Ejido & Prestanombre

Mexican Property Laws
Federal law in Mexico prohibits the owning of properties within 100 kms of any national border or 50 kms of the coast by foreigners. However, there are two methods by which a non-national of Mexico may be recognized as the legal possessor--albeit not "owner"--of the land:
  1. Bank Trust (Fidecomiso)
  2. Borrowed name (Prestanombre)
Prior to the mid-1930's, huge tracts of land in Mexico were owned by a very few individuals. Between  1934 and 1940, President Lázaro Cárdenas enacted sweeping land reform laws that converted large portions of these privately-owned lands to communal properties that were administered under a system called ejido. The ejido was (and is) responsible for the land distribution, tax collection, transfers of property rights, road construction, utilities installation and maintenance, and all legal matters related to the properties under its jurisdiction. Lands that were not part of the ejido system fell under the control of CORET, the federal agency charged with the same responsibilities in adminstering urban tracts or PRESEDE, which adminsters agricultural lands.

The major difference between the systems--Ejido, CORET and PROSEDE--is that while income produced by taxes and legal fees received from ejido lands remain within the ejido and the local community, CORET land generates fees that go into the national coffers and those of PROSEDE are returned to the municipality. It is important to know which agency administers the land you are planning to purchase because that will determine which method you will use to legally buy the land. Property administered by the ejido may ONLY be purchased using the Prestanombre method; it cannot be purchased through a bank trust. Property administered by CORET or PROSEDE is most often purchased through a Bank Trust.

Headquarters for the ejido charged with administering lands in Lo de Marcos is located in Sayulita; CORET administrative offices are in Tepic (tax payments are made in Bucerías); PROSEDE administrative offices are located in Compostela.
Property Purchase
If using a prestanombre, you should be fully aware that, by law, the name of the prestanombre will appear on all legal documents relating to your purchase. This means, in effect, that the prestanombre, NOT you the purchaser, is the registered legal owner of the property. In order to protect your interests in the property you have purchased, you will want to create a convenio, a legal document that assigns you all rights and responsibilities relating to the property. A standard form is available from and will be validated by the ejido offices for a fee of approximately US $75 (effective March, 2005). THIS IS A VERY IMPORTANT DOCUMENT. Be aware that while you may reside on the property, order construction done, contract services and/or sell the property, it may NOT be passed on to a non-Mexican national as an inheritance. Be sure to include a clause in the document that allows you the right to name another prestanombre in the case of death of the individual listed as the legal owner, otherwise "your" property will become a part of the estate of the prestanombre.

You may expect to incur the following ESTIMATED costs (all in US dollars) when purchasing property administered by the Ejido. For illustration purposes, a purchase price of $100,000 and a property of 600 m2 are assumed:

Purchase price: $100,000
Prestanombre fee: $300a
Convenio Document fee: $75
Title Document fee: $70
Title Transfer fee: $3,000
Yearly Land Use taxes (Derecho de piso): $50
Water & Electricity deposits: $150
Total fees: $3,595 (3%-5% of purchase price)

aThe prestanombre is normally paid a $200-$300 yearly fee .
If buying CORET or PROSEDE land through a Fidecomiso, legal fees, taxes and yearly maintenance will be higher:

Purchase price: $100,000
Bank and Notary fees: $5,000b
Title Transfer fee: $3,000
Yearly Land Use taxes (Predial): $200
Water & Electricity deposits: $150
Total fees: $6,850 (6%-8% of purchase price)

bBanks charge a $300-$500 yearly maintenance fee.

A government agency calculated in 1995, that of the 1973 million hectares that make up the Mexican Territory, 48.2% was still Ejido and/or community land; 34.2% was private property, 1.7% were colonies and 15.9% was diverse land, i.e. protected areas, parks, federal zone, etc.
Within the Bay of Banderas, (from Cabo Corrientes to Punta de Mita) we still have a great percentage of this type of land possession. New developments are being built on regularized Ejido land and many more hotels, houses, condominiums and even golf courses are being planned for development. Part of the bay economy is 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.

  • Foreigners cannot acquire rights to Ejido land
  • As you may know, due to Article 27 of the Mexican Constitution, a foreigner cannot acquire direct ownership of land in a restricted zone. Private property needs to be placed in a bank trust in order for a foreigner to own rights to real estate in Mexico. This is how non-Mexicans can purchase property in Puerto Vallarta, in other Mexican beach destinations and on the countryís borders. "La Nueva Ley Agraria", The New Farm Act (NLA) of 1992, establishes that the "ejidatarios" (Ejido members) 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. The act does establish that the Ejido community can participate, in the form of a formal mercantile corporation, in the development of projects that will benefit the community.
    In my opinion, it is encouraging that the government has implemented several programs to transform Ejido Land to private property, especially since many Ejido sales -to foreigners- are made on a daily basis, most commonly in the southern and northern parts of the Bay. Times have changed and we can no longer have absurd restrictions such as the "Restricted Zone" which only prevents investment from coming into the country. Later on I will describe the "Regularization process" which is transforming Ejido Land to Private Property.

  • Our independence from Spain did not change the way most Mexicans lived and worked the land. In 1810, the main financial promoters of independence were a few wealthy Mexican families who conditioned the support for such a movement to keeping most of their rights, including large extensions of land. This event led to the creation of "latifundios" (large extensions of land owned by one person). This situation was one of the factors that later led to the "Revolución", the Civil War of 1910-1919. One Revolution motto was "Tierra y Libertad", Land and Freedom. According to Dr. Isaias Rivera, the concept of Ejido comes from Spain, where the "Spanish Ejido" was the land, outside the town, used for the recreation of the community, and "Dahesa" was the land, also located outside the town, used by farmers to feed their cattle. Both were for collective usage and were not subject to privatization. The idea was adopted in Mexico by President Alvaro Obregon (1920-1924) who supported this concept in his Ley de Ejidos, the Ejido Act.
    The first Mexican Farm Act was the "Ley Agraria" of January 6th 1915. In 1934, the act was made a constitutional guarantee. The Act was reformed many times but in 1992, the government realized that what had worked eight decades ago was no longer feasible since the Ejido members were leasing their farmland, selling their properties, and signing contracts that were illegal. Those contracts created many legal problems for farmers. That year, Mexican legislators approved the "Nueva Ley Agraria", New Farm Act. According to the NLA and article 27 paragraph VII of the Mexican Constitution, an Ejido is a legal entity. It is set up so that it can represent itself (Board) and has its own patrimony (Land).
    In order to make it somewhat more understandable, I will compare an Ejido to a corporation. The Ejido supreme authority is the General Assembly. Then, as in a corporation, there is a Board of Directors, a "Comisariado Ejidal" and a Vigilance Committee "Consejo de Vigilancia". The General Assembly approves the Ejido Bylaws; accepts or authorizes new Ejido members and elects the Board of Directors and the Vigilance Committee, approves business contracts with third parties, authorizes termination of the Ejido regime, etc. The Board of Directors is in charge of administration of the Ejido and also represents the Community in the judicial and fee-collecting matters, inter alia.

    According to the new act, the Ejido land is divided as follows:

    I.- Land for human settlement.
    II.- Common land.
    III.- Farmland.

    The land for human settlement is the most important part of the Ejido community. It is the demographic concentration of the community homes, streets, parks, public services, etc. It also includes schools, and land for sports, industry and cultural activities.
    The General Ejido Assembly, with the cooperation of the municipal authorities and following the norms established by the Secretary of development and public services, will define, locate, divide and record the land for human settlement.
    When an Ejido is formed, its members will have the right to acquire for free, a Solar, which is a lot within the Ejido land that is or can be private property. The size of the solar will be established by the Ejido General Assembly. The National Farm Registry Registro Nacional Agrario will provide title for the solares. The owners can sell, rent, lease, donate or dispose of their solares almost without any limitations.
    The Ejido community and Ejido members can make contracts providing for the use of the common land or farmland, respectively. The contracts will last no longer than 30 years. The use of the land -not the land- can even be used as a collateral for bank loans.
    When an Ejido community is illegally dispossessed of its land or water (rivers, lakes, etc) it can appeal to the Procuraduria Agraria or Tribunal Agrario Court for farmers, to reclaim what was illegally taken. Common Land is also protected against liens, illegal sales, and illegal acquisitions. The general assembly can provide the use of the land and resources (water, wood, minerals) to associations and corporations, when it is beneficial to most Ejido members or the entire community.
    The Ejidatarios, as I mentioned before, can provide the use of their farmland to other people. They can even sell their Ejido rights to other members or avecindados.
    The sales contract must be in writing and signed in front of 2 witness. A notice shall be sent to the National Farm Registry, which will issue the new Ejido certificates. 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.
    1.- PROCEDE (Programa de Certificación de Derechos Ejidales y Titulación de Solares) is described in the new farm law of 1992. It's purpose is to prevent irregular settlements in Ejido Land. Article 47 of the regulation of the New Farm Act states that the Ejido General Assembly is responsible for defining the use of the common land, authorize the change of the farm land to settlement land and authorize the Ejido members to acquire full ownership of their farm land.
    PROCEDE involves the work of approximately 6 Secretariats. It is approximately a 10 step program.
    2.- CORETT. In 1993, the government proposed a second plan called CORETT, (Comisión para la Regularización de la Tenecia de la Tierra), Committee for the transformation of Ejido land to Private Property. Since the plan seemed to work, it was fully implemented in 1995. The purpose of this plan is to regulate all the illegal settlements made before the new law. This applies only to settlement and farmland within or adjacent to a city. The plan provides full ownership of the land to a person.

    The basic duties of CORETT are:

    1.- Regulate the ownership of the land in the Ejido town.
    2.- Promote the incorporation of the regulated land to the cities.
    3.- Issue public deed and ownership titles.
    4.- Prepare the expropriation request of the Ejido and communal property, etc.,

    They will always hear any recommendations or opinions given by the town authorities.
    CORETT will request the following documents when an Ejido land possessor wants to regulate his property:

    1.- Original of Ejido rights certificate,
    2.- Certified copy of birth certificate.
    3.- Electricity, water or property tax payment receipt, and
    4.- Copy of the Ejido description of the lot.

    In order for CORETT to start working on the regulation of the land, a formal request has to be made by the Ejido board of directors, such request needs to be approved by the General Ejido Assembly following the rules in article 24 of the Farm Act. CORETT will study the request to regulate the land and propose how the regulation can be accomplished. If the proposed request is accepted, another Secretariat will then request expropriation of the Ejido Land and make a symbolic sale to the actual possessors.
    At this time, CORETT can issue a deed to a lot of no more than 5000 square meters. The minimum size of a lot is 90 square meters. If the lot is larger or smaller than the above, the city should authorize such deed.
    This is a general and informative background as to how the Ejido is organized. My 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.·