The search for options to invest in a property that provides excellent future benefits, brings to the table an issue that many first-time investors face like Blue World City: a notable difference in the costs of investment land.
Like any real estate investment, buying a land involves getting informed and comparing the options that the market offers. Within the purchase process, this moment is decisive for the benefits and stability that said investment will provide in the future.
Faced with this search, an apparently more convenient option may be presented due to its low costs: ejido lots, however, are not the best option due to the legal problems they present.
In this article we will talk in detail about the differences between private property and legal land, and what is your best option to invest in real estate.
What is an ejido land?
Before starting to name the differences between these types of land, we will define what an ejido land is:
These are portions of land that the government grants to the inhabitants of an area to carry out the projects that the Ejidal Assembly determines based on the needs of the community.
Ejido lands can be classified into three types:
- Land intended for human settlements: It is an area that has been assigned for the development of community life, generally they are located in an urbanized area with a legal background.
- Common use land: It is an extension of land destined for the economic support or way of life of a community.
- Parceled land: In this case, the same land is shared by one or more epidermis.
The origin of the ejido lands dates from the time of the Mexican Revolution when the lands were distributed among the peasants in order to use them for cultivation.
The Agrarian Law of 1915 establishes that this extension of land is federal property, which can be used as collective, undivided land and does not have the possibility of being sold or inherited.
Most of the ejido lands are used for agricultural or livestock activities. In the Mexican Republic, the ejido is made up of three main organs:
- The Ejidal Assembly
- The Ejidal Commissariat
- Supervisory Council
In Mexico there are almost 32 thousand ejidos and more than 5.6 million epidermis, that is, just over half of the country’s lands are in the possession of ejidos and agrarian communities, so it is understood that the majority, forests, mountains, jungles, mines, bodies of water, among others, are social property.
What is legal land or private property?
A legal or private property is one that belongs to a single owner, who has the property deeds in his name, can make use of the property as he sees fit and has the absolute power to sell, rent or inherit said property. property.
What characterizes privately owned land is that the entire purchase and sale process is carried out in a legal process and endorsed by a notary public.
For a property to be declared private, it is necessary to register the deeds in the Public Property Registry.
What are the differences between an ejido land and a legal one?
Although both are extensions of land, legal and ejido lands have a series of characteristics that differentiate them by their use and modality. We will delve into them below.
These differences can be classified into 4 main categories:
- In terms of ownership or ownership
- In terms of documentation
- In terms of the person or owner
1. In terms of ownership or ownership
As we have mentioned, a legal land has the deeds that guarantee the possession rights of the property.
To conclude the process of buying and selling a privately owned land, it is necessary to deed in the name of the new owner and record this change of owner in the Public Property Registry.
An ejido land does not have a public deed in the name of an individual, it belongs to the state and is assigned to an evidentiary for a specific use, stipulating specific terms and conditions for its management.
In the case of ejido lands, the sale and purchase process should not be carried out since the person to whom it was granted cannot sell these lands, they can only cede them to other epidermis.
2. In terms of documentation
Legal land must have the corresponding deed duly registered in the Public Property Registry, with which they can obtain the property title that fully guarantees the power to dispose of the land.
The Public Property Registry is an institution that concentrates all the information related to the owners, transfers and modifications that have been made in the registry of a particular property. Through it, future owners can obtain legal certainty by verifying aspects such as:
- Who is the current owner of the property?
- That the property is free of encumbrance.
- That the owner really has the power to use and enjoy the property.
The legal lands in Yucatan are registered in the Public Property Registry, for which, it is necessary that the owner -whether private or real estate- has the deeds, because in these the seal that proves their registration is placed.
In the case of ejido lands, they have a certificate of parcel rights, whose sole function is to authorize the epidermis to use the land that the state granted them; but it does not accredit them as owners.
Having the parcel certificate, on many occasions, makes epidermis believe that they have property rights, and therefore they try to sell the land, however this is not legal.
3. In terms of the person or type of owner
As they are land granted by the government, the ejido lands are property of the state, so the epidermis do not have any legal power to sell, inherit or rent; and they are obliged to hand over the lands to the government in case it decides to expropriate them.
On the contrary, private land belongs to a single person who has total freedom to use it as it suits him best; either by selling it or inheriting it to his family since he has the documentation that supports him as the sole and true owner.
Another difference is that all property owners —including land— must pay a property tax annually. In the case of an ejido land, the epidermis does not have this obligation, however, they must cover a contribution fee to the ejido.
This section refers to the use that is given to the land, for example for commercial, residential or industrial purposes.
On privately owned land, you have the freedom to develop any project such as: a house, vertical developments, commercial premises. This will depend on the type of land use that the land has.
The ejido lands can only be used to develop the activities or works specified by the Ejidal Assembly for the benefit of the population, however, there is an alternative for those who wonder how to convert an ejido land to private property.
This occurs when the ejido land is designated for housing use, it will continue to belong to the state until the Assembly grants the land to the epidermis as lots. It is then when, after a series of procedures, the evidentiary can acquire the rights to the land to sell it, rent it, inherit it, among others.
Risks when buying ejido land
At first glance, ejido lots – both in Yucatán and in the rest of the country – may seem like a better option to invest without allocating a large amount of money due to accessible costs, however, it is a short-term “advantage” term, since acquiring one of these lands can detonate some problems in the future:
- These are properties that belong to the state; therefore, their sale is illegal.
- The “sale” of ejido land is exposed to fraud; since, in the absence of a document proving their ownership, there may be multiple “owners” of the same land.
- The state has the full right to expropriate the land at any time, so there are chances of losing the land and the investment in it.
- By not having a document that guarantees the ownership of these lands, there is no support that provides legal certainty to protect the investor, their rights and the land itself.
Benefits of buying legal land
Unlike ejido lands that do not provide legal security to the buyer, legal lands ensure your investment and your assets, by carrying out the entire purchase and sale process in accordance with the law.
Among the main benefits are:
- Accreditation as the sole and true owner, which gives full right to the acquired land.
- Obtaining the support of legal entities in the event of any inconvenience that may arise in front of third parties.
- Ease to inherit or sell, because it can be verified who the owner is and in turn, legal security is granted to the buyer, which gives the property greater value.
- Access to mortgage financing using the property as collateral for financial institutions.
- By having the power to rent, you can get extra profits by leasing your land to franchises, even earn income without investing too much.
Although it is important to give priority to land whose cost adheres to the budget allocated for it, it is also essential to think about the cost-benefit of the investment to be made, since it is not worth putting money at risk for land that is not guarantees the security and stability that is sought in an investment.
In this sense, although it requires a greater investment, it is best to acquire a land that has complete documentation and complies with the legal aspects that govern this type of property, as this will translate into patrimonial protection and greater benefits in the future.
A recommendation if you are looking for options that fit your budget is to purchase pre-sale investment lots, which increase their value by providing a short-term profit.
There are also real estate companies such as – BMF Inversions – that have investment lots tailored to your needs, ideal for your industry or commercial project, as well as legal advice throughout the process, guaranteeing the security of your investment.
Legal purchase process What is required?
The best thing will always be to hire the advice of a real estate professional. To carry out a legal and safe purchase process, we have these suggestions for you:
- Hire a notary public: He will be in charge of verifying the documentation of the property you want to buy from either an individual or a real estate company, and will carry out the legal process of sale.
- Verify the identity of the seller: If it is a private individual, make sure that their identity documents are in order and that they have the title to the property subject to sale.
- Check the land use of the land: This must be adjusted to the needs of your project, and that it has the necessary characteristics for your land to increase its value in the medium and long term.
- Confirm the legal status of the property: Make sure it has the certificate of freedom from encumbrance and that its payments are up to date.
- Make the corresponding payments: Just as the seller must make the necessary payments so that the property is up to date, as a buyer you must carry out the corresponding tax payments, as well as the notary’s fees.
Legal land, the best option to invest
Now that you know the differences between legal lands and their advantage over ejido lands, you can include in your business plan, investment lot options to prepare your retirement, or ideal macro lots for your industry or project.
At BMF Inversions we have a professional team ready to guide you on the legal grounds in the main cities of the Mexican southeast to invest and the benefits they offer.