and you’re ready to go for it. As a buyer or seller, you may need to attend (or enlist a representative to attend) a periodically-held community assembly to present your plan for land transfer. As long as there are no complications with community approval, you can move forward with the transfer of possession. Don’t expect to receive a deed transferring title to your name–you’re not the owner. And your purchase will not be documented in the national property registry. Instead you’ll receive a Cesion de Derechos (Transfer of Rights) and a Constancia de Posesion (Record of Possession) to document your right to possess and use the property. The former catalogs the yield of possession of the land, while the latter documents your gaining of rights to use the property.
These documents are not registered or controlled by the conventional Mexican real estate apparatus. Your purchase will not be administered by or at the mercy of civil courts and institutions. Instead, all processes and disputes will be handled by ejido governing bodies that make their own community-specific rules. Understanding and meeting these guidelines can be a cumbersome task, which is why we suggest you enlist some help.
Who Should I Consult Before I Purchase Ejido Property?
Since the status of ejido land is often in question and can affect your ability to move forward with the real estate transaction, a local real estate agent is a must. They’ll help you determine whether the house you want to buy or the property on which you want to build is even eligible for purchase. A local real estate lawyer is also a helpful resource, especially because particular rural communities might have obscure rules that could complicate the transaction. These individuals, along with a Notary Public (notario) to represent the government in the transaction will discover any complications that could derail the sale.
It’s worth noting that a good local real estate agent is useful even before you start the process of finding your new home in Mexico. They’ll help you determine if ejido land is something worth exploring and steer you away from any ejido properties if you decide that they simply aren’t your particular residential flavor.
Can I Turn Ejido Land Into Private Property?
It can be lengthy, expensive, and unpredictable, but as of 1992, there is a process for turning communal land into a privately-owned parcel. The Programa para Cesion de Derechos Ejidales, or PROCEDE, offers a path for ejido lands to become “regularized” and thus available for private ownership.
The decision to regularize the land involves the entire ejido. 2/3 of the community must vote to approve privatization. Even if the vote passes, should someone come forward with a valid communal claim to the land after the fact, there could be an expensive and lengthy legal battle. That’s why it’s necessary to hire a lawyer to conduct extensive due diligence to determine any complicating ancestral claims and to handle any other issues. The inherent risks and expenses are often too much for single-family home buyers, which is why many privatizations of ejido lands are undertaken by well-resourced large developers.
Is an Ejido the Same Thing as the Restricted Zone?
In short, no–but we understand the confusion. Both refer to large tracts of land technically designated for Mexican citizens, both were established as a result of the Mexican Revolution, and both can involve some of the most coveted property in Mexico. However, an ejido can be in any region of Mexico, while the Restricted Zone consists only of property within 100 km of Mexico’s borders and 50 km of its coast. Furthermore, in the Restricted Zone foreigners can gain all rights associated with holding title to a property through the fideicomiso. Whereas, unless they go through the process of privatizing the communal land, buyers of ejido property are subject to those unconventional agrarian terms. It’s worth noting that some ejido land does exist within the Restricted Zone. Therefore, check with a lawyer or real estate agent to determine the property’s status before you start the purchasing process.
If you are interested in putting down roots on ejido land, or if you’re just looking for some guidance on how to find the right Mexican real estate for you, Far Homes is here to help. Contact one of our real estate agents to kickstart your dreams in Mexico.