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TREC LICENSE # 0303291
 CASCO
mAIN oFFICE
210-692-0990
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Land tenure
The Mexican legal system is different from
the American legal system in its fundamental historical and organization
basis. Mexico can be generally defined as a civil law country. Its legal
system has its ancient origins in a Roman law system inherited from
Spain. Civil law countries give precedence to written law combined with
an extensive codification of their ordinary law. In Mexico, the Spanish
legal heritage was modernized in the nineteenth century by the addition
of the Napoleonic code, itself a system of codification rather than
legal precedent, as in the common law tradition.
Property rights are not surprisingly
legally defined by the Latin terms of Roman law: the three rights of jus
fruendi, the right to enjoy; jus
utendi, the right to use; and jus
abutendi, the right to consume.
The rights to enjoy and use are well guarded in law and practice in
Mexico, and are familiar to those more conversant with the concept of
the bundle of rights as known to American real estate practitioners. In
Mexico, however, the third right, the right to consume, is more narrowly
restricted than in the U.S. concept of the bundle rights, and better
defined as the right to dispose of real property: use, enjoyment, and
disposal, rather than use, enjoyment and consumption.
In Mexico, there are four legal categories
of land tenure:
1. Private ownership by a single owner,
private ownership by co-owners, and private
condominium ownership.
2. Tenure held communally without private
ownership rights (eijido
lands).
3. National, state, or municipal
government lands that are defined as public domain, and therefore are
cannot be sold or otherwise transferred.
4. National, state, or municipal lands
that are defined as private domain land, and
therefore can be sold, otherwise
transferred, and legally are regarded as private
property.8
Title
The deed (title) to a property is known in
Mexico as a public instrument. They are held and can be researched at
the local Public Registry of Property. They are accessible government
offices and present in most Mexican cities and towns. The title (public
instrument) will identify the parties involved in the property
transaction as well as identify the property. When the title is
finalized and signed by the notary (see below) and buyer and seller,
then the purchase price of the property is exchanged. The transaction is
now considered complete.9
A notary public, or notario,
is essential to any real estate transaction in Mexico. A notario is
actually a legally required professional who puts together the paperwork
required for the transfer of ownership in Mexico. Notarios
act as both attorneys and title companies, and there are only 1,500 in
all of Mexico. The notary public is legally an extension of a judge or
agent of the government as his duty is to formally execute the
transaction and make sure it complies with all legal requirements.
This more expansive role (and power) of
the notary public is due to the basis of Mexican
law in Roman law, while the more limited
role of the notary public in the United States as a third party witness
is part of our (British) Common law heritage. The notary public must
authenticate the following documents for a sale to legally occur: the
title deed, a certificate of no encumbrances, a certificate of no
property tax liability, a property appraisal and a topographical survey.
The authentication of these documents is then recorded within the title
deed. Title insurance is not common in Mexico but can be purchased for
use in Mexico through companies in the United States.
General methods of sale
At the most basic level, a letter of
intent is accepted as a valid contract or agreement for a sale. The
parties must then reach agreement on the best method of transfer. The
most commonlyused agreements in Mexican real estate transactions are a general
purchase sales agreement or a reserve
title and
installment sales agreement.
The general purpose sales agreement is the
simplest and most common method of property transfer in Mexico and can
be used by foreigners outside the restricted zones (see below).
Essentially, it is basic contract law, requiring consent (between the
buyer and seller) and object (the title and then the payment). It is
formalized by a notary public and recorded at the Public Registry of
Property of the locality where the real estate is located.
A reserve title and installment sales
agreement allows the seller to reserve title until full payment of the
agreed price has been received, while the buyer has the benefit of the
use of the real estate while still making payments. Default in payment
by the buyer may entitle the seller to have the property revert to him.
However, if the payments are made, the seller may not sell, encumber, or
in any other way transfer the property to a party other than the buyer.
1999 ongoing Baja incident
Baja California, the scenic peninsular
southern end of the California region that is within Mexican national
jurisdiction, is host to over 63,000 American property owners. A recent
and ongoing incident there highlights some of the potential problems of
property ownership in Mexico - for both citizens and foreigners. 150
property owners, mostly Americans, currently face eviction from their
properties at the Punta Banda
beachfront development, located about 85 miles south of the US/Mexico
border. The dispute involves up to US$25 million worth of resort
property.
The legal problems come from the
unfortunate circumstance that the Punta
Banda properties are built on
an eijido,
which are land grants that were made to peasant farmers and indigenous
groups by the Mexican government in the 1970s. These land properties all
have serious questions surrounding the validity of land title, because
of fraudulent transactions, inadequate registrations, or collective
claims. Difficulties in determining true legal title to eijido
land, and fraudulent transactions related to these uncertainties, are a
problem for Mexicans and foreigners alike. Eijido land can be safely
listed as one of the major property rights issues that plague the
establishment of the clear ownership of title in Mexico.
In the Punta
Banda case, the property was
part of an eijido
given by the government to a communal ownership of 80 eijidatarios.
They, in turn, had leased the land to developers by the late 1980s, but
later, seven original landowners challenged the legality of the eijido.
Their claim was upheld by the Mexican Supreme court in 1996, who found
that the developers who sold the home sites never had proper legal title
to the land. The questions of whether home owners can remain in their
homes while further legal proceedings are under way or whether they are
entitled to financial compensation, and if so, from who and by what
means are unclear.10 Initial attempts by Mexican authorities to carry
out evictions were stopped by protesters, but the situation is still in
a legal limbo.11
The unfortunate situation that has
developed for these Baja resident investors highlights how important it
is for foreign purchasers of real estate to thoroughly investigate any
title issues that may exist in relation to a prospective property.
Basically one should take even more care than when buying property at
home. Unfortunately, it can happen in Mexico that the property developer
will advertise and sell the individual units of a condominium complex
before proper establishing the legal subdivisions that comprise the
Condominium Regime. A serious problem then arises. Until the condominium
regime for the particular complex has been registered with the Public
Registry of Property and Property Tax Office, no legal title can be
given for a particular unit, since it is thus part of a non-existent
legal entity. As such a title cannot be issued, because legally there is
not a property to describe. A full title search is at least as necessary
in Mexico as in the United States, and should be carried out regardless
of the type of property purchased.12 |
COPYRIGHT© 2002
NATIONAL ASSOCIATION OF REALTORS®
REALTOR® - A registered collective membership mark
that identifies a real estate professional who is a member of the
NATIONAL ASSOCIATION OF REALTORS® and subscribes to its strict Code of
Ethics.
The National Association of REALTORS®, 430 N.
Michigan Ave., Chicago, IL 60611 Telephone:
1-800-874-6500
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