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What is Ejido Property

In the 1800's the main financial promoters of independence in Mexico were a few wealthy families with large parcels of land or "Latifundios". The Mexican Revolution (Civil War of 1910-1919) was a direct result of the efforts of these families to retain their land ownership rights.

In 1920 the concept of the Ejido was adopted by Mexican President Alvaro Obregon, in the form of the "Ley de Ejidos" (Ejido Act). The government ceded land to local inhabitants, as a community, mostly of Indian origin, for use as farmland. This was initiated during a period when vast areas of Mexico were sparsely populated and there was no concept of individual land ownership. The new farming community, or "Ejido" could decide whether they wanted to hold all of the land public for the use of every member of the community as a collective; or it could decide whether they wanted to permanently distribute it individually to its members. In many cases, some land was apportioned, and some held as public. Today, ejidos still manage much of the collective ownership of land in Mexico. The collective elects administrators who function much as a mayor and his staff do in small towns in the U.S. In 1934, the Ejido act was made part of the constitution and has been amended many times over the preceding decades.

Prior to 1992 Ejido land was owned entirely by the Mexican government who eventually recognized problems with the whole concept as Ejido members illegally leased or sold their farmland. Those contracts created many legal problems for farmers and therefore in 1992 Mexican legislators approved the "Nueva Ley Agraria", the New Farm Act, designating individual Ejidos as legal entities. An Ejido (farming community) was then made able to represent itself by an elected board of members and given its own legal rights to its property.

The Ejido supreme authority is the General Assembly who approves Ejido Bylaws, accepts or authorizes new Ejido members, approves business contracts with third parties, authorizes termination of the Ejido regime, etc. The "Comisariado Ejidal" (Board of Directors elected by the General assembly) is in charge of the administration of the Ejido and also represents the Community in the judicial and fee-collecting matters. 

There are 3 types of Ejido property; land for human settlement, common land and farmland. Human settlement property is the most important part of the Ejido community. It is the demographic concentration of homes, streets, parks, public services, etc and also includes schools, land for recreation, industry and cultural activities. This type of Ejido property of course is of the most interest to foreign investors. The individual Ejido general assembly, with the cooperation of municipal authorities define, locate, divide and record the land for human settlement. When an Ejido is formed, its members have the right to become an "Ejidatario" (Ejido Landowner) by acquiring for free, a "Solar", which is a lot within the Ejido land. The size of the solar is established by the Ejido General Assembly.

Much of the Mexican economy is now flourishing thanks to the regulation changes made to the Farm Act which allows for the sale of Ejido Rights and/or transformation from Ejido Land to private property. "La Nueva Ley Agraria", The New Farm Act (NLA) of 1992, established that the "ejidatarios" (Ejido landowners) can sell their land rights to other members or to other individuals already living in the Ejido community "avecindados", but they must be Mexicans. In other words, the Farm Act does not allow foreigners or even companies to acquire rights to Ejido property.

Ejidatarios can provide the use of their farmland to other people, or sell their Ejido rights to other members or "avecindados". These owners can sell, rent, lease, donate or dispose of their solares almost without any limitations. If a Mexican national purchases Ejido land, the transfer of property is recorded by the the Ejido, not by the government in Mexico City. A sales contract must be in writing and signed in front of 2 witness. A notice shall be sent to the National Farm Registry and the Ejido board of directors shall sign and register the transaction. The spouse and children of the Ejido member are entitled to a portion of the benefits, and if they are not legally notified of the sale, the sales contract could be annulled. The Ejido General Assembly, in order to avoid irregular occupation of the land shall define a settlement plan.

There are two ways to make Ejido land Private property, "Procede" and "Corett". Procede stands for "Programa de Certificación de Derechos Ejidales y Titulación de Solares" which basically translates to "the system of giving title to Ejidal property". Its purpose is to prevent irregular settlements in Ejido Land, by making it legal for the landowner (Ejidatario). In 1993, the government proposed a second plan called "Corett" (Comisión para la Regularización de la Tenecia de la Tierra), which is the Committee for the transformation of Ejido land to Private Property. The purpose of this plan is to regulate all the illegal settlements made before the new law. The basic duties of both plans are to: 1) regulate the ownership of the land in the Ejido town; 2) promote the incorporation of the regulated land in to its municipality; 3) issue public deed and ownership titles to each individual owner; 4) prepare the expropriation request of the Ejido and communal property, etc. 

Buying Ejido Property

A foreigner can buy Ejido land, but the sale requires the agreement of the whole community that "own" it. The process for buying Ejido property as a non-Ejido member or foreigner can be time consuming and must be pursued with diligence, patience and expertise. Often the process can be accomplished in months, but sometimes it can take several years.

Until an Ejido has been transferred to private ownership, with title, there is no 100% safe way to buy Ejido property as a foreigner, although many do purchase this type of land. A foreigner needs to weigh the risks of potential problems on one side, with the significantly lower land prices on the other before deciding to purchase such property. In most cases, these types of land purchases happen without incident, but one has to understand that the potential is there. As in any type of land purchase transaction in Mexico, there will always be an element of trust involved. Like buying stocks, one should not risk investing their life's savings, investing only what they would be willing to lose in the event of issues. Also, like investment in stocks, many people have made millions of dollars by purchasing Ejido property for little money, then selling it for many times what they paid after it has gone through Procede, the transfership from Ejido to public title ownership. 

Since Ejido land is much less expensive than regularized land, many foreigners have elected to take the risk and buy Ejido property, however, they do so recognizing that they have absolutely no rights, until they are able to legally obtain a fidecomiso (bank trust) of their own. A foreigner purchases Ejido property by placing the Ejido title to the land in the name of a trusted friend or relative who is Mexican, called a "Prestanombre" (translation: borrowed name), who then becomes a member of the Ejido, relying on the hope that when, or if, the land is regularized, ownership can be converted to a fideicomiso (bank trust) in their own name. Trust in their "prestanombre" is a must as that person ultimately has control over the property in the mean time and the foreign "owner" has no recourse whatsoever in the Mexican legal system.

In the past, foreigners have purchased beachfront property from fishermen for peanuts, erected houses for little more, and then find that the fisherman's long-lost cousin surfaces many years later to claim that the land is his because it initially belonged to a common grandfather. In cases such as these, which have gone all the way to the Mexican Supreme Court, foreigners have been thrown off their land and treated as squatters. This happened in Ensenada several years ago on beachfront property that had come to be worth hundreds of thousands of U.S. dollars. Those Americans were not swindled, however. They knew they were not allowed to own that land; but they hoped that possession would be 99/10ths of the law. They took a risk and paid the price.

Once an offer has been made to an Ejido landowner (Ejiditario) the spouse and or heirs of the ejiditario will have the first right of refusal to purchase at the offering price. The second right of refusal is held by the Ejido membership as a community. They must approve the sale by a 75% majority vote in their regularly held meetings (Asambleas). If they vote to accept the sale, the written offer is posted for 30 days in the Ejido office. During these 30 days, any Ejido member can exercise their right of purchasing the property at the proposed price, having the third right of refusal. If none of these rights of refusal result in a sale, anyone can purchase the land from the Ejiditario.

A foreign purchaser of Ejido property will receive two certified copies of the recession of rights to the Prestanombre, which will have been notarized and signed by the Ejido President, Treasurer and two witnesses. It is further recommended that the purchaser have a legal document made up through a Notario between themselves and their Prestanombre, who will agree to give the purchaser recession of his rights, the moment the Ejido title completes Procede and becomes title able. This will further strengthen the bond between the buyer and Prestanombre and lesson the amount of risk involved in the sale. 

This is a general and informative background as to how the Ejido came about, what it is, how it is organized and how to purchase this type of land. Our purpose is to give all people who have an interest in Ejido Land a wider understanding of this unique, important and complex real estate regime.

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