Ejido Information from the past.

April 18, 2005

La Manzanilla and most of the surrounding area is Ejido land. Ejido land is communal land, it was given to the local people to work, and in the past it could not be sold or leased. I believe the law has changed now as to allow the Ejido to transfer their rights of use on land (without title) to other Mexican nationals. I have talked to the local Notary and am waiting for clarification on the details.

As it is now (to my knowledge) no one owns (has title to) property in La Manzanilla, not even the Mexicans who have lived here his or her entire lives. They only have permission to use the land. When Mexicans or foreigner's "buy" either land or a home here today they would get a paper called a Contrato (often referred to as a Constancia) from the Ejido giving them permission to USE the land.

Procede is a government program, which changes Ejido land into titled land. It does that by measuring each of the properties then checking to see if any of the neighbors has a problem with those property lines. It also measures the boundaries of the entire Ejido to make sure that there are no conflicts with the adjoining neighbors. When there are no problems Procede then gives out titles of ownership to each of the Mexican property owners. Once there is title on the land it can then be bought and sold legally.

La Manzanilla is in the restricted zone of Mexico. The restricted zone is the area located 30 miles from the coast all over Mexico where it is forbidden for anyone not a Mexican citizen to own land under their name. One of the most common and legal ways in which a foreigner can own land in the restricted zone is to hold it in bank trust also known as fideicomiso (see the web site links on bank trust for more information).

Some of the issues going on in La Manzanilla have more to do with the land being in the restricted zone than to do with the Ejido. It used to be that you could go to La Huerta and they would issue a tax payment or building permit in your name no matter if you were a Mexican citizen or not. That has changed due to the change of administration that enforces the law more, no more tax registers or construction permits (to my knowledge) are being given to foreigners.

The Ejido of La Manzanilla has promised the foreigners who have Constancia's that when title is available they will assist them in the process (which also requires a Notary) of transferring title into a bank trust on the property. In a way the Ejido serves as a Presta Nombre.

Currently there are two main ways for foreigner to hold property in La Manzanilla, one is the Constancia's from the Ejido in their name and the other is for them have the name on the Constancia be a Presta Nombre (borrowed name) who is a Mexican citizen. Presta Nombre's are illegal, but there is a difference (I think) when one is using a Presta Nombre to hold property until they can get bank trust and when one is using a Presta Nombre to avoid bank trust. If you are using a Presta Nombre to avoid paying the yearly fees that come with bank trust the Mexican government thinks you are trying to cheat them and can take serious action against you.

When you have a Constancia from the Ejido you are trusting the Ejido to give title to the person who's name is on the most recent Constancia issued for a property (if Mexican citizen) or to let them go to bank trust (if foreigner) when it becomes available. There are some buyers who just leave it at that and do not do any other documents.

When you use a Presta Nombre (borrowed name) to hold the property you are trusting that Presta Nombre to "sell" the property to you (you have actually already paid for the property) when they get title in their name which will allow you to transfer title to the property into bank trust in your name.

Some prefer to go to the local Notario and have them do one or more documents to protect them further weather that is on a Constancia in their name or a Presta Nombre.

1) Cesion de Derechos (transfer of rights) from the person who is selling to the person who is buying as a way to make the transfer more secure. Another paper they could use is a "promise to transfer title".

2) Contracto de Arrendamiento (lease agreement) where the buyer leases the land from the Presta Nombre or the Ejido. The agreement also contains a statement from the buyer stating who is the heir of the property if they should die. The heirs of the Presta Nombre are automatically bound by the agreement in place if the Presta Nombre should die.

3) Irrevocable power of Attorney gives the buyer all the rights to do whatever they would like to do with the property.

To sum it up your are always trusting someone either the Ejido or a Presta Nombre. There are some that have different schemes to bypass the fact that La Manzanilla is Ejido land, none of them have any validity, Ejido land is Ejido land is Ejido land.

Perhaps one thing in the favor of the buyer is that the Mexican government has a vested interest in seeing that there are no more stories of foreigners having their land taken away, it hurts not only investment in real estate all over Mexico but investment as a whole.

The advantage to "buying" now is that once title / bank trust is available prices will increase significantly and most of the really good properties will have already been taken. Some of the Ejido's who have gone through Procede have reported that prices doubled the first year and again the second year. Be aware of the risk involved and don't invest any more than you can afford to lose.

A couple of years ago I did a lot of research on foreigners buying real estate in Mexico. I was going to build a website dedicated solely to this subject but never quite got it finished. So as an alternative to that I am going to list some of the message board and news group postings and link to the articles I found during that research here on this page. Keep in mind that some of the information may be a couple of years old and may have changed since then.

I am also going to list some rough notes I had for each of the sections the original website was going to contain. I will not extensively edit these notes because if I do I will never get this project completed just like the last time I tried to finish it.

If you find other relevant articles or information on this topic of foreigners buying land in the restricted zone please email me with the link. Please put something relevant into the Subject box of the email or I won't open it.

I assume no responsibility for anything, I am just trying to help others and understand better myself.

May 11, 2003

To the best of my knowledge this is the way things are in La Manzanilla, Jalisco Mexico (the town I happen to live in) as of May 11 2003. I assume no responsibility for the accuracy or inaccuracy of this information or my personal opinions, take everything I say at your own risk.

Costa Alege consist of many different counties and there are usually more than one Ejido per county. Much of the Costa Alegre is currently Ejido land. It is illegal for any Ejido to sell land.

All of Costa Alegre is located in the restricted zone, it is against the constitution of Mexico for individual foreigners to own land in the restricted zone unless it is held in a bank trust. Parts of Costa Alegre are in the process of going through Procede (which is a process where the Government of Mexico regularizes the land) And parts of it have completed Procede and a bank trust is available.

The way the regularization process (Procede) works is they measure off each property and make sure that everything is in order as far as where the property lines are for the individual properties and the Ejido land as a whole. Once that process is complete the Mexicans will get title to their land and the foreigners will be able to get a Bank trust (fideicomiso) for the property that they can then legally "buy".

As it stands now in La Manzanilla no foreigner has gotten fideicomiso (Bank trust) because you can't get a Bank Trust until Procede has completed the regularization process. So technically no one owns land or real estate in La Manzanilla, not even the Mexicans who have lived here their entire lives. The Procede process is supposed to be completed very soon, but then again we have been hearing that for a couple of years.

Still, people "buy" land and real estate when they come to La Manzanilla. Some use presta nombre's (borrowed name) others get a 99 year lease and others just have their name on the paper the Ejido gives you when you "buy" here.

A couple years ago the Ejido of La Manzanilla called a town meeting for all of the foreigners living here. The meeting had several state officials, some local accountants and the ruling members of the Ejido (Ejiditario).

They said that it was basically a waste of time for everyone to be running around getting presta nombre's and doing the wills and power of attorney that usually go with the presta nombre method. They told us that we should trust the Ejido and put the property in our names, then when the Procede process was completed they would transfer the property to our name via fideicomiso for something like 5 pesos per square meter. Basically they were telling us to let the Ejido be our presta nombre.

I have not done an official survey of who is using what method of property "ownership" here in La Manzanilla. But I believe that most have the property in their name (I do) and are trusting the Ejido to live up to their word when the time comes to go legal. Each Ejido is a separate entity, the above information is about the Ejido of La Manzanilla. I have heard other stories about other Ejido's along the Costa Alegre that are not very favorable. Be very careful.

Presta nombre's are also known as "Straw men" and are illegal. If the Mexican government finds out that a foreigner owns property by using a Mexican as the pretend owner they see it as you trying to cheat them out of the fees you would pay if you did have fideicomiso and can take the property away as a penalty. But, since we (in La Manzanilla) currently can't get fideicomiso in La Manzanilla there is no real deception going on for those who have presta nombres since we can't get a bank trust even if we wanted to. Once Procede has finished and we can get fideicomiso it will be a whole different situation when it comes to presta nombres.

In the past there have been some horror stories of bad land deals in Mexico, some due to honest mistakes as to the legal ownership and some from mistakes that are more questionable.

I believe that the Mexican government is actively seeking foreign investment in Mexico and will do anything in its power to prevent any more horror stories or bad press in regards to foreign land ownership. But there is an election coming up and International relations are always in a state of flux so basically follow common sense and don't invest more than you can afford to lose.

A couple of years ago I did a lot of research on foreigners buying real estate in Mexico. I was going to build a website dedicated solely to this subject but never quite got it finished. So as an alternative to that I am going to list some of the message board and news group postings and link to the articles I found during that research here on this page. Keep in mind that some of the information may be a couple of years old and may have changed since then.

I am also going to list some rough notes I had for each of the sections the original website was going to contain. I will not extensively edit these notes because if I do I will never get this project completed just like the last time I tried to finish it.

If you find other relevant articles or information on this topic of foreigners buying land in the restricted zone please email me with the link. Please put something relevant into the Subject box of the email or I won't open it.

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