BajaNomad

Slice of paradise becomes eviction nightmare for Canadian in Tenacatita (Costa Alegre, mainland Mexico)

BajaNews - 8-30-2010 at 09:14 PM

http://www.vancouversun.com/opinion/Slice+paradise+becomes+e...

By David Agren
August 29, 2010

LA MANZANILLA, Mexico — Siegfried Schiffmacher thought he had found an idyllic slice of paradise in 2006 when he purchased a large lot at Tenacatita, a spit of land in Mexico with spectacular oceans views to the front and a calm bay with clear water and a golden-sand beach to the back.

He thought he had found a sound investment, too: The 1,007-square-metre property — once part of a communal farm known as an "ejido" — came with a title validated by then-president Vicente Fox.

Those illusions were shattered Aug. 4, when more than 150 state police officers raided Tenacatita, acting on an eviction order won by a Guadalajara-area businessman, Andres Villalobos, who claimed title to 42 hectares of land — including Schiffmacher's lot — that he purchased in 1991 from the widow of a former Jalisco state governor.

"When you buy with a title signed by the president, it feels secure," said Schiffmacher, a retired telecom entrepreneur from Surrey, B.C., whose wife, Margarita, is a Mexican national. "We never thought this would happen."

Schiffmacher's plight highlights the perils of investing in paradise and, he estimates, affects at least 15 Canadians.

It also highlights the problem of purchasing in a country with lingering conflicts over land and titles — two key grievances that fuelled the Mexican Revolution, the centennial of which is being observed this year — and how these unresolved squabbles are affecting foreigners a century later as they move south in increasing numbers and unwittingly into areas with histories of property disputes.

And it once again shows the risks of purchasing land on ejidos and former ejidos, the dismally unproductive communal farms created from broken up haciendas after the revolution for the landless campesinos (peasant farmers), which long have been sources of legal conflicts, title disputes and murky governance.

Ontario resident Barbara Hanc-ck and another Canadian have owned a two-storey house at Tenacatita since 1988 and acknowledged it was originally built under risky circumstances. She later obtained a title for it after a federal agency known as Procede surveyed and titled the area, allowing her to put it in a bank trust — an obligatory step in Mexico as foreigners are forbidden to own property in coastal and border regions without one.

A letter from Banorte, the bank holding her trust, reads: "You have the advantage that your rights are protected under Mexican law."

She's unsure about that now.

"This was supposed to be our retirement," she said.

The deeds Schiffmacher, Hanc-ck and about 40 other foreign investors purchased in Tenacatita in the Costa Alegre region of Mexico — which is popular with Canadians — appeared valid. The land was surveyed and titled and the 220 titles granted at Tenacatita were validated by presidents Fox and Felipe Calderon.

Those validations came despite the apparent existence of another claim to Tenacatita by Villalobos and his development company, Inmobiliaria Rodenas. Media in Guadalajara report the company's legal representatives based their claims to Tenacatita on a 1977 Mexican Supreme Court decision in favour of the original property holder, Paz Gortazar de Gonzalez Gallo, declaring the disputed property was never ejido land — making it ineligible for titling through Procede.

The dispute leaves the case in legal limbo and could further risk the reputation of a country already beset with drug violence in some areas that has claimed 28,000 lives since December 2006 and scared off untold numbers of tourists and foreign investors. Mexico is the second most popular travel destination for Canadians after the United States, according to Statistics Canada.

"This action could undercut trust in Mexico across the board — and not just in real estate," said Daniel Hallas, a realtor in the community of La Manzanilla, across the bay from Tenacatita. "If they want to improve investment in Mexico, these papers have to have validity."

The Tenacatita investors interviewed for this story say they learned lessons from the past mistakes of others in places such as Punta Banda in Baja California, where, a decade ago, a titling dispute led to the Supreme Court issuing an eviction order. That episode, Hallas said, "set Mexico back 10 years."

The investors acknowledge knowing of problems in Tenacatita such as two prior mass evictions from the beach for supposed violations of a concession held by Inmobiliaria Rodenas. Schiffmacher candidly said the ejido at El Rebalse de Apazulco had a bad reputation and have sold properties "they had no business selling."

Those problems were thought to be isolated from their purchase, however.

The investors say they did due diligence by working with a notary to verify their titles, investigating the local area and, in the case of at least one buyer, purchasing properties through a bank trust — lending further creditability to the investments.

Many of the purchasers own other properties in Mexico and were familiar with the country, having travelled south regularly for years.

For many, the signature on the title sealed the deal — a critical mistake says political science professor Aldo Munoz Armenta of the Autonomous University of the State of Mexico.

"Designations with presidential signatures are not infallible," he said, adding that land distribution decisions by past presidents have been overruled by the courts. "In all the country, you'll find cases like this."

Realtors say inland parts of Mexico have experienced fewer titling issues than coastal regions, where ejido conflicts are more common — and especially in regions with development potential.

Hallas, who never sold properties in Tenacatita, frequently sells listings on ejido land in La Manzanilla and has never encountered serious issues.

He called the ejido council there, "trustworthy," and explained that they have "always resolved problems."

A state circuit court judge in the municipality of Cihuatlan effectively overturned the 220 titles issued by Procede — and endorsed by the president — with his eviction order, which Jorge Diaz Topete, lawyer for Inmobiliaria Rodenas, told the newspaper Publico was based on a complaint originally filed in 1993.

Diaz Topete told the Guadalajara Reporter, an English-language weekly, that he had never seen any of the Procede titles.

Jalisco state police officers, acting on the eviction order, cleared out hundreds locals who lived and worked at Tenacatita, a working-class beach often crammed full of sun-seekers, seafood shacks and one-star hotels and famed as one of the best snorkelling spots on the Pacific.

State police still guard the seized land, denying access to the beach and titled lots. Adding insult to injury for Schiffmacher, police officers now lounge, smoke and play cards in the shade provided by a large tent taken from his property and erected next to a barricade on the only road leading into Tenacatita.

The state human rights ombudsman described the lingering police presence after an eviction as unprecedented. The municipal government of La Huerta, which contains Tenacatita, questioned why beach access was being impeded — a violation of the Mexican constitution.

The investors and locals working the beach are filing for individual injunctions known as "amparos" against the Aug. 4 evictions and blockade. Class action cases are not permitted in Mexico, and the litigation is expected to drag out for years to come.

This at a time when the Mexican government has been actively courting foreigners to purchase properties and reside in the country. The government also started giving everyone 180-day visas when they enter the country to encourage longer stays.

New York native Sylvia Fox purchased a lot because of the signature on the deed — and the existence of a deed itself.

"We bought it because it was titled," she said. "If my titled land doesn't prevail, then Mexico has bigger problems than I do."

Schiffmacher, who had wanted to build a clinic offering alternative arthritis treatments on his land, echoed those sentiments, saying, "After Tenacatita, everyone should be worried."

Officials at the Department of Foreign Affairs and International Trade in Ottawa said they were aware of the land dispute and the involvement of Canadian citizens.

"Consular officials at the Canadian consular agency in Puerto Vallarta, as well as Guadalajara, are following up with local authorities to gather additional information regarding the matter; and consular assistance will be provided as required," Alain Cacchione said.

Jalisco Gov. Emilio Gonzalez Marquez distanced himself from the situation, calling it a fight between "private parties."

Alberto Lozano Merino, spokesman for the Mexican Embassy in Ottawa, said the embassy was aware of the situation in Tenacatita and called the issue, "complex." He encouraged any affected foreigners to contact their countries' embassies in Mexico.

An interview request with a legal representative of Guadalajara-based Inmobiliaria Rodenas went unanswered. The company's exact plans for Tenacatita are uncertain, although luxury developments have become increasingly common along the Costa Alegre, the coastal region stretching from Puerto Vallarta southward to Manzanillo.

wessongroup - 8-31-2010 at 07:19 AM

If one can not see the risk associated with owning land in Mexico..

Not sure who it was, that said "don't spend anymore than you can walk from" when I first came to this board...

When I first saw it.. thought what a silly thing to say.. now about one year later...

Dittos

Due to the continued failure of Land Reform in Mexico over a very, very long period of time.. the overall risk of "buying property" in Mexico.. in many areas is just to great for this individual... best you can say, is that your renting until the landlord says... "your out of here"...

Seems there is always some "farmer" some place that is found who really owns the site and/or sites .... reminds me of the old John Wayne move North to Alaska... someone stacked some rocks on the site... therefore he lived there... hence it's his.. and/or hers..

These stories are really sad, as it sounds like these folks do have a piece of a really nice location... hence... trouble.. never see anyone fighting of the dump in Loreto ... other than to get it a bit better organized into a true function recycling and disposal center...

Just my 2 cents.. Russ didn't put any pictures up.. hope he is getting a line wet and takes some of those super pictures... for us :):)

[Edited on 8-31-2010 by wessongroup]

Udo - 8-31-2010 at 07:48 AM

I think I would have bought the same land under the "secure" circumstances. However, now it seems that even land held by Mexican Nationals, could be confiscated at any time...
a sad day for the rights of Mexican property owners:(
Quote:
Originally posted by BajaNews
— came with a title validated by then-president Vicente Fox.

"When you buy with a title signed by the president, it feels secure," said Schiffmacher, a retired telecom entrepreneur from Surrey, B.C., whose wife, Margarita, is a Mexican national. "We never thought this would happen."

A letter from Banorte, the bank holding her trust, reads: "You have the advantage that your rights are protected under Mexican law."


The Tenacatita investors interviewed for this story say they learned lessons from the past mistakes of others in places such as Punta Banda in Baja California, where, a decade ago, a titling dispute led to the Supreme Court issuing an eviction order. That episode, Hallas said, "set Mexico back 10 years."

k-rico - 8-31-2010 at 09:47 AM

"Media in Guadalajara report the company's legal representatives based their claims to Tenacatita on a 1977 Mexican Supreme Court decision in favour of the original property holder, Paz Gortazar de Gonzalez Gallo, declaring the disputed property was never ejido land — making it ineligible for titling through Procede."

Another problem with Ejido land.

A friend once told me to stay away, far away, from Ejido land, even if it has gone through the privatization process. I thought it was an extreme point of view but this occurrence, and what happened in Punta Banda years back, indicates that it is riskier than I thought. In both cases, land everyone thought to be Ejido land was judged to be private land.

Also, I remember reading a Stewart Title Insurance contract for Mexican property. It had words in it that indicted (to me) that it didn't cover disputes like these. Can anybody verify that?

[Edited on 8-31-2010 by k-rico]

wessongroup - 9-1-2010 at 07:02 AM

k-rico.. have not seen one of their policies.. but would bet you are spot on.. it's funny how those folks in that business come up with actuary tables on risk.. and they make decisions on "how" the policy will reflect same" as they are in the business to make money, with no liability associated with it...

think not ... check out AIG... and the title insurance industry pays about 4% of its collected premiums in claims, compared to a 75% payout for auto insurance.

One parting shot on AIG.. they were the folks that take care of claims on folks that have come back from the Middle East after working as private contractors for the military ... the horror stories from folks that were "messed" up from ordinance is absolutely disgusting.. SOP ... denial of the claim, and then denial again and again.. and these folks have lost arms, legs.. and other just terrible injuries...

And this has nothing to do with ones decision to go as a "private citizen" to a war zone.. rather the "legal" obligation to full fill a valid contract entered into by the two parties...

Where is the ACLU on this stuff anyway..

And yes this does tie into the thread.. we are talking about Insurance Companies and there policies and how they handle complaints and/or policy coverage.. or lack thereof...

[Edited on 9-1-2010 by wessongroup]