The ABC of Real Estate Foreign Investment in Mexico – Part I

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TP LEGAL GROUP - The ABC of Real Estate

The ABC of Real Estate Foreign Investment in Mexico – Part I

By – Lic. Mauricio Tortolero.

In order that non-Mexican nationals, either individuals or entities, invest in real estate in Mexico, it is important to understand the nature of real estate and the laws that regulate same.

In this part of “The ABC of Real Estate Foreign Investment in Mexico”, we will discuss the most common forms in which real property is owned or held in Mexico.

Generally, nonpublic real property in Mexico falls into one of the following three categories:

   A. Private Property.

   B. Ejido Parcels.

   C. Communal Property.

The owners or possessors of each of such types of real property have different rights to use and transfer their ownership rights, as outlined below.

A. Private Property.

Private property is owned by individuals or legal entities for their own exploitation and use. Private property rights are conveyed, in most cases, through sales contracts or trust agreements.

Conveyances of the title of such private property are recorded with the Public Registry of Property and commerce in the corresponding jurisdiction.

Although there are some exceptions, such as subsoil rights, private property generally has no limitation regarding its domain nor transfer of the same.

B. Ejido  Parcels

Ejido property is land granted by the Mexican government to individuals for agricultural and ranching purposes.

Ejidos are structured as communities or townships. They have an internal administration and surveillance boards, respectively known as “Comisariado Ejidal” and “Comité de Vigilancia”.

Ejido property includes those that may exist either for the exclusive use of an individual beneficiary (the “Ejidatario”) in the form of ejido parcels, or for the mutual benefit of the ejido community in the form of ejido communal property.

All ejido parcels are inalienable, unattachable and are not subject to acquisition via prescription. Only through a lengthy disincorporation procedure may an ejido parcel be taken out of the ejido property regime and converted into private property.

All ejido parcels are recorded with the National Agrarian Registry. In the event of disincorporation from the ejido regime, the land must be recorded with the Public Registry of Property in the corresponding jurisdiction.

C. Communal Property

Communal property shares virtually all of the characteristics of ejido parcels, with the exception that there are no exclusive parcels for individual beneficiaries. On the contrary, all of the properties belong to the community for their mutual use and enjoyment.

Similar to ejido parcels, communal property is inalienable, unattachable and is not subject to acquisition via prescription. It also must be recorded with the National Agrarian Registry.

The disincorporation of communal property involves a lengthy procedure with a considerable number of formalities that need to be observed in order that it may be irrevocable.

In Part II of “The ABC of Real Estate Foreign Investment in Mexico,” we will discuss how real property is acquired in Mexico, the restrictions for acquiring same by foreign individuals or entities, and the general aspects of conveyance and title transfer.

In the event that you would like to receive further information relating to Real Estate Foreign Investment in Mexico, please contact one of the following attorneys:

Leobardo Tenorio-Malof   |   ltenorio@tplegal.net
Héctor Torres-López   |   htorres@tplegal.net
Alejandro Pedrín   |   apedrin@tplegal.net
Mauricio Tortolero   |   mtortolero@tplegal.net
Daniel Gancz-Kahan   |   dgancz@tplegal.net

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