Most of the formally-built houses and condominiums that you see in Mexico today have legal title: the procedures to ‘legalize’ the land they occupy have already taken place, the paperwork is in order, and you can also take out mortgages and title insurance on these properties.
However, some types of property in Mexico are only available for purchase under Agrarian terms, and while this type of property transfer gives you possession, it does not offer legal title. This article explains the difference and explores the practicalities of purchasing land or property on Agrarian terms.
Not all land is titled land
After the 1910-1917 Revolution, most of Mexico’s lands were divided into Ejidos: large land parcels which were owned collectively by many different people —often groups of families— who had the right to work the land, usually for growing crops and raising livestock. Large swathes of Ejido land continue to exist today, and while there is a legal process to ‘convert’ Ejidos to legally-titled property, the process is involved and expensive. It’s usually undertaken by specialist companies on large parcels of land which are then sub-divided and sold to property developers for use in residential, commercial, and tourism developments.
If you’re seeking something off-the-beaten track in Mexico, you might find that certain properties you’re offered —some with very desirable/idyllically-located homes built on them— are not legally titled but instead classed as communal property. These types of properties are most usually situated in rural or semi-rural areas and might only be available for purchase under an Agrarian arrangement.
Practicalities of land possession vs land title
Many people purchase, pass quiet enjoyment of, and sell their right of possession of untitled properties without any trouble. However, if a property you fall in love with is only available on Agrarian terms, it’s as well to be aware of the practicalities and risks.
No legal title
Property designated to you under an Agrarian arrangement does not constitute legal title: your possession of it holds no force in Mexican civil law and any matters related to it will only be heard by the Agrarian Court (or Assembly) which adheres to its own code.
No title deed
When you purchase right to possession instead of title, you will not receive a Title Deed enforceable in a civil court and the property will not be registered on the national property register. Instead you receive two important documents:
- Cesion de Derechos (Transfer of Rights) and
- Constancia de Posesion (Record of Possession)
The first document records the previous holder(s) yield of their possession of the land, and the second records your current possession of the property. When you sell, you will yield possession in the same way that the previous holder yielded to you. This process is managed entirely through the local Comuneros, not the civil courts. The property might or might not be listed on the national agricultural land register.
No finance, collateral value, or title insurance
These properties can only be purchased with your own money: you cannot take out a mortgage on them; you cannot use them as collateral; and you cannot obtain title insurance for these properties.
Difficult or impossible to insure the property
Civil law requires you have to have legal title to something before you can insure it. It’s difficult (and may be impossible) insure untitled properties, because when you claim on a policy, the insurer will demand to see proof of legal title, especially for larger claims; thus any structural damage caused by earthquakes, floods, storms, etc. may not be insurable and you’ll need to pay building repair or reconstruction costs out-of-pocket.
If you hold land on agrarian terms, cross-check this issue with the insurance agent or company and if they say they’ll insure untitled property, obtain unambiguous pledges in writing to ensure that claims are not rejected after the fact due to an absence of legal title.
Transfer and sale on Agrarian terms only
You can transfer these properties to others through a private contract or bequeath transfer of them in your Will, although the beneficiaries will inherit the land on the same Agrarian terms as you did when you purchased it. When you sell the property, the buyer will need to agree to purchase on Agrarian terms; this significantly reduces the potential buyer pool as most people seek legal title, not a Record of Possession, when they buy property in Mexico.
Disputes cannot be settled in Mexican civil law courts
If a dispute arises regarding the property, you must abide by the code of the Agrarian Court (sometimes referred to as Asambleas, or Assemblies) to resolve it; you cannot seek any remedy through Mexican civil law courts.
Tips when purchasing Communal or Agrarian property in Mexico
Mexicans and foreign residents buy and sell property on agrarian terms every year and transactions can pass without hindrance provided that the terms are known and understood by the parties and that proper local protocols are adhered to. Here are some tips if you are intending to purchase land on agrarian terms.
Get a clear understanding of what you are buying
It’s not unheard of that buyers (Mexicans and foreigners) have been sold property given the impression that the ‘title’ sold was a legal title when in fact it is a Record of Possession under Agrarian terms. A good Notary Public will ensure the buyer is aware of the land’s legal situation before a sales transaction takes place.
Understand the protocols and documentation
When you purchase agrarian land, you normally receive a Cesion de Derechos (Transfer of Rights) document and a Constancia de Posesion (Record of Possession) document. Any other documentation (including ‘title deeds’) are unlikely to be recognized by agrarian courts/assemblies who adjudicate on all matters related to communal land transfers in their area. The procedures and protocols for land transfer are distinct to those under civil law, and buyers and sellers (or their Gestor, see below) often have to attend a meeting with local Comuneros at one of the regular assemblies to discuss their plans and intentions in regard to any land transfer.
Hiring a local ‘Gestor’
If you need advice about a property, or you need to ‘regularize’ the status of a property purchased on agrarian terms, you will probably be advised to hire a local Gestor—a manager / representative who specializes in these matters. That person will attend the local agrarian court (or assemblies) and petition issues on your behalf with the local community leaders.
A good realty agent will be open and transparent about the property’s legal status; however the ultimate responsibility lays with the buyer. If you are buying property in (semi)rural areas, a unique property, or a brand-new property, it’s important to be mindful about the legal status of the land the property is on (or the land you intend to build on). Choose a good Notary Public, and consider also hiring a lawyer specializing in land matters to make additional cross-checks if you harbor any doubts. Ask direct questions in regard to the property’s legal status and title.
Pay the local property tax
If you buy a property on agrarian terms, pay the Predial — local property tax — every year at the local Municipal office. If the previous owner has not been paying this, you may need to back-pay the tax to ‘regularize’ the property’s Predial records and bring payments up-to-date.
Some desirable properties don’t offer legal title
There are foreign residents in Mexico living in homes which are held on Agrarian terms, and aware of that fact: some properties which people really want to dwell in are simply not available through the civil property registry process and they take-on the property knowing the practicalities and risks of doing so.
For the majority of foreigners who buy land or property in Mexico, full legal title will be readily available to them.
However, if you’re a buyer who’s seeking something unusual —rural or remote, perhaps something unique situated in the Mexican countryside— you may have to weigh-up whether you value the experience of living on that property with a Record of Possession more highly than legal title, and take your decisions accordingly.
You can learn more about buying, selling, owning, and renting property in Mexico on our extensive guides to Mexican Real Estate here on Mexperience.
If you need assistance with a property transaction, we recommend you talk with an experienced Real Estate agent, and/or consult with a Notary Public in the State where the property is situated.
The information contained in this article is published in good faith and not intended to constitute personal, professional, legal, financial or investment advice, nor replace the services of professional advisors.
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