BajaNomad - Real Estate Contracts with Ejidos

Real Estate Contracts with Ejidos

BigWooo - 5-25-2009 at 11:06 AM

After reading the Bajanuts story I’d like to relay some information we’ve learned about real estate contracts with Ejido land:

When an Ejido decides to parcel out land to sell, there is a federal process that takes a very long time before the individual Ejido members receive their Escrituras (Titles). Often a buyer will enter into some form of a verbal, or written contract to purchase the property before this process has been completed, and the seller is in possession of the escritura.

Here’s the problem: The seller cannot legally enter into a contract to sell property they do not own. Until they have their escritura in hand, the land technically belongs to the federal government. The Ejido members have no legal right to enter into contracts to sell federal land. At this point, what you are really doing is entering into a non-binding agreement. Any deposits made are done trusting the seller will follow through. If for some reason he/she doesn’t, you have no recourse. That said, many sales are completed this way without incident.

If you want to enter into a purchase contract, the following steps must be taken in order for it to be valid:

1. The seller must have legitimate title before entering into a contract (Have a title insurance company do a title search)
2. The sales contract must be notarized and signed by all parties (both husband and wife if married) in front of the notario.
3. If you are not a Mexican citizen, you must prove to the notary you are in the country legally. Your immigration status at the time of signing must be documented on the contract.
4. The contract must be registered in the public registry of properties.

If you don’t do the above four steps and need to take legal action, chances are you won’t be successful.

First American and other title companies offer “Escrow” services. The cost is reasonable. If you are entering into an agreement to buy property before the seller has received their title, I would make the deposit into the escrow account. The escrow instructions would indicate the seller only gets his/her deposit if they follow through on the terms of the agreement, which should include entering into a legally binding contract as soon as they receive the escritura. If they don’t follow through, then you are only out the cost of the escrow service and not the deposit money.

Now, all that said, in real life, the seller is usually anxious to have some cash flow and may not agree to wait for the deposit, especially if the land is in high demand. Here you have to rely on your gut and remember that any deposits you make to the seller, you most likely won’t be able to recover if they are not completely honest.

edit: a little re-wording to make better sense

[Edited on 5-26-2009 by BigWooo]

rpleger - 5-25-2009 at 03:52 PM

Good info. Thanks

Cypress - 5-25-2009 at 04:06 PM

BigWooo,"Rely on your gut". OK! :tumble:

bajalou - 5-25-2009 at 05:13 PM

Where you say
"2. The sales contract must be notarized and signed by all parties (both husband and wife if married) in front of the notary."
you mean Notario, don't you? There are no notaries in Mexico similar to the ones in the USA.

bacquito - 5-25-2009 at 05:23 PM

My wife-a Mexican citizen-purchased land in the ejido system. The member of the ejido selling her the land met with our lawyer and signed the papers that allowed my wife to obtain a Constancia. Our lawyer assured her that she owns the land. But we have paid no taxes. She has had the land for about two years. The man she bought the land from claims he is working on getting the paper work complete. I think it is still in the ejido system. Obviously I am somewhat worried.
Perhaps we should meet with the lawyer again or meet with the ejido organization.

arrowhead - 5-25-2009 at 05:40 PM

It seems to me a smarter way to go about buying ejido land is to tell the seller you are muy, muy interesado and the moment the seller has a clear title for selling he should call you. It is so much cheaper.

It's not like there is a waiting list of buyers lined up to buy land in Baja. There is lots of land.

BigWooo - 5-25-2009 at 08:43 PM

Quote:

Originally posted by bajalou
Where you say
"2. The sales contract must be notarized and signed by all parties (both husband and wife if married) in front of the notary."
you mean Notario, don't you? There are no notaries in Mexico similar to the ones in the USA.

Yes, my mistake...Notario. I fixed it in the post.

[Edited on 5-26-2009 by BigWooo]

Any Tips on Leasing Ejido Land?

estebanis - 5-25-2009 at 09:00 PM

I have been doing a 1 yr lease on a handshake and a smile for the last few years. The price is low enough that if the deal went goofy I could shed some tears and move on.So far no problem. When I retire and begin the process of improving the lot and putting a Casa on it I will be sure to get my FM3 and sign a formal lease with a Notario present. Any other tips?
Now be nice Amigos!!!

[Edited on 5-26-2009 by estebanis]

Sounds Shaky!!!!

Bronco - 5-26-2009 at 06:55 AM

Quote:

But we have paid no taxes. She has had the land for about two years. The man she bought the land from claims he is working on getting the paper work complete. I think it is still in the ejido system. Obviously I am somewhat worried.
Perhaps we should meet with the lawyer again or meet with the ejido organization.

When you buy, property taxes are based on what you will do with the property. Such as farming, business or building a home etc. If you have not paid taxes than the property is still in the hands of the ejido. Two years is a long time and I would as you say, meet with the attorney.
You could take the attorney and check the records for any information?

[Edited on 5/26/2009 by Bronco]

oladulce - 5-26-2009 at 10:14 AM

Quote:

Baquito-
Maybe you or your wife can clarify if I understand what a "constancia" is. I believe it means you have been given permission by the ejido (or the ejido member) to "use" the property.

As BigWooo mentioned, if the ejido member has not yet received his individual title with his name on it, the land still belongs to the federal government. Until the property is in his name, it won't be surveyed or registered yet at the local Registro Publico office.

If the ejido member hasn't gotten his Escritura yet, the property won't have a catastro number and the local municipio office will not have a record of the property. Once you hear that there is a catastro number for the lot, then someone will owe local property taxes.

Nothing to be worried about, but i would check in with the "seller" to see how the progress of his title is going.

longlegsinlapaz - 5-26-2009 at 10:29 AM

Quote:

Originally posted by bacquito
My wife-a Mexican citizen-purchased land in the ejido system. The member of the ejido selling her the land met with our lawyer and signed the papers that allowed my wife to obtain a Constancia. Our lawyer assured her that she owns the land. But we have paid no taxes. She has had the land for about two years. The man she bought the land from claims he is working on getting the paper work complete. I think it is still in the ejido system. Obviously I am somewhat worried.
Perhaps we should meet with the lawyer again or meet with the ejido organization.

Just to expand on or clarify Oladulce's comments....ejito land is not subject to taxes. It only becomes taxable after title has been issued, even if title is issued in an ejito member's name. That's why titles are rarely in place on ejito land; the owners aren't liable for any tax, so don't typically apply for title until they do want to sell the land.

oladulce - 5-26-2009 at 11:35 AM

Quote:

Originally posted by longlegsinlapaz
Just to expand on or clarify Oladulce's comments....ejito land is not subject to taxes. It only becomes taxable after title has been issued, even if title is issued in an ejito member's name. That's why titles are rarely in place on ejito land; the owners aren't liable for any tax, so don't typically apply for title until they do want to sell the land.

Yeah, what she said!

Can you tell I have trouble giving the short-version of anything?
Thank you LLinLP.

longlegsinlapaz - 5-26-2009 at 12:50 PM

Oladulce, I knew what you meant, but figured others might not fully pick up on what you were implying. So shy me jumped right in & nailed that puppy down! :yes:

gnukid - 5-26-2009 at 03:20 PM

It seems that some people would prefer to suggest that the process of buying ejido land should be pushed aggressively on where as if you feel comfortable with the ejido and seller, there is nothing wrong with allowing the process to unfold as it does, doing so reduces costs and reduces obligations and beside you can't get blood from a turnip er somptin like dat.

Most people I know with ejido land have waited 7-10 years for title and this reduced their costs substantially. I also know people with ejido land that still hasn't been titled after 10 years and it continues through machinations. If you have the money I am sure someone will take it to pursue the issues and if you don't have the money it will probably work out anyway if you pursue it slowly.

oladulce - 5-26-2009 at 09:53 PM

Quote:

Originally posted by gnukid
It seems that some people would prefer to suggest that the process of buying ejido land should be pushed aggressively on where as if you feel comfortable with the ejido and seller, there is nothing wrong with allowing the process to unfold as it does, doing so reduces costs and reduces obligations...

The ejiditario seller of our property had waited 10 years from time of the lottery for his parcel until he received his escritura. We weren’t in any hurry to buy, but when he was finally able to sell his lot things couldn’t proceed fast enough for him because his family needed the money. He thanked us for hiring attorneys to make sure things were done correctly and to keep on top of the process.

I don’t see any mention of “pushing aggressively” with an Ejido purchase, only the suggestion to pay attention to details in the transaction to protect your investment.