by Blake Harrington, REmexico Real Estate (www.CaboRealEstate.com)
To fully understand how land ownership in Mexico works, it is vital to learn the history of property ownership in Mexico. If you picture a country that has been dominated by foreign owners since the early 1500s, you will begin to see why Mexico is so protective of its most valuable resource…land.
In 1517, when Hernández de Córdoba sailed from Spain to the Yucatan Peninsula, foreigners laid claim to Mexican lands. Spain decided that since they had landed here, it was now theirs. It was not until 1822 that Mexico declared its independence from Spain, much like the U.S. declared independence from England, but even with this new independence, the lands of Mexico were still owned by wealthy foreigners, the Mexican upper class and the Church. Porfirio Diaz, a former President of Mexico for over 30 years, nearly sold all of Mexico to foreigners during his term.
The end result was the Mexican Revolution, which cost over one million lives and was the basis for the Federal Constitution of 1917. The new constitution imposed new laws and restrictions on foreign ownership and ownership of real estate by the Catholic Church. Article 27 of the constitution allows Mexican Nationals and Mexican Companies to own property in Mexico, however it restricts foreigners from owning land with the restricted zone. Foreign citizens must obtain a Trust or Fideicomiso, which acts as a bank trust, in order to buy property in Mexico.
It is also said that the U.S. was involved in this new zoning in an effort to prevent the installation of foreign military bases on our borders or near our coastlines. This “restricted zone” is defined as property within 60 miles from any Mexican border or within 30 miles of any Mexican coastline, which includes the real estate in Los Cabos/Cabo San Lucas.
Not until the 1930s did the Mexican people truly see the property being returned to them. President Lazaro Cardenas disassembled the large property holding and distributed them in the form of cooperative farms or “Ejidos”. The people were given exclusive rights of usage for these properties and were allowed to farm and cultivate them while receiving the profit from their efforts. After nearly 4,000 years, over 50 million acres of land was back in the hands of the Mexican people, however, it was still owned by the Federal Government.
Even though the people were allowed to farm the properties and profit from their work, it was not until 1992 that they were allowed to sell their properties. The 1992 Agrarian Law recognizes property rights within the Ejido and allows for the owner of record to sell or lease the property to a non-Ejido member. The property can be removed from the National Agrarian Registry (removed from Federal Control) and placed in the public land registry allowing it to be sold or leased. Today, thousands of acres are being removed on a daily basis from the Ejidos, added to the public lands and being sold or leased. There are well over 50 million acres of land that will go through this process to be either leased or sold over the coming years, making investing in Mexican real estate an attractive venture for foreign investors.*