Ejido (Agricultural) Lands
Ejido lands have a long history in how they came into being. Essentially, they are similar to “commons land”; after the revolution, communities and peasants were handed strips of land, in the main, to grow crops on, and they are called “Ejidos”. You CAN buy Ejido land, but the sale requires the agreement of the whole community that ‘own’ it, the process is arduous and risky.
Some big property developers may negotiate to buy a big plot of Ejido land, with a view to “fractionalising” it (usually introducing mains water, sewerage and electric to the land as well), to develop property and/or to sell off the individual plots to small property investors. Under these schemes, the land is often re-classified and made available for private ownership. The process is usually undertaken by professionals who understand Mexican property law intimately and can from a year to several years. The current advice is: double check to make sure that the land you are buying is not Ejido land and if it is, avoid it.
Note: It is advisable to purchase Title Insurance if the property you are purchasing is ex-ejido land (although regardless of the type of property, Title Insurance is a shrewd investment).
The real estate property of the ejido is divided into three categories:
-property for common use, and
-property for community development
Individual parcels are those for which parcel certificates have been issued to individual ejido members by the decision of the ejido member”s meeting, and inscribed in the national agrarian registry. No individual parcel may be larger than pequeña propiedad (100-800 hectares) and no more than 5% of the ejido property. The national agrarian registry will issue a deed of an individual parcel of the ejido which in turn will be recorded at the corresponding public registry of property.
The property for common use in the ejido is really the patrimony of the ejido and it is the ejido member”s meeting which decides what is to be done with this land. It can be subdivided into individual parcels or used to do business with other private individuals or corporations. The property for community development is intended to meet the needs of the ejido community for urban development. Article 75 of the new agrarian law states that the ejido may transfer ownership of common use properties to partnerships or companies in which the ejido or its members participate in joint venture corporations in which their capital contributions consists of real estate property. It is important to point out that the title to the property in a joint venture is assigned to the corporation and the ejido no longer owns the real estate property in question.
The agrarian authorities no longer intervene to regulate transactions between third parties and the ejidos. The process of formation of an ejido is similar to the one for a joint venture corporation. As in the latter case, members in the aggregate contribute their rights to the real estate for common use. The contributions are approved by the ejido members meeting. The contributed rights then constitute the economic support or capital of the ejido community.
Purchasing property of the ejido is a decision of the ejido member”s meeting. Only the property for common use may be purchased. Many foreign investors have entered into joint venture agreements with large ejidos using the ejido population as workers and producing vegetables and fruits, which are subsequently sold throughout the world. In projects not involving agriculture, which could include tourist developments, there are no restrictions on how much the ejido must hold in capital of the corporation. There is no restriction whatsoever in dealing with indiividual parcels if a parcel certificate has been duly issued and registered. Leasing of property for common use is permitted. Article 45 of the new agrarian law states that common use of property and individual parcels may be the object of any contract that entails the use of property. Such contracts are limited to a term of 30 years, and may be renewed.