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Every day more people are hearing about ejidos and are getting more familiar with ejido processes and formalities. Actually, ejidos represent a very interesting topic for investors in real estate and tourism because a considerable amount of land in Mexico belongs to ejidos, and an important amount of these ejidos are located in coastal areas. This article intends to provide a general overview of ejidos in Mexico and the processes available to convert ejido land into sellable property, taking into consideration the most common inquiries I have been asked in working on ejido matters.

History – Classification of Properties

In Mexico all real estate is classified either as public, private or social property. This classification is derived from in the Mexican Constitution of 1917, which states that “the ownership of the lands and waters comprised within the limits of the national territory originally corresponds to the nation, which has the right to transfer the ownership of such (lands and waters) to individuals to constitute private property. . .”

Public Property

The ownership, use and enjoyment of public property is exclusive to the Mexican nation (natural resources, minerals, seas, rivers, lakes, lagoons, etc). Ownership rights cannot be transferred to any individual, however exclusive rights to use and enjoy some types of public property can be acquired under certain restrictions via “concessions” for a given length of time, i.e. federal zone concessions. It is important to note that all individuals have the right (non exclusive) to use public property.

Private Property

All individuals and entities can acquire full ownership and domain over private property, which is transferable without any restriction except those established by the parties in such sale and by law, i.e. condominium property regime, zoning and construction ordinances.
Please note that the above is always subject to the restriction of Article 27 of the Mexican Constitution which establishes that no foreign individual or entity can acquire direct ownership of properties within the restricted zone (all lands located within 100 kilometers of any Mexican border and within 50 kilometers of any Mexican coast line).

Social Property

Is “held” by a group of people. Social property includes those properties held by ejidos, indigenous communities and agrarian colonies. Under this classification, members of ejidos, indigenous communities and agrarian colonies acquire use and enjoyment rights only.
At this point we will focus our attention on the ejidos and the process of converting their social property into Private Property.
Thanks to reforms to the Agrarian Law made in 1992, ejido members can now acquire ownership to the land they hold via PROCEDE (procedure for ejido rights certification) and DOMINIO PLENO (full ownership) procedures. They can then transfer it to any third party, including foreigners.

PROCEDE – Certification of Ejido Rights

In 1992, due to generalized conflicts existing within the ejidos regarding tenancy of land, the government recognized the need to regularize and give certainty to the tenancy of the land already “granted” to ejidos. It therefore decided to stop granting more land to ejidos. Due to this circumstance a process called PROCEDE (Procedimiento de Certificación de Derechos Ejidales / Procedure for Certification of Ejido Rights) was created under the current Agrarian Law.

By means of PROCEDE each class of ejido land is surveyed, numbered and assigned to each ejido member on an individual basis via “titles” or “certificates”.
Prior to 1992 ejido members only acquired rights to use and enjoy the land, and were unable to transfer their rights to a third party as they did not “own” the property. Through PROCEDE, among other things, ejido members are now able to:

• Assign their rights to parcels between members of ejido,
• Inherit their ejido rights,
• Enter into long term (30 years, renewable) association agreements with third parties to exploit their parcels and common use land; and
• Acquire full ownership and title to solares (lots) and transfer them to any third party including foreigners, without restrictions.

Inherit their ejido rights;

Enter into long term (30 years, renewable) association agreements with third parties to exploit their parcels and common use land; and
Acquire full ownership and title to solares (lots) and transfer them to any third party including foreigners, without restrictions.

For the above, PROCEDE is the process to certify ejido rights by means of which the ejido land is surveyed, classified (solares, parcels and common use land) and assigned to ejido members.

Clases of Ejido Land

PROCEDE classifies ejido land in the 3 following manners:

Parcels

Areas assigned for individual use and enjoyment. The rights to this type of land are assigned individually to each ejido member and are subject to be assigned among ejido members or subject to joint venture agreements; and can be converted into private property via the DOMINIO PLENO procedure.

Common use land

Areas that belongs to all or some ejido members “in common”.

Solares

These are the urban area lots granted to each ejido member. Solares are granted through “Property Titles” and the ejido members acquire full ownership and are able to transfer them to any third party without restriction (including foreign individuals and entities) as they are the “owners”. Solares do not comprise a classification of ejido land by themselves; actually they belong to a class called “Human Settlement Land”, which is the urbanized area within an ejido that guarantees the community coexistence; i.e. schools, areas reserved to community works and public services, etc.

This land, with the exception of solares, is not sellable or subject to embargo, prescription or lien.

Ejido members only acquire use and enjoyment rights to parcels and common use land, which are recognized or supported by “certificates”. However, these certificates are not “property titles” and they can only be transferred to other ejido members at this point.

Dominio Pleno (Full Ownership) – Conversion of Ejido Land to Private Property

In order to convert ejido “parcels” into private property, the ejido members should apply for the “dominio pleno” (full ownership) to the parcels they were assigned once the PROCEDE is complete. This will provide them with a property title that can be transferred to any third person, including foreign individuals or entities, and that accredits the ownership over such land.

Only members of ejidos in which the “majority” of parcels have been assigned via PROCEDE can acquire DOMINIO PLENO over their land. By means of this procedure, the ‘certificados parcelarios’ are cancelled and substituted by “property titles” that attest to the full ownership over such land.

The parcels converted to private properties by following the “dominio pleno” procedure are totally sellable. However, the first sale is subject to “right of first refusal” that is given to the ejido representatives (comisariado ejidal), 30 days prior the sale, in writing and before a notary and two witnesses. If this notification is not made the sale can be nullified.

None of these procedures, PROCEDE or DOMINIO PLENO are automatic; the ejido must invoke and carry out all procedures and formalities of law related and together with the respective agrarian authorities to complete them, which in some cases take years to complete.

Conclusions

According to most recent statistics published by the agrarian authorities, 52% of Mexican territory is comprised of social property, 40% of private property and 8% of public property.

In addition to the above, an important amount of social property belongs to ejidos that are located in the coastal areas, which certainly increases the interest of real estate and tourism business investors in this type of land. For all of the above, in order to determine how realistic and reasonable acquiring ejido land in Mexico is for you, the following premises are to be considered:

• Solares are sellable to any third party, including foreign individuals or entities, as the ejido members are the owners and “title holders”.
• Parcels are not sellable or subject to fractioning or subdivision if they are not converted to private property, by means of PROCEDE and DOMINIO PLENO.
• Rights to parcels not converted into private property can be assigned only between ejido members of the same ejido and the assignment is subject to various formalities.
• All assignments of rights to parcels must be recorded before the National Agrarian Registry (RAN) and the existing parcel certificate has to be cancelled in order for a new one to be issued in favor of the new “certificate” holder.
• No Mexican or foreign entity or foreign individual can become an ejido member.
• Parcels converted into private property are sellable, but the first sale is subject to the notification of “right of first refusal”. If this notification is not made the sale can be nullified.
• Parcels and common use land can be subject to long term (30 years, renewable) agreements (lease, use and usufruct, joint venture).
• Common use and human settlement land (except for solares) are not sellable or subject to conversion into private property.
• In dealing with an ejido the first thing that is recommended is to do the necessary background research of the ejido to determine when it was created, if it has entered PROCEDE and DOMINIO PLENO and where it lies in these procedures. Once the above information is obtained the different scenarios available for acquiring the land can be explored.

David Connell is a licensed Mexican attorney with an office in Puerto Vallarta. If you have any questions about this process, you can contact David or Ana Lilia Lozona at their office at: www.mexicolaw.com.mx.

The taxi is waiting. The drapes are drawn and the door double-locked, but a pang of anxiety persists. After all, you’re leaving your special dream dwelling by the bay to fly north, while the pounding surf continues to spray the patio doors, and the balcony plants bake in the Vallarta sun. The telephone and electric bills keep turning up regularly, and you agonize that, somewhere, a pipe will leak, creating a small lake before you return.

Whether your condo is your private home or a comfortable property purchased to produce rental income, it’s a major investment. And taking care of this asset from afar can be challenging. Worse, it may demand more time and effort than you would like to give it. After all, when you’re not in Vallarta, you still have a life –probably even busier than the one here. So, instead of leaving the extra set of keys with a neighbor or la muchacha, think about relying on a professional property manager to keep your home in perfect shape, ready to be enjoyed by you, your guests or rental clients.

As with most things in life, you’ll want to know how much all this responsible care will cost. And, as is often the case, the answer is “it depends”. The size of your “unit”, usually based on the number of bedrooms, and the services you contract are usually the determining factors. A basic package for people not renting to others would probably include the following:

• Paying utilities, maid, pool maintenance and gardener, if applicable
• Providing personnel, such as maids and gardeners
• Paying property tax
• Paying any association dues
• Ensuring everything is working before your arrival
• Inspecting property once per week and reporting to you any required maintenance
• Making monthly inspections and accounting reports
• And, naturally, for a fee, everything from restocking your bar and picking you up at the airport to feeding your pet parakeet in your absence is available.

Even more help from a manager is necessary if you’ll be renting out your abode. In some cases, the company may market your property and handle rentals. If the company also manages your home, its rental commission may be reduced, and it will take care of all details. Otherwise, if you rent the property yourself or through an unrelated real estate agency, your property manager should simply charge a fee for greeting your guests and making sure their stay is something they would like to repeat. The manager will also need to inspect the property after the tenant leaves and report any damages or problems.

“Professional” is sometimes a relative term here in Mexico. With the explosion of building around the bay, the number of property management firms has proliferated. Note that there is no licensing prerequisite or training requirement for property managers in Mexico. Moreover, these services are available from a number of sources: your condominium organization, real estate agencies, the lady up the street and management companies of all sizes. Thus, you’ll need to give up some beach time on an early visit and devote it to investigating who will best handle your home.

Start by asking friends and neighbors for recommendations, but make sure you’re the one who is comfortable handing over your keys. Do you want a large organization, with a wide network and many employees, or a smaller concern, where you’re always dealing with the same people? Remember that your manager will be the primary contact for any tenant or guest in Vallarta.

Some points you may want to consider follow:

• Is the staff fully bilingual?
• Is there a 24-hour emergency contact for you and guests? What are office hours?
• How and where do guests check in?
• What is the minimum amount to be held in your personal fund?
• What type of comprehensive monthly operating statement you will receive? Is there flexibility in the types of reports that can be provided?
• Will the company negotiate rental agreements, collect rent and track tenant deposits? Will the company keep a rental calendar for you?
• Does the company provide construction management, if required?
• If you care, what types of technology are used? Is there is an online system to review accounts at any time?
• How many homes do they manage? What is the size of the staff?
• Does the firm specialize in a particular type of property (condos, large homes, long- or short-term rentals)?
• In your interview, try a hypothetical situation. Ask how the manager would handle a three-week renter who shows up with a dog despite your “No Pets” policy. Inquire about “key control” policies in the office; you don’t want anyone using your place for a party!

Make sure the company understands that the most important thing for both you and your renters is making sure everyone has a great, stress-free time. If there are special requests or someone needs help scheduling an area tour, the manager should have the ability to respond. And to get the best from your property manager, remember to be a good client!

Don’t make unreasonable demands, and try to avoid last minute changes. You’re not the only client!

So, two weeks of timeshare just wasn’t enough, and even the two months in a rental left you lusting for more. Puerto Vallarta can get to you that way, and then the only thing to do is move here –trade the house up north for one with a view of the sea framed by scarlet bougainvillea! But before you embark on your idyllic new life by the bay, there are some details to consider.

Keep in mind that once you leave your home for another country, you become an alien in the new locale and must comply with its immigration laws.

Mexico’s immigration regulations and procedures can be a bit tricky, and, somewhat like traffic signals here, often appear to be mere guidelines rather than strict laws. The potential for bureaucratic bewilderment may seem overwhelming, but the key commandments of “patience”, “photocopies” and always bringing a book along to read during the wait can help ease the process. These commandments also will come in handy when dealing with those other bastions of bureaucracy, the telephone and electric companies, not to mention banks and even video stores.

As with any move, an important consideration is what to pack. In this case, your decisions should depend not only on the laws regulating what you’re permitted to bring into Mexico –with a recently issued residency visa, you supposedly have a once-in-a-lifetime chance to bring whatever the consulate closest to your last non-Mexican residence, in its infinite wisdom and sole discretion, permits –but also on what you can expect to find once you arrive. Thus, you’ll want to chuck your sweaters and instead wrap your computer keyboard in a nice bathroom rug or a couple of luxurious bath towels –because “fluffy” is not a well-understood concept in Mexico.

You’ll also want to toss the pantyhose –they’ll disintegrate before you have a chance to wear them –and men, forget those ties and suits. Actually, you should forget any garment with a lining, as there is an exceedingly high “stick-to-the-skin” factor here, particularly during the six summer months from May through October. And while you’ve probably figured out you won’t need the fur-lined boots, you might not guess that your high-heeled sandals can become a serious handicap on cobblestone streets. Also, skip anything suede because you won’t need it and the substance has an unfortunate propensity to grow mold.

While gauzy summer clothes are for sale in scores of stores here, finding plastic wrap that sticks to anything other than itself is impossible. Conversely, Mexican “band-aids”, even the “brand name” ones, refuse to stick to anything –including your skin. And I was startled when my dentist here recommended that I buy dental floss on my next border crossing. Generally, manufactured items here tend to be expensive, difficult to find, or they simply “perform differently”. Thus, get wonderful coffee in any market, but bring the filters in your suitcase; buy some terrific Mexican shampoos, but pack your electric hair curlers.

The list of essentials from north of the border will grow shorter, however, the longer you’re here. I’ve found superb local products I would miss terribly –especially in the food department, always my downfall. I’ve renounced cosmetics –unless I know I’ll be socializing in air conditioning– and I no longer weigh down my suitcases with reading material since I discovered the myriad book exchanges here.

Still, tucking a couple of jars of mincemeat for Christmas dinner into your carry-on or wrapping an electric ice cream maker in your new bedspread doesn’t seem like a big deal, except that the fine print on the customs form clearly indicates that you should not be in the “Nothing to Declare” line with these treasures, whether arriving by air or land. But most people blithely ignore the fine print.

I recently returned from a five-day trip to L.A. with three bulging suitcases containing a “few” non-tourist items –like four-dozen decorative cocktail napkins and several three-way bulbs, a product unobtainable in all of Mexico. The usual procedure at any Mexican aduana is to hand the customs officer the completed card and press the button on the “traffic light”. Green means go right on through, while red means you get to open your luggage, dirty underwear and all, for inspection. In this case, the customs official clearly suspected I had more than the $300 USD of “miscellaneous” items beyond the personal clothes allowed an air traveler and strongly suggested I make a declaration and pay up before hitting the button. But the great thing about ex-pats in PV is their spirit of adventure, so after 10 minutes of verbal sparring, I politely but firmly declined her offer and gambled on the integrity of the random signal system, which apparently is truly indiscriminate because I got a green light!

So, now you’re residing in “paradise” with a great view of the bay and, somehow, the days are flying by. Your friends and family are still asking, “But what do you do all day?” And it’s hard to explain that what you thought would be endless lazy afternoons in a hammock with a good book and long siestas simply have not materialized. There are just too many things to do in Puerto Vallarta!

By day, there are the usual chores of living –each with its own possibility for devouring time. Take bill paying, for example, a rather mundane job in most places. The Mexican postal system can be a bit vague at times, but the consumer is required to pay the bill on time, whether or not it ever arrives. I discovered this fact the first time my telephone was turned off for non-payment, promptly on the day after the money was due.

I was mortified, not to say aggravated, to have become delinquent my second month of living in paradise, so off I went to my local Telmex office armed with copies of my bills and righteous indignation. But my representante was so gracious about the whole thing I couldn’t stay angry. After apologizing for the efficiency of the telephone computer system and the inefficiency of the mail, she suggested that I stop by between the first and fifth of each month if I hadn’t received the statement; and now I go to visit each month and catch up on gossip, even though I could pay the bill as easily at the bank. Some utility bills can be paid at the supermarket as well, but forget the mail.

Of course, in addition to the mundane errands of life, there will be book clubs, bridge groups, golf games, yoga classes, tennis, boating activities, sewing and writing clubs and a surfeit of really worthwhile charitable organizations clamoring for your time and energy. And set aside time for the Internet and email –a lifeline to the world around the bay as well as outside it!

Save the evenings for the myriad social and cultural activities: parties, book signings, dinner theater, art shows, jazz and dance concerts and music recitals under the stars. In fact, “Where To Retire” magazine recently listed PV as a highly recommended place to retire in Mexico because of its many artistic activities. Perhaps you’ll even want to participate! All efforts are appreciated in this town, and you may find yourself onstage, as I have, in one of the wonderful local productions.

Of course, another worthwhile project might be studying Spanish, with private and group classes readily available in classrooms or your home. Certainly an understanding of Spanish enhances your life here and the Mexican people you meet will be pleased at any effort to speak their language, but it really isn’t a requirement for living in PV. The foreign community is large, and PV is a tourist town so for most shops, services and restaurants, getting along in English isn’t a problem and generally gringos bright enough to get through the red tape to set up a household here can manage enough Spanish to communicate the basics when necessary, especially if combined with the correct combination of grunts, nods and gestures.

Nevertheless, learning a language teaches you about the people who speak it. For example, the word esperar means “to hope” as well as “to wait” and “to expect”. So if you’re home expecting a repairman or a delivery at noon, at 1 pm you’ll be anxiously waiting and by 3, it’s hoping –but in Spanish there’s no need to change verbs. Just don’t forget the English word “patience!” In fact, don’t fret at all. This is Puerto Vallarta and the bay is sparkling in the sunlight somewhere right outside your door. Maybe it’s the moment to hit that hammock and just swing gently until it’s time to watch another magnificent sunset. If the guy shows up, fine; if not, there’s always mañana.