Laws that came into effect in the 1990s made it possible for foreigners to secure the legal title to land and property in Mexico directly, or through a special type of trust if the property is situated near the coast or a land border.
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 why and explores the practicalities and risks of purchasing land or property on Agrarian terms.
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 major property developers for use in residential, commercial, and tourist developments.
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. The Notary Public you appoint plays a crucial role in making the necessary background checks and this is discussed in our guide to buying and selling property in Mexico.
Many countries including Mexico have some land and properties which do not exist on public property registers. They are usually lands which have been in the care of a single family over centuries, or which were sold or transferred using private contracts and have not since been formally registered.
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 Ejido or communal lands. These types of properties are most usually situated in rural or semi-rural areas and may only be available for purchase under an Agrarian arrangement.
Many people purchase, enjoy quiet enjoyment of, and sell these properties without 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:
- 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 which adheres to its own code
- When you purchase this type of property, you will not receive a legal title deed and the property will not appear in the national property register. Instead you receive two documents: Cesion de Derechos (Transfer of Rights) and Constancia de Posesion (Record of Possession); the property may or may not be listed on the national agricultural land register
- 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
- You cannot insure these properties, so any damage caused by earthquakes, floods, storms, etc. or e.g. damage caused by leaking pipes or loss caused by burglary, cannot be covered with a home insurance policy
- You can transfer these properties to others through a private contract and/or bequeath them in your Will, although the inheritors will receive the land on the same Agrarian terms as you did when you purchased it
- When you come to 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
- If a dispute arises regarding the property, you must abide by the code of the Agrarian Court to resolve it; you cannot seek any remedy through the Mexican civil law courts
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, although a good local realty agent and Notary Public will ensure the buyer is aware of the land’s legal situation before a sales transaction takes place.
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 registry process and they take-on the property knowing the practicalities and risks of doing so.
For the overwhelming 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 very 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.