Mexican property & real estate laws seem archaic. For clear information on how to register ownership of land in Mexico read on...
A Constancia is a legal form of ownership recognized in Mexico which is supplied to an owner of a property being purchased through an Ejido. When a Constancia is given on a property, it means the title to that property is in process.
Well, let’s talk about an Ejido and what it is and how it basically works.
An Ejido is like a co-op in so much as their land is owned by every member of the Ejido and all monies derived are apportioned among the ejiditarios (members of the Ejido).
Ejidos In Mexican Real Estate
Ejidos were formed and legalized many years ago by the Mexican government to encourage population in areas which were sparsely populated. The government offered, I believe it was 50 families, to join together to form the Ejido and move to the area where the government gave them large plots of land in commune. The land was originally not to be sold or split up. Cabo San Lucas was once largely owned by the Ejido (parts still do). Pescadero and Todos Santos were also Ejidos and parts still are. They are each separately run Ejidos with a governing body.
In the early 1990’s (or thereabouts) the Mexican Government passed a law authorizing Ejidos to parcel off parts of their property and request individual titles. There were at least 2 ways that this could happen.
1. The parcel to be sold would be split up equally and placed in the name of the ejiditarios through a draw process. Cerritos Beach in Pescadero is a prime example of this process. Each member was given 13 lots each, free of charge. In this process, they drew lot numbers without knowing where the actual lots were located until the final plans and titles were ready.
2. The parcel to be sold would be set aside for non-members to purchase and receive a Constancia as proof of ownership. In this case the owners were given ownership of specific lots and they knew exactly where they were and were encouraged to live on and build on those lots. In many areas these were offered exclusively to low income Mexican Nationals.
Once an area was approved, through the Ejido to be sold, then the process of obtaining the titles would begin. For the first option, this was done rather quickly (3-8 years). I know this seems like a long time, but they have to submit the plans to the Mexican Government and then the Government has to send out their people to verify it, plot it, get the GPS readings, sizes, etc, create maps and have it all logged into the land system and incorporated into the existing city. That takes a lot of time.
For the second option, all of the lots within the area need to be sold and constancias issued prior to the paperwork being started or submitted to Mexico City. This can be a long process and from start to finish (titles issued) can take as many as 15 years or more, depending on many factors.
Not to worry though because the property owners always get their titles. It is just a waiting game.
A Constancia is not a lease, it is a legally recognized form of ownership which can be sold or passed down through a will. A non-Mexican can hold a Constancia in their name. You can go to the Ejido office and personally ask if their Ejido allows this. If they do not, then you have the option of using a “prestanombre” which is the borrowing of the name of a Mexican National. If you do go this route, be sure to use a lawyer to draw up the necessary paperwork and part of that paperwork needs to be that they sign a document which cedes their rights to the property in your name (sort of like a Power of Attorney) allowing you to receive the original title, sell it, etc. You must always be in control of the original Constancia in this case.
When an Ejido has an area “in process”, the Ejido requires an annual property tax be paid and it is imperative that you keep all of the originals of these payments or you will be required to pay them again when the titles come in.
Ensure You Have The Original
If you are considering purchasing a lot which has a Constancia, be sure to actually see the original Constancia, not a copy of it because owners can and will borrow against that property giving the original to the person or business which they borrow from. You must have in your possession the original Constancia in order to get your title.
Closing The Deal With A Fideicomiso
Once the titles come in, they will go to the Ejido and the Ejido will post a notice in their office and also give notice at their monthly open meetings. If you are a foreigner and the title to your property has arrived all you need to do is go to the Ejido office (or have your lawyer do it for you) and bring all of your paperwork with you. They will explain that they cannot give you the title directly and you need a Fideicomiso. Your next stop is at your local Notary Public office. Take all of your paperwork with you, giving copies of everything to the Notary. They will handle the “closing” for you, just the same as any other property you purchase with a Fideicomiso. It is all very simple and many foreigners (non-Mexicans) have done this all over Mexico.
Constancia Tax Benefits
Purchasing property which has a Constancia is usually a great investment because the owners tend to sell them cheaper than already titled properties. Another benefit in purchasing a property of this type is that you do not have to claim it on your foreign taxes because it does not have a title as of yet. Eventually, when the titles do come in, you will need to claim it beginning with the year of the title. Transferring a Constancia into your name is quite cheap, depending on the Ejido, and may only run around $250 USD.
When you purchase a property with a Constancia, you can do it one of two ways. 1) you both go to the Ejido office and sign the necessary paperwork and exchange monies. or 2) you can have a document prepared, in Spanish, in which they sign over all rights to the property in your name. You will receive the original Constancia and all originals of all use taxes paid, etc and you must get a copy of their electorial card (or passport) as well.
I hope this answers any questions you may have regarding a Constancia.I am not a Lawyer. I do not give expert legal advice. I am simply an American who has lived in Mexico for over 15 years and have purchased property which began with a Constancia. If you have any questions about the process, you can always go to the Ejido office and ask them, speak to your Mexican Lawyer or email me for more information. my email is: [email protected]