In the landscape of real estate law in Mexico, one of the issues that has gained prominence is the Ejidos, especially in growth areas and tourist destinations. The Ejidos represent a unique form of land ownership that, while offering opportunities, also entails significant legal risks that property owners, developers, and real estate investors often do not fully understand until it is too late.
Ejidos are defined as a collection of lands, forests, or waters that the Mexican government grants to a community for the purpose of working and using them for their benefit. This form of ownership has three key characteristics:
- It Is a Form of Communal Ownership: Unlike traditional private property, ejidos are not owned by the government or by a single individual, but rather belong to a Community of Ejido Members.
- It Has Legal Personality: The ejido acts as a legal standing and the capacity to make decisions and enter into agreements. This means that developers must engage with the Ejido Assembly (Asamblea de Ejidatarios), which has the final authority over any transaction involving ejido land.
- It Has Its Own Regulations. Each ejido has its own rules and procedures, which are established through assemblies where decisions are made by a majority of the Ejido Members (Ejidatarios).
For many investors, Ejidos represent attractive opportunities primarily due to their location, size, and price. However, behind many of these transactions lies a legal risk that is often detected too late: the assumption that an “ejidal parcel” can be transferred as private property without first completing the procedure for acquiring full ownership and registering it with the National Agrarian Registry.
The ejido system formally emerged in Mexico following the agrarian reform stemming from the 1917 Constitution; this system was implemented with the aim of redistributing land and promoting its use, whether collectively or individually, within agricultural communities.
With the 1992 amendment to Article 27 of the Constitution and the enactment of the Agrarian Law, certain land rights were permitted to eventually be converted into private property, provided that a specific legal procedure is followed.
Not all Ejidos can be freely sold. It is essential to distinguish between:
- Common-Use Lands: These belong to the ejido community and their transfer is subject to significant restrictions.
- Urban Building Lots: Also known as “human settlements,” these are designated for people to build their homes. They can be freely transferred once the title deed is issued.
- Plots: These may be individually assigned to ejido members but remain subject to the agrarian regime. There are two types:
- Ejido Plots: These cannot be transferred; they may only be assigned among ejido members or residents, that is, within the ejido core.
- Plots with Full Ownership: These are plots where the Ejido Assembly voted to allow ejido members to become the absolute owners of the plots. In these cases, transfers to third parties are permitted.
To obtain full ownership of a Plot of land, the Agrarian Law requires, among other things:
– “Formally convened meetings.”
– “Specific quorums.”
– “Proper legal notices.”
– “Validly approved resolutions.”
– “Registration with the National Agrarian Registry.”
– “Issuance of corresponding titles”
If any of these steps were omitted or carried out incorrectly, the chain of title may be compromised. In practical terms, this can result in the nullification of sales, agrarian litigation, suspension of developments, among other consequences.
In Mexico, particularly in transactions involving Ejidos, a property’s value is not limited to its location, size, or price per square meter; its true value also lies in the legal certainty of its origin and the legal possibility of its transfer.
Therefore, before structuring any acquisition, it is essential to conduct a comprehensive review of the property’s agricultural, registry, and ownership records. At VAHG, we advise property owners, investors, and real estate developers on real estate and agricultural due diligence processes to identify potential issues, mitigate financial risks, and ensure legal certainty in every transaction. In the world of Real Estate Law, knowledge is power, and in the case of ejidos, it can make the difference between a successful project and a legal complexity with asset-related implications.
| Ana Karen Inzunza Sánchez| Partner
+52 (33) 38171731 Ext. 235 |ainzunza@vahg.mx |
Fernando Hernández de la Torre | Associate
+52 (33) 38171731 Ext. 237 | fhdelatorre@vahg.mx |