Real Estate Articles

May 10, 2014

Investing in Real Property with a History of Having Been Communal Property (“Ejido”)

By Jorge Ojeda and Marimar Pérez Cacheaux

 Multiple hotel developments, golf clubs, industrial plants and a whole range of investments in Mexico have been and continue to be developed on tracts of real property which, at one time or another, were communal properties (“ejidos”). One often hears stories of investors who were fooled into believing that they were purchasing private property, when in fact they were being offered to purchase ejido land, which caused many “headaches” for such investors.   The regime of land of communal origin presents various peculiar features, which must be understood. The Agrarian Law (Law) classifies communal properties as real property for communal use, real property for human settlements and real property that is divided into parcels. In principal, only parceled real property … read more

March 14, 2014

The Payment of Rent in Foreign Currency

By Jorge Ojeda

Clients often ask their attorneys whether it is possible to agree that the rent to be paid for real property located in Mexico may be paid in foreign currency (most often U.S. Dollars). At first the answer seems easy, that yes it is possible; however, there are various aspects to consider. Foreign currency does not constitute legal tender in Mexico and, for such reason, Mexico’s Monetary Law and Provisions of the Mexican Central Bank that authorize the debtor to pay in foreign currency, when payment is to be made within Mexico,  consider that payment is properly made when the agreed amount is delivered in foreign currency or its equivalent in pesos, in accordance with the official exchange rate published by … read more

January 12, 2014

The Importance of Designating Successor Trust Beneficiaries in Real Estate Management Trusts

By Marimar Perez-Cacheaux and Ramón Concha

There exist many trusts in Mexico that were created in order for foreigners to acquire and own real estate in the restricted zone (a strip of 50 kilometers – approximately 31 miles – along the coast, or 100 kilometers – approximately 62 miles – from the border). In any of these situations, a foreigner contracts a Mexican bank (the “Trustee”), so that real estate is transferred to the trust and the foreigner, in his/her capacity as trust beneficiary, has the right to use and enjoy the real property. If the trust was duly structured and formalized, the foreigner, as trust beneficiary, shall designate successor trust beneficiaries, meaning that he/she will name the person or persons who will replace him or … read more

September 26, 2013

Real Estate Law. Buying and Selling Real Property and Mexico’s Anti-Money Laundering Act

By Jorge Ojeda

On July 18, 2013, the Federal Law for the Prevention and Identification of Operations with Illicit Resources (the “Anti-Money Laundering Act”) went into effect, the same which was issued by the Mexican Congress for the purpose of serving as an information hub in the government’s fight against money laundering. Similarly, (i) on August 16, 2013, the Regulations to the Anti-Money Laundering Act (the “Regulations”) were published; (ii) on August 23, 2013, the General Rules (the “General Rules”) were published; and (iii) on August 30, 2013, the formats for registration and notification in terms of the Anti-Money Laundering Act were published (the “Formats”). The Anti-Money Laundering Act contains a list of at-risk activities and requires those who conduct such activities to … read more

June 22, 2013

New Legislation regarding Changes in Use of Forest Land, and the Federal Environmental Impact Statement

By Jorge Ojeda

When considering the development and construction of real estate in Mexico, it is necessary to verify whether such land is considered "Forest Land" and, if so, to inform the Mexican Department of Environment and Natural Resources (“SEMARNAT”), in advance, regarding the change of use of forest land. Such process requires, among other things, an approval of the environmental impact, which involves conducting an Environmental Impact Statement ("MIA"). The General Law for Sustainable Forest Development broadly defines "Forest Land" by stating that such is land that is covered by "forest vegetation," or, "an environment where plants and fungi, grow and develop naturally, forming forests, jungles, arid and semi-arid areas and other ecosystems, developing the coexistence and balance of other resources and … read more

April 19, 2013

Initiative for Constitutional Reform to Allow Foreigners to Acquire Residences in the Border and Coastal Zones of Mexico

By Iker Dieguez

On April 3, 2013, Federal Congresswoman Gloria Elizabeth Núñez Sánchez and Federal Congressman Manlio Fabio Beltrones Rivera of the Institutional Revolutionary Party (PRI) submitted the initiative to Congress, along with the draft decree to amend section I of article 27 of the Constitution of the United Mexican States. This initiative is the first attempt to reform the constitutional provision dating from 1917 which prohibits foreigners from directly acquiring ownership of real property located within the “restricted zone,” consisting of a strip of land that covers 100 kilometers along Mexico’s land borders and 50 kilometers along the country’s coastlines. The initiative seeks to allow foreigners to acquire direct ownership of real property located within the restricted zone, so long as the … read more

April 10, 2013

Real Estate Law – The Professionalization of Realtors in Mexico

By Jorge Ojeda

In many countries, the provision of real estate services consists of the promotion and marketing of real estate, and it is required that such services be provided by individuals or companies that have gone through an accreditation process with an authority or a certifying association. Such process exists in order to professionalize the quality of service, training and updating of realtors and verify that they act ethically and are penalized for actions that do not conform to required minimum standards. The lack of regulation of realtors, or real estate brokers, in Mexico has led to a market that ranges from global companies with high quality and ethical standards to firms that, because of a lack of employment opportunities in the … read more

February 10, 2013

The Community Property System and the Sale of Real Estate

By Jorge Ojeda

The various civil codes in Mexico establish two principal marital property systems: community property and separate property. In a few states, such as Jalisco and Sonora, a third regime known as the legal property (sociedad legal) system exists, which essentially consists of a broader community property system. When a spouse under a community property system purchases real property, there is a presumption that such real property is held as community property, and such is deemed to have been acquired by both spouses in equal shares, unless a legal exception applies. Consequently, the sale of such real property would require the consent of both spouses. Historically, this requirement has led to conflicts and legal uncertainty when title to real property is … read more

January 10, 2013

Real Estate Law – Does the Broker’s Lien Exist in Mexico?

By Jorge Ojeda and Carrie Osman

Texas law allows real estate brokers to perfect a lien on commercial properties in order to guarantee payment of their commission in a manner similar to that known as the “mechanic’s lien.” In Texas, this law is known as the “Broker’s and Appraiser’s Lien on Commercial Real Estate Act” and more than half of the states in the U.S. have laws providing for the so-called “Broker’s Lien.” In order to create a “Broker’s Lien,” it is necessary to have a commission/fee agreement in writing between the real estate broker and the party with an interest in the real property (seller, buyer, lessor, lessee). Texas law contains specific provisions on the content of the agreement, including disclosure and notice requirements, among … read more

November 1, 2012

Real Property Searches

By Jorge Ojeda

In Mexico’s legal system, a general principal exists that holds that an important purpose of public registries is to provide public notice of the legal acts recorded therein, so that such acts may be considered effective as to third parties and to provide certainty as to the date the acts were recorded. Note, however, that recordation by itself does not create ownership rights for property owners. When conducting a legal inspection of a proposed real estate project, it is necessary to define the aspects that should be reviewed, which include recordation issues that may relate to the real property in question, and thus result in a need to consider various issues. First, the scope of private ownership in Mexico should … read more