The Four Major Types of Baja Land to Look Out For
by Mario Restrepo
When talking about owning and investing in real estate in Baja, people always ask me the same question: “Can’t they take away your land, or do you have a 99 year lease?” Well, I can understand the concerns, but there is no such thing as a 99 year lease, and the Mexican Government would never just take away your land.
Ownership policies of Baja real estate has evolved, and Mexico now embraces foreign investors and second-home owners who want to acquire Mexican real estate. But those who set out to purchase real estate in Baja, are confronted with different types of land to purchase, and not all have the same value.
The four major types of land in Baja are the Federal Maritime Land Zone, the Restricted Zone, the Unrestricted Zone, and Ejido land.
Federal Zone
The Federal Zone is a strip of land that hugs the ocean and the international borders. No one can own this land, not even Mexicans. This includes land along the Pacific Ocean, Sea of Cortez, and Gulf of Baja, from the mean high tide line to 66 feet up the beach. This 66 feet of coastal land is a buffer from the ocean to the first row of homes or businesses.
Some big hotels, Mexican land owners, large developments, and marinas apply for special permits, called concessions, to rent this land from the government. Some home owners with significant beach front real estate are also now applying for concessions to lease this land from the Mexican Government. If you own a beach house, it may make sense to also get the concession to the land in front of your house just to avoid the possibility of anyone else getting the concession, and putting up a business or some kind of structure.
Restricted Zone
The Restricted Zone is the prime land that most international buyers are after. This is land that is more than 66 feet away from the mean high tide line and up to 32 miles away from the major oceans, and 64 miles from international borders. U.S. citizens, and other non-Mexican nationals, are buying this land using an instrument called a “fideicomiso,” also known as a Mexican bank trust.
This Mexican bank trust is a dream come true for international buyers of Mexican real estate. It gives the non-Mexican national owner of Mexican real estate the power they need to control their land purchase, very similar to the way a USA citizen would enjoy owning real estate in the USA. For example, using a fideicomiso, you would be able to will the land or home to your children, rent it, subdivide it, lease-option it, enjoy it, sell it, improve it, or do anything that can be done with real estate.
This bank trust costs about $1,500 to set up, and about $500 a year to maintain, depending on the size of the land. If you decide to sell your property the bank trust is easily transferable making your property more liquid.
Mexican nationals don’t use fideicomisos to buy land, as the restricted zone is not restricted to them. They buy land using a deed called an “escritura publica.” So when looking to buy Mexican real estate, you will be buying from someone that has either a fideicomiso, or an escritura publica. A word of caution is that if someone quotes you a lot size of beach front land, make sure that no portion of that lot size is Federal Land.
Unrestriced Zone
The Unrestricted Zone is the inland part of Baja that is over 32 miles away from the oceans, and over 64 miles away from the international borders. If you’re a U.S. citizen you don’t need to pay the fideicomiso set-up fee to purchase this land. There is not much Unrestricted Zone land here in Baja because of how narrow the penisula is.
The Unrestricted Zone allows foreigners to own land using an escritura publica just like a Mexican citizen. The colonial cities of Taxco, San Miguel de Allende, Guanajuato, and Oaxaca are within this zone. All these cities are the Spanish colonial gems of the Americas, and much of their city centers are national parks.
Ejido
Ejido land is communal land that is shared amongst a group of Mexican nationals. As a non-Mexican national, I don’t recommend you buy this land unless you are a professional investor of Mexico real estate, or you really understand the details.
This land is less desirable because clear title can be difficult and costly to get, and sometimes never comes. When you buy ejido land you buy the rights to use the land, versus ownership of the land, depending on the ejido. Ejidos each have their own governing body, therefore one ejido may have different culture and methods for allocating land then the next. Many Mexicans feel very comfortable living on and being in control of their parcel of ejido land. It is land on which many Mexicans were born.
Ejido land is many times offered for sale by developers making promises that at some time in the future, 3 to 8 years, the land will be regularized for clear title. Regularization of Ejido land is a lengthy legal process that is not always achieved. Not only that, banks don’t offer fideicomisos on Ejido land, and title insurance companies don't offer insurance on Ejido land. The only way to control Ejido land for a non-Mexican national is by setting up a Mexican corporation.
Baja was originally mostly ejido, and what is not ejido, is mostly within the restricted zone.
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