It looks the same, but most of it isn't

A large percentage of our clients come into our office much the same way I did a few years back, with little to no knowledge of the type of land available in Tulum. When we tell them that much of it is still ejido, I immediately hear their mental gears come to a grinding halt. The word ejido can be a monkey wrench to many, but not to all. And the second difference, which also takes a little getting used to, is that Tulum is positioned within the Restricted Zone. Understanding these unique aspects of the region will make your purchase process a much more comfortable one.

Foreigners are often shocked when they come to Tulum and find that there is land that they cannot purchase, and it’s true, by law non nationals are not allowed to own Ejido, but the constitutional reforms of 1992 state that ejido land can be converted into private property and sold to third parties, including foreigners.

In general terms, an ejido is a collective group of people that live and work on a determined piece of land as a community. The land is assigned for usage only, it belongs to the government until it becomes private property, something that only happens after the ejidatarios (the name used for the collective group) formally request it, and the period it can take for this to happen depends on the stability of the group. For US citizens this concept is similar to the Homestead Act passed in 1862 which gave away free land to whomever wanted to live on it, and lasted until 1976 when it was repealed. The differences betweens these Acts are greater than the similarities that might tie them together, but I do like to show that this was common practice, even in the US until the 1970s.

Often people are shocked that this type of land ownership, or I should say “usage”, is still in practice, but one must remember the relatively young age of this side of the Yucatan peninsula – which is part of the appeal. Merida, only a few hours west of Cancun, and the capital of the state of Yucatan, is over 500 years old, but the state Quintana Roo, mainly the region between Cancun and Tulum, is much younger. Cancun as we know it is only about 40 years old, and it too started as ejido. Later, after the success of Cancun, investors started looking south for cheaper land and found Playa del Carmen, also ejido at the time, only about 20 years old since the wave of investors landed on its amazing beaches looking to cash in on its beauty. It is important to note, that most of the land to the west of route 307/Carretera Federal is still ejido.

Ejido land cannot be sold to non nationals until it has been converted into private property. There are exceptions where non-ejido members can acquire “posessionary” rights to ejido land; however the rules governing rights of posession are not very secure, especially for foreigners. Because ejido land was given to the ejidatarios, it tends to go for the best prices, which is the reason it is so attractive to many investors. Unfortunately foreigners cannot legally become ejidatarios, and neither can corporations. For those purchasing land in Tulum, the ejido concept is by far the most important information to understand, but understanding ownership in the restricted zone is also important.

Foreigners can be owners of any property inland as long as it is not within 60miles from the border or 30miles from the coast. For property within these 60 or 30miles, known as the “Restricted Zone”, land must be bought through a bank trust, known as a Fideicomiso. And depending on what the buyer’s future plans for the land may be, whether it is for retirement, or to resell, creating a corporation or partnership may be the best option. A fideicomiso is an option created for the foreigner's benefit; it is an agreement between the buyer, the bank and the property's seller. The bank buys the property on behalf of the foreigner and follows the foreigner's every instruction. In this way the foreigner can make use of all the benefits of a proprietor to inhabit, enjoy, and profit from the property, whenever he wants. The Fideicomiso lasts 50 years, and can be renewed for another 50 years. It is important to note that a Fideicomiso is not a lease.

What is happening now then is that Tulum is in the sights of those investors who have lived through the rapid growth of this region known as the Riviera Maya, and betting that it too will be a success like the towns before it. The key here, regarding ejido land and purchasing through a fideicomiso, is to not let it discourage you. Do not allow yourself to get bogged down by all this new information.

We’ve all heard the horror stories of people purchasing property that they are actually not allowed to own. The odds of this happening to someone who’s being helped by a reputable real estate office are diminished. Without doubt, this is an amazing time to enter into this market; there are still incredible bargains in Tulum. And hundreds of foreigners continue to purchase land in Tulum and enjoy being a part of this healthy market. Every purchase doesn’t have to be for hundreds of thousands of dollars. Every day we incorporate new land with the perfect price for the investor with a modest budget, or who wants to test the waters before launching.

My advice to those looking to invest in this fantastic emerging market is not to be discouraged by what seems to be a difficult new process brought forth by never ending differences in the local real estate game. As I’ve said before, the most important thing a prospective buyer can do, after doing their homework, is finding the right sales associate to help with the details. By then the buyer will have a broad understanding of the purchasing process and feel greater control of the situation.

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It looks the same, but most of it isn't

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