Mexican Beach Developers

by Margaret and John Fleming

An ejido is

      a) a small Mexican village
      b) a concept practiced by the Aztecs
      c) a way of owning property in Mexico
      d) a group of co-owners of agricultural property
      e) a risky investment for foreigners
      f) all of the above

The answer is (more or less)  f) all of the above . . . . but not exactly. Each of the statements above is true in part, but each needs some explaining.

The ejido is a Mexican concept not well understood by foreigners; as a consequence, many unwary Americans and Canadians, in dealing with ejidos, have become mired in legal quicksand and lost substantial sums of money.

What is an ejido, exactly?  The word, pronounced ay-hee-do, is thought to be derived from the Latin exitus, meaning "the way out." Presumably ejidos got their name from being located at the outskirts of towns and cities, and they were, and some still are, small Mexican villages. The ejido is defined as a community that has joint ownership of a piece of land, lives on the land, and practices joint agriculture on it. While this was the original intention, and was once an accurate description of ejido activity, more and more ejidos today exist as land where no one lives and no agriculture takes place.

The ejido was indeed a concept practiced by the Aztecs. It has had a long and rocky history. When the Spaniards conquered Mexico, it was abandoned; it came back in again when the church was given the authority to hold lands in trust for the peasants. It went out again when the church lost favor, and church lands, along with the lands held in trust for the peasants, were expropriated by the government. Then when the present Mexican constitution was adopted in 1917, the ejido was revived. Large tracts of land were taken from wealthy landowners and divided up into ejidos for the peasants. Members of an ejido, called ejidatarios, could farm the land, live on it, enjoy it, pass it to their children, rent parts of it to third parties, but they could never own it or sell it. The mindset of the authorities, from the Aztecs on, seemed to be that peasants were like children, not intelligent enough to manage their own affairs, and so they must be protected by a kind of benevolent (or not-so-benevolent) despotism on the part of the emperor, the church, or the government.

Of course, this is the cynical view of liberal Americans, used to the idea of individual free enterprise. One of the articles we researched for background cautions that Americans and Canadians are so used to democratic capitalism, in which individual effort is encouraged and rewarded, that they have a hard time comprehending democratic communism, the concept on which the ejido is based, in which the emphasis is on collaborative effort, and decisions are made on the basis of what is good for the community.

  And so, yes, the ejido is a way of owning property in Mexico, but this statement must be read with a realization that "ownership" may not mean the same thing to an ejidatario as it does to your average gringo. To an American, ownership means having what is known in real estate circles as "the bundle of rights": possession, enjoyment, control, exclusion, and disposition. When we own a property, we can possess it, enjoy it, control it, exclude anyone we don't want from it, and dispose of it by selling it, giving it, exchanging it, or willing it to our heirs. To a Mexican, ownership appears to be largely a matter of possession. We have observed, for example, that if we ask a Mexican, "Who has the title to this property?" she may say, "I have it," because she has the title document in her hand, but the name on the title may be her mother or brother or cousin. She apparently equates possession of a document with ownership; whereas Americans are more likely to think of title as an abstract concept, for which documents provide the proof. The owner is the person whose name is on the title, not the one who has the document in hand. Similarly, an ejidatario who lives on the communal land and enjoys possession of a share of it thinks of himself as an owner of the land, and might tell a foreigner he owns it, which does not mean he can transfer the title, although the foreigner is likely to assume that he can.  

This difference in cultural background and assumptions often causes misunderstanding when a foreign investor finds a choice piece of property that is ejido land and wants to buy it. The ejidatarios may tell the investor that they have ownership of the property, and of course they do, but not the same kind of ownership the investor is assuming. They have no power to dispose of the property legally unless and until they have gone through a process of regularization which converts ejido land to private property. Investors have often "bought" ejido property by paying large sums of money to ejidatarios, but they have been unable to get legal title. Obviously, this has produced losses, lawsuits, ill will, and much misinformation.

Trying to buy ejidal property can be a risky investment if the investor is uninformed as to the legal pitfalls or unwilling to follow the prescribed procedure. In one high-profile example, some American investors bought homes in a community called the Baja Beach and Tennis Club in Punta Banda, Baja California. It turned out that the houses had been built on land that belonged to an ejido, but had not been privatized. Some non-owners "sold" land to developers, who  "bought" the land and built the homes. There were several levels of graft and opportunism involved. Later the ejidatarios, who were still the legal owners, sued to regain their property. After a long and tedious legal battle, the courts ruled in favor of the ejidatarios and against the foreign home "owners," who were subsequently evicted. This gave rise to a frequently cited belief that the Mexican government can take away foreigners' property at any time. This is absolutely not true. It was simply a case of the law being enforced.  

There is a way to get legal title to ejido property, but it is not always easy. In 1992 the Mexican government established a policy for regularizing ejido land called PROCEDE. PROgrama para CEsion de Derechos Ejidales (Program for cession of ejidal rights). Through this program, ejidatarios can convert their property to private property, which can then be sold. 

There are three types of ejidal property: lands for community development, lands for common use, and individual parcels. The lands for community development cannot be sold or privatized. Lands for common use can be converted into what are called solares, individually owned parcels, which can be privatized and then sold. The individual parcels can also be privatized and sold. The difficult part of this procedure is that it requires a vote of the entire ejido. Notice of a meeting must be posted in a prominent place within the ejido at least 30 days in advance. If there is not a quorum for the meeting, another must be scheduled within 30 days, but not sooner than 8 days from the first meeting. There must be a vote of 2/3 of those present to pass the resolution to privatize the land.

The problem with all this is that if any ejidatario doesn't get the notice (many have moved away from the area), and doesn't vote, he or she can come back later and challenge the decision, thus creating a cloud on the title. This makes it very difficult for investors to be sure that they do indeed have legal ownership.

    The linguistic, cultural, and legal complexities of buying ejido land are enormous. Investors should be aware of them and avoid common pitfalls by using due diligence.  Recommendations: Don't pay out large sums of money without receiving a receipt, contract, or agreement that states exactly what the money is to be used for and what is expected from each party. Try to get as much documentation as possible for the property you are considering. Maps with dimensions and areas are very helpful.  If you are considering buying ejido land, work with a real estate agent who is knowledgeable about the process. Don't try to negotiate a deal yourself.