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 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 the restricted zone. Private property needs to be placed in a bank trust in order for a foreigner to own rights to real estate in México. This is how non-Mexicans can purchase property in Puerto Vallarta, all other Mexican beach destinations and the country’s frontiers.

“La Nueva Ley Agraria”, The New Farm Act (NFA) 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 of 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 “Regularización” process” which is transforming Ejido Land to Private Property”.

HISTORY
Our independence from Spain did not change the way most Mexicans lived and worked the land. In 1810, the principal 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”, 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 recreation for the community, and “Dahesa” was the land, also located outside the town, and used by farmers to feed their cattle. Both were for collective use and were not subject to privatization. The idea was adopted in México 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, they were 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 NFA and article 27 paragraph VII of the Mexican Constitution, Ejido is a Juridical person. 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 Ejido to “a corporation”. The Ejido supreme authority is the General Assembly; also like a corporation, there is a Board of Directors “Comisariado Ejidal” and a Vigilant Committee “Consejo de Vigilancia”.

The General assembly approves the Ejido By-Laws; accepts or authorizes new Ejido members, elects the board of directors and the Vigilant 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.

REGULARIZACIÓN
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.

CORETT VALLARTA has regulated almost 60% of the Ejido property in the Vallarta Area.

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.

Lic. Alejandro Niño Merino
Member of the Mexican Real Estate Professionals Association, AMPI-VALLARTA.

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The Latin Notary System was set up so that notaries could offer security and legal validity and function as legal advisers. The members of the Latin Notary System are lawyers who have been granted the power to act as qualified witnesses to the degree that when they exercise these powers the state grants legal certainty to all actions carried out in their presence. These actions are valid in any court or legal process. A notary’s primary mission is to avoid legal conflicts resulting in long and tedious legal proceedings (similar to preventive medicine specialists whose mission is try to avoid disease).

Latin notary services are in no way equivalent to the system established in the United States, Great Britain or Canada. Those systems are not set up to foresee or avoid future legal problems. The sole function of the English “Notary Public” is to certify that a certain “John Doe” signed a document. There is no profession in the United States or Canada that could be considered equivalent to the Latin-American Notary. The only conflict prevention assurance that can be obtained in those countries is through the signatures of each party’s lawyer on a specific document. The only function these two professions share is that they can certify a declaration and a signature. The American Notary carries no responsibility as to the content of a document, since they do not write them. They are not lawyers and so cannot function as legal advisors. A Notary Public in the U.S. or Canada may not have any legal background since their sole function is just to certify that the person appearing before them is in fact the person who signs the document.

The Latin Notary System is established in all or almost all continental European countries (Spain, France, Switzerland, Germany, Italy, Belgium, etc.), some Asian countries such as China, Japan and Singapore, all Latin American countries and the Province of Quebec in Canada. It is in the process of being accredited in certain American states such as Louisiana and Florida. There are a total of seventy-seven countries affiliated to the International Union of Notaries, based in Rome, Italy.

German Goldman S.
Principal Notary
NOTARIA DIEZ DEMARCACION UNO
Boulevard de Nayarit 70-Desps. 4 y 5. Villa 5
Nuevo Vallarta, B.B. Nay. MEXICO (63732)
Tels: 011 52 322 2970022

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The relevance inherent in the development of Mexican coastlines is undeniable. There have been huge investments impacting the country’s economy and the creation of thousands of jobs. These are just two of the most important effects produced by real estate developments, marinas, hotels, condominiums and luxury homes on the coast.

Therefore, it is essential that investors understand the laws that govern these coastal areas. They are essential, because the legal consequences stemming from such laws will have a direct impact on any real estate purchase or sale and will affect any piece of property from the planning phase onward. An informed legal outlook will allow the investor to exert his/her rights as foreseen by law, but a faulty outlook will produce sanctions, penalty fees, closures and even criminal lawsuits.

HOW IS THE MEXICAN COAST ORGANIZED AND WHAT ARE ITS MAIN ACTIVITIES?
There are 17 coastal states and 167 counties that border the sea. There is a population of about 15 million inhabitants. There are about 8,600 miles of Mexican coastline where developments, hotels, condominiums, villas, marinas are built and operating. Additionally, there are many more in the planning phase. Most of the activities are related to marine sports, especially in tourist ports. However, there are also areas where the maritime industry, like shrimp fisheries, flourish. There are also conservation areas to protect wild life.

SO, WHAT IS THE MARITIME FEDERAL ZONE?
This area is considered public domain owned by the federal government. It includes any islands and a 65-foot strip of passable, continuous, dry land. When beaches are present, this measurement begins at the highest registered high tide mark. In terms of rivers, the federal zone is measured from the mouth to 300 feet upriver. Lagoons (permanent water deposits connected to the ocean), and estuaries (bodies of water permanently fed by the sea) are also considered federal zones 20 meters from greatest reservoir registered or from the high tide mark.

The federal maritime zone is federal public domain because it is considered to be “within the area of national property which the government controls according to public law, so that its use and enjoyment can be regulated, and its conservation and rational use can be ensured” (according to Administrative Law by Rafael I. Martinez Morales, p.82). The idea of encompassing federal maritime zones within public domain property is to protect them and maintain the ecology. This idea is shared by Professors Delgadillo and Lucero in their Administrative Law Compendium, where they state that, “this idea adopts a conservationist position considering that the ecological aspect is not expressly recognized. However, all protectionist or guardianship of such persists through time within the legislation.” It seems like society, although largely unaware of such, has tried to preserve areas of historical importance by sheer self-conservation instinct.

Lic. Alejandro Flores Von Borstel
Basilio Badillo 417 Col. Emiliano Zapata
Tel. (322) 223 0708

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NAME-LENDERS AND THE SUPPOSEDLY IRREVOCABLE POWER-OF-ATTORNEY

I’m frequently uncovering powers of attorney given by national citizens in favor of foreigners so the proxies can buy or sell real estate. Thankfully, however, this practice has decreased substantially. Today’s commentary will focus on foreign proxies, although this topic is also applicable to national ones as well.

In the case of foreign proxies, the power of attorney is granted through “name-lenders”, Mexican people who are trusted enough by the foreigner to put their name on their property. This supposedly allows the foreigners to feel certain that their interests are protected properly. However, there is nothing farther from the truth, even though they have probably been advised by my fellow notaries (at least by the one that formalized the action) or by a real estate agent anxious to close a deal and get the commission. Truthfully, these fraudulent activities are instruments used to hide acts or contracts that may or may not be valid, to carry out the purchase or sale of real estate in restricted areas or areas protected by community property laws (ejidos), or actions that seek to avoid the fulfillment of fiscal responsibilities or formalize the action by way of a trust. Let me underline this concept: these actions are illegal and there are diverse penalties that will come to bear as a consequence to such.

Such power-of-attorney documents contain an almost holy legend that loosely translates to: “are of irrevocable nature since they are granted for the fulfillment of bilateral obligations or contracts”. What they don’t specify however, is the obligation or contract to which they refer, since if they did, the illicit nature of the granting of such a power would be obvious. So, since they are subject to that condition without explaining its nature, the irrevocability as such becomes very doubtful.

In my personal opinion, these powers can be revoked by the grantor whenever and however he/she wants it done. Let me explain:

The power-of-attorney contract necessarily implies a degree of trust between the grantor and the attorney and according to our legal codes, these powers can be revoked whenever the grantor so decides. As an exception to the rule, the irrevocable nature of such is only maintained when they are carried out to fulfill an obligation as stated above.

Aside from the danger represented by the revocable nature of these powers, I’ll be talking later on about the consequences to the proxy/purchasers in the case the “name-lender” should pass away or be subject to any sort of seizure of property due to debts.

So my advice is to think twice before using this “name-lender” concept that has become such an institution on the Nayarit and Jalisco coast.

German Goldman S.
Principal Notary
NOTARIA DIEZ DEMARCACION UNO
Boulevard de Nayarit 70-Desps. 4 y 5. Villa 5
Nuevo Vallarta, B.B. Nay. MEXICO (63732)
Tels: 011 52 322 2970022

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