Acta de Constitutiva - Ejido Land

Acta de Constitutiva - Ejido Land

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Hello,
Can anyone direct me towards info about the Acta de Constitutiva? According to
my Mex National friend, this allows ejido land to be converted to private property.
He has done this in Jalisco - supposedly. My legalese spanish isn't good enough
to understand everything. Also I would be interested in doing this in Hidalgo.
Any help would be appreciated.

Sincerely, Tony

"We don't see things as they are, we see things as we are."

Aug 22, 2008, 3:30 AM

Post #2 of 35 (2055 views)

Re: [tony] Acta de Constitutiva - Ejido Land

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It takes an "Acta" alright; an "Acta" God!

The process kicks off with a solicitation on the part of the Ejido property owner and an "Asamblea" or meeting of the local Ejido members which formalizes their intent to allow the land to be privatized. There is generally a honoraria of around 5% made to the Ejido for the permission granted. There are then multiple, multiple layers of steps involved. The land must first be surveyed, then be issued a escritura or title at the national level (RAN), and then come back for registration at the municipal level. Following all of this there is a constitutional hurdle requiring "dominio pleno", a 30 day first right-of-refusal to the property for all Ejido members, and also a sign-off from the municipality stating that there are no public works project planned that might involve the property. Once all of this is done, payment of per hectaria land fees to the Ejido generally around another 3-5% of the value is made and you're in the clear.

If this all sounds do-able, consider that most Ejido land is property that has changed hands multiple times over the decades, often over cervazas and in exchange for a horse or old pickup truck. Anyone that makes a countervailing claim to the property or disputes the lot lines can totally bullocks up one's best laid plans to privatize. Also consider that many of the bureaucrats handling the paper along the way are likely to want a tip for their good services, and, once they're paid, they're likely to misplace the papers until another tip helps jog their memory.

I've heard it said having kids is like getting pecked to death by ducks. Privavtizing land in mexico doesn't necessarily take as long, but it is much more painful. I would count on 2 years minimum to run the gauntlet.

Caveat Emptor & Buena Suerte
MexDog

Rolly

Aug 22, 2008, 6:38 AM

Post #3 of 35 (2044 views)

Re: [DanGair] Acta de Constitutiva - Ejido Land

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Dan has correctly listed the steps. But the process is not always slow and painful. Here in Lerdo my friend Adriana has privatized some of her holdings in Ejido Lerdo and is selling the lots. It was a simple and quick process for her. However, as Dan points out, in some places it is not that easy.

You will certainly want a good lawyer by your side.

Rolly Pirate

E-visit me http://Rollybrook.com
This is a good time to be living in Mexico.
A clean house is the sign of a broken computer.

Aug 22, 2008, 6:53 AM

Post #4 of 35 (2040 views)

Re: [Rolly] Acta de Constitutiva - Ejido Land

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The general reality probably falls somewhere in between the two experiences. I've heard that some ejiditarios band together and privatize their parcelas en masse, and certainly a well connected lawyer can effectively grease the skids.
MexDog

MichaelEL

Oct 8, 2008, 9:15 AM

Post #5 of 35 (1920 views)

Re: [DanGair] Acta de Constitutiva - Ejido Land

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Hey Dan,
(I said "hey" because we are in Turku, Finland and here, "hey" means hello!)

It took us a mere 6 months. With the help of our attorney (who we have recommended to you) we wrote the purchase contract requiring the seller to do all the work. We gave a 10% refundable (?) deposit, with additional payments only as hurdles were cleared. We are ready now to transfer, but financial chaos in the US means we have to slow the payment schedule, even though the sellers are ready to transfer. At the same time he subdivided our piece, he ran a couple of other parcels through the process so he now has other land ready to sell.

We count on our Mexican cpa and attorney to keep us on track. So far, so good.

Hi to Holly.

Michael

BajaGringo

Oct 9, 2008, 9:04 PM

Post #6 of 35 (1829 views)

Re: [DanGair] Acta de Constitutiva - Ejido Land

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I have found that it varies from Ejido to Ejido and if you do a little homework you can quickly find out which ones are going to make it easier or harder. What I saw an attorney do recently was structure the payment schedule to the successful title bureaucracy process and they got it done in just a few months.

Money talks...

Our House Building Project in Mexico...
Lomas de San Martin
Loving Life on the Baja Peninsula

tony

Oct 16, 2008, 7:27 PM

Post #7 of 35 (1749 views)

Re: [BajaGringo] Acta de Constitutiva - Ejido Land

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I want to drop a short "Thanks All" for the posts. I hope
a few more people can keep this thread going.

Tony

"We don't see things as they are, we see things as we are."

Carron

Oct 17, 2008, 8:28 AM

Post #8 of 35 (1721 views)

Re: [tony] Acta de Constitutiva - Ejido Land

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When we moved to Chiapas over ten years ago, we bought a home in a Zoque Indian village that had at one time been ejido property. Our village, however, had begun selling land privately around 1978 and we therefore were able to buy from an individual owner without the problems of being "first" to test the waters of privitization.

Part of the boundary survey and title check (which are both among the things handled for you by your notario publico) requires in depth interviews with the neighbors. They indicate where your property joins theirs and give testimony as to who has owned it over the past generations. The "testigo" (witness) or use of verbal input from sworn witnesses is an integral part of Mexican legal practice. Two sworn witnesses in agreement with each other are usually believed as fact and become a part of the official record.

Our village there was already surveyed into similarly sized large tracts, usually fenced, and it was easy to tell just by looking pretty accurately where property boundaries were. The village we live near here in northern Coahuila is also ejido land, but there is no demarcation of private areas. There are no side streets and the perhaps two dozen small houses are just scattered about in close proximity. There is a small plaza area, a school with a large yard, and room to drive a pick-up between the houses, but everybody lives everywhere outside. I can't imagine anyone from the United States understanding how people can possibly live this way! Obviously none of this land is available for purchase.

Even under the best circumstances, buying what once was ejido land can be risky. (We were so innocent we didn't realize this when we made our purchase. How lucky we were!) Even Mexican citizens get caught up in financial dramas. A friend I taught with in Chiapas bought a lovely piece of land in another ejido village in the cool mountains up above the city, an easy commute from the university where we taught. He paid $5000 US before the deal fell through and he couldn't get his money back. Nor could he sell the land, since he really didn't own it. And he was a local.

Be very, very careful and listen to your notario. He will do the actual real estate deal, not your CPA.

Oct 17, 2008, 4:29 PM

Post #9 of 35 (1693 views)

Re: [BajaGringo] Acta de Constitutiva - Ejido Land

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I agree that the process can vary greatly from ejido to ejido. While I'm far from being an expert, I've been learning that each ejido has it's own distinct personality. Where some can be friendly and accommodating, others are quarrelsome, if not downright dangerous. Sayulita is one boomtown where privatization seems to be going along smoothly, while Talum is an example of a good place to get burnt.

Land privatization also varies greatly by what's come before. Things will likely go well in an ejido that is accustomed to the process or near a city as opposed to one in the boonies where it is all new. It would definitely behoove anyone considering buying ejido property to get to know their prospective neighbors and the general lay of the land before jumping in head first.

The arrangement that you heard about, tying payments to achieving steps in the process sounds like a pretty good plan, although by no means foolproof. There are multiple steps at the local, state, and federal levels, and any of these can get bollucks'ed up. Also always bear in mind that one of the final steps, "Derecho Del Tanto" is mandated by the constitution and offers first right of refusal for the final transfer of title out of the ejido to the ejiditarios themselves. While most ejiditarios are far more interested in selling than buying, having them exorcize the option is always a possibility. There is also a requirement for the municpio to sign off that there are no planned public works projects that might involve the property, otherwise the municipio also has a first right of refusal. I'm not sure how strictly this is adhered to, but our Notario required the sign-off.

All said and done, its definitely a good idea to get a well vetted lawyer and limit your exposure as much as possible throughout the process. (Of course finding a reliable lawyer is probably good fodder for a whole 'nother thread). Nothing is guaranteed until you have a deed registered in your own name, or, if you're in the restricted zone, in the name of your fideicomiso bank trust or corporation, at which point title insurance is readily available.
MexDog

Oct 23, 2008, 11:52 AM

Post #10 of 35 (1600 views)

Re: [DanGair] Acta de Constitutiva - Ejido Land

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Regarding your comment about Sayulita...there has been a disturbing development here. When I regularized and got my fideicomiso a few years ago, the cost to regularize was $6.00 per sq.meter. The fee has skyrocketed to $88.00 per sq. meter now! Local homeowners are up in arms about this and are trying to negotiate with the ejido and Corret. Another thing that people should know is that it is far cheaper to regularize lots than land with a house on it. Capital gains is paid on the assessed value, obviously a house raises the assessed value greatly. I know a good number of people who dragged their feet on this--folks who bought before I did--and are now regretting it.

Oct 23, 2008, 1:08 PM

Post #11 of 35 (1584 views)

Re: [jl1] Acta de Constitutiva - Ejido Land

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Sorry to hear that about Sayulita.

Does the term "regularized" include issuance of a title from RAN to the ejiditario owner, or is it just a recorded survey?

As for the capital gains, the first transfer out of eJido is generally exempt so it shouldn't be an issue. I don't think it matters whether or not there's a house involved.
MexDog

Oct 23, 2008, 1:48 PM

Post #12 of 35 (1574 views)

Re: [DanGair] Acta de Constitutiva - Ejido Land

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There is a simple document issued after regularization, which by the way, requires a new survey by Corett. I left out an important piece of information: capital gains is only paid if and when the property is placed into a bank trust. At that time, the survey goes onto the national registry in Mexico City. We often see property listed for sale as "ready for a bank trust". This is misleading to potential buyers, who often assume that the property is "clear" and that they should not expect any more fees. Regularized land is technically still ejido land and still requires a presta nombre. It has been understood by many that the ejido-level fees were fairly minimal and that the major fees come when the bank trust is created. This recent increase to $88.00 per sq mt., BEFORE any trust fees, or capital gains, is what has people in a dither. There is an attorney named David Connell, a dual citizen, who is a recognized expert in the area and has a lot of clout at every level. My wife and I had a very difficult problem caused by a trusted presta nombre of the previous owner of a large tract of land. After more than 10 years, the presta nombre decided to just claim the land as her own. Our lot, though previously separated, was originally part of the much larger parcel, so we got caught up in it. David Connell's firm was able to straighten it out for us, after two other attorneys had failed. People need to understand that the presta nombre system is basically illegal and NOT RECOGNIZED by Mexican courts. It was created by attorneys and realtors as a vehicle to aid in the buying of ejido land. I personally know people who have successfully bought and sold ejido land without bothering to regularize. I also know others who have some very sad tales to tell. Anyone considering purchasing ejido land would be wise to download and read David Connell's articles on the subject.

Rolly

Oct 23, 2008, 2:10 PM

Post #13 of 35 (1566 views)

Re: [jl1] Acta de Constitutiva - Ejido Land

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Connell & Associates http://www.mexicolaw.com.mx/

Rolly Pirate

E-visit me http://Rollybrook.com
This is a good time to be living in Mexico.
A clean house is the sign of a broken computer.

(This post was edited by Rolly on Oct 23, 2008, 2:14 PM)

wendy devlin

Oct 23, 2008, 2:12 PM

Post #14 of 35 (1565 views)

Re: [tony] Acta de Constitutiva - Ejido Land

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Used to weigh in on this issue(from both personal experience and many 'stories' told to the gringa 'journalist in the making' .

Now 'retired' to other projects but maintaining an 'interest' in this issue over time.

Presta nombre within the "50 km of the coast", illegal.

Why is it still going on....

Have my theories...what are yours?

Oct 23, 2008, 3:16 PM

Post #15 of 35 (1551 views)

Re: [wendy devlin] Acta de Constitutiva - Ejido Land

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Thanks Rolly, for providing the link.

Oct 24, 2008, 4:51 AM

Post #16 of 35 (1507 views)

Re: [jl1] Acta de Constitutiva - Ejido Land

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Agreed that using a "Presta Nombre" to acquire property is a terrible idea. Not sure it's technically illegal (as in you could be fined or arrested?), but if it goes south for any number of reasons, you have absolutely no rights to the property.When we looked at property in Sayulita three years ago, the realtor told us that he could provide the Presta Nombre for something like $50 and that "everyone" bought land there this way. House of cards if you ask me.

Again, there are only four safe options for acquiring land in the restricted zone:

1) Fideicomiso bank trust. Requires a transfer of RAN issued escritura registered in the name of the bank. Cannot be used for large tracts of land.
2) Mexican corporation. Can be 100% foreign owned. Requires RAN issued escritura registered in the name of the corporation. Higher maintenance and accounting fees than a trust but allows for legally doing business with or at the property.
3) Marry a Mexican
4) Achieve Citizenship

Anything your sold or told other than this is a gamble.
MexDog

Oct 24, 2008, 12:56 PM

Post #17 of 35 (1472 views)

Re: [DanGair] Acta de Constitutiva - Ejido Land

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Not "illegal" in the sense of a crime; only that it has no legal standing in the courts. After we dumped our original presta nombre--who was one of those "helpful" Sayulita realtors--we asked a prominent local citizen to assume the role. She agreed, but asked us to please not let anyone know, as she was embarrassed about it. My wife and I have become unpopular among the local real estate community here because we will tell anyone who asks what the realities are. We will do whatever we can to spare innocent people the monetary pain and emotional suffering we had to endure. Screw the realtors.

As for the methods, there is another way, through Procede (sp?), which entails having land categorized as rural. I know that some property developers have taken that route here, with land that is just outside the village borders. Sayulita is lately beginning to shed the boomtown mentality that it had when I first arrived, as people become more educated about the process. I can't tell you how many people I know who bought property within a few days after arrival! We're not seeing too much of that anymore. Some of the big-hitters in real estate, such as Century 21 and Christie's, have opened offices here. Those folks are more into full disclosure, offering informative booklets and articles for people to read BEFORE they take the plunge. I am not often in favor of franchises usurping local business, but in this case it is not a bad thing.

Oct 24, 2008, 1:58 PM

Post #18 of 35 (1461 views)

Re: [jl1] Acta de Constitutiva - Ejido Land

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Further Clarification:

While there are many variations on parts of the process, particularly at the local level, there are also several absolutely fundamental steps required for a foreign national to safely, legally acquire ejido property in the restricted zone. These are:

1) The ejiditario seller must have an escritura (title) from the national governmental agency RAN issued in his or her name. This escritura is the first private title for the property and is issued only after the ejido membership has agreed to release the property for privatization (dominio pleno).

2) With an escritura in hand, the property can then be offered for sale outside of the ejido. This sale can only take place, however, after the ejido “mesa directiva” (board of directors) signs off that a 30 day first right-of-refusal (derecho del tanto) has been offered to all the ejiditarios. This step is a constitutional requirement.

3) With both these steps completed, a Notario can then approve the sale and transfer of the escritura title to either the purchaser’s fideicomiso bank trust or their corporation, but not to the foreign national purchaser directly. At this point one's investment is reasonably secure, though not yet insurable. Some Notarios will also require the municipio sign-off mentioned in my post previously in this thread.

4) Once the transfer is approved by the Notario, a final deed is registered at the state level (normally a two month process) and a new deed is issued in the name of the bank trust or corporation. Title insurance is available once this final deed has been issued.

I have researched this topic extensively and know of no safe or legal exceptions to the above steps other than marriage (safe?) or citizenship. I be curious to hear more about this "precede" you mentioned, although I highly doubt one could use it to accomplish any form of legal residential use.

Anyone taking the corporation route should also be aware that there are some restrictions on personal use. These restrictions are not insurmountable, but should be included in legal & accounting consultation when making plans for the property one is acquiring.
MexDog

Oct 24, 2008, 3:07 PM

Post #19 of 35 (1452 views)

Re: [DanGair] Acta de Constitutiva - Ejido Land

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Great post, DanGair. My wife is the family expert in this. The procede route was actually suggested to us by our attorney. I can do a little a digging and come up with more information. Not sure when. Thanks again for your posts. It is very important that this topic be examined and re-examined from time to time, so that each new wave of potential buyers remains apprised of it.

Oct 24, 2008, 3:14 PM

Post #20 of 35 (1448 views)

Re: [jl1] Acta de Constitutiva - Ejido Land

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I just googled Procede land purchase and a site came up with great info, including the "procede" process.

Oct 24, 2008, 7:07 PM

Post #21 of 35 (1421 views)

Re: [jl1] Acta de Constitutiva - Ejido Land

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Great. Thanks. What's the site?
MexDog

Oct 25, 2008, 5:22 AM

Post #22 of 35 (1402 views)

Re: [jl1] Acta de Constitutiva - Ejido Land

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I've been googling "procede" and apparently it is the basis of the "regularization" you mentioned, whereby ejido property is privatized en masse, rather than one parcela or lot at a time. That would take the place of each landowner soliciting dominio pleno, but the process and requirements for a gringo buying would otherwise stay the same. What I can't find anywhere is whether or not the first refusal for sale of regularized land has to be offered to ejiditarios as the constitution prescribes, or if that requirement is somehow waived.

The price you mentioned for regularized property in Sayulita is huge! That would definitely knock some of the stuffing out of the land rush there! Do you know if that money goes to the ejido (generally a good thing), or is it paid to the government for the process of surveying, settling land disputes, and more than likely, lining pockets?
MexDog

Oct 25, 2008, 12:19 PM

Post #23 of 35 (1373 views)

Re: [DanGair] Acta de Constitutiva - Ejido Land

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The money goes to the Ejido. But there is a growing consensus among Mexican people who grew up here to hold onto their property. The ejiditarios have watched land grow astronomically in value. Some local residents have certainly benefited financially, but the reality that is beginning to sink in is that the land itself is not just a commodity, but an important part of the village culture. ( My property is the last lot at the very edge of the village boundaries, bordering jungle, away from any residential streets or inhabitants). We are now seeing the "tear-down" phenomenon begin. People are asking $300,000.00 for a virtual chicken coop because of land values! One of the many ironies is that certain realtors in town hold "presta nombre" papers on dozens of properties. In addition to the crazy increase in fees there is another sticking point: a presta nombre can only regularize ONE property per year. Many of the gringos who "own" ejido land are under the impression that they can somehow put pressure on the ejido to lower the proposed fees, if they act as a group. The problem with that is that their Mexican presta nombres are the ones who would have to do the petitioning, and they have no incentive to do so--unless they have a financial arrangement with the gringo. So, the house of cards is beginning to fall. The pitch from the realtors who sold the land was that if the gringo held a POA over the presta nombre they could used that to ensure that they controlled the property. Now the gringos are finding out that the POA's are not worth the paper they are printed on. My take is, what will finally happen is the cost of regularization will be factored into the negotiations between buyers and sellers. This of course will raise the value of properties in a bank trust, and lower those that are not. As I said, we have many friends who are caught up in this and feel bad for them. I'm just glad that we saw the handwriting on the wall and took the steps we did years ago, before we started building. Greed is rearing it's ugly head on all sides. The Ejido wants theirs. The realtors want to keep on reaping their ridiculously high fees for doing nothing but filling out a few forms. The presta nombres are now beginning to ask for 10% or more of the selling price when the land is resold. And finally, the "owners" are frantic over the possibility of artificially inflated values going down. SOUND FAMILIAR?

Oct 25, 2008, 3:32 PM

Post #24 of 35 (1350 views)

Re: [jl1] Acta de Constitutiva - Ejido Land

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Yup. Sounds familiar alright. Fascinating though. Thanks.

I'm also curious, are the ejiditarios still supposed to have first right-of-refusal for the first sale of regularized property out of the ejido? Or does Procede/regularization process somehow provide a constitutional loophole for that?
MexDog

jerezano

Oct 25, 2008, 7:08 PM

Post #25 of 35 (1326 views)