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1.1 Legal Protection
1.2 Registries
1.3 Formal Ownership
In-Country Assessment Information

1. Property Rights

Goal – Property rights that are legally protected, secure, recorded in a single, accurate, widely accessible electronic registry and that lead to high levels of formal ownership for all citizens

 

 

1.1 Legal Protection

Core Question: Does an effective and sufficient legal framework exist to protect property rights for all citizens? No – Weak. Although property rights are in theory enshrined in Mexico’s laws, local political bosses and crime cartels have traditionally been able to wrest control of the land from peasants and control its uses.

Source: National Center for Policy Analysis
Economic Freedom and Economic Growth in Mexico
http://www.ncpa.org/pub/ba605

Legal Framework

1.1.1   Are property rights clearly defined and protected by law? No – Weak. Ranking 75th out of 148; Score 4.2 out of 7; Trend ↓ – this ranking is down slightly from Mexico’s ranking of 71st the prior year.

Security of Tenure

1.1.2   Can citizens challenge the legality of government takings? No – Weak. 78th out of 148; Score 3.3 out of 7; Trend ↑ – this ranking is up slightly from Mexico’s ranking of 85th the prior year.

Source: Global Competitiveness Report 2013-2014 – World Economic Forum
http://www.weforum.org/issues/global-competitiveness/a>

Bundle of Rights

1.1.3   Survey Question

SQ1    What is the bundle of rights (group of rights such as occupancy, use and the right to sell or lease) associated with both residential and commercial property ownership? Strong

The inequitable distribution of land in Mexico at the start of the 20th century, in which landless Mayans worked as indentured laborers for large private farms, was a primary cause of the country’s 1910 revolution. The resulting Constitution of 1917 provided for massive transfer of lands from large-scale owners to rural collectives known as ejidos and comunidades – and over the next 75 years, 100 million hectares (around 50% of Mexico’s arable land) was thus transferred. However, the country’s 1992 Agrarian Law ended the process of land redistribution from private farms to collectives – and also allowed for the lease, sale, and privatization of ejidal land (a reform that is now largely completed).

Four broad categories of land tenure are now in effect in Mexico: private ownership, known as domino pleno (a form of tenure akin to freehold); federal ownership; ejido ownership, and tenure in colonias (informal urban settlements on formerly vacant land that often convey a right of possession, but are subject to restrictions on transfer).

Source: USAID Land Tenure Mexico Profile. March 2011
http://usaidlandtenure.net/mexico

 

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1.2 Registries

Core Question: Does a reliable property registry exist including cadastral, title and mortgage lien information? No – Weak. However, Mexico’s cadaster and land registry systems are undergoing a re-engineering process that stands to drive major improvements in this indicator – see Survey Question 2 below.


1.2.1  Cadastral Information

Status – Strong

Survey Questions

SQ 2   Is cadastral information (information about the dimensions and location of land parcels) accessible to the public? Not currently. Mexico’s land registry mechanisms have historically been fragmented in several dimensions. First, the functions of cadastre and public property register have previously been split into two different systems. Second, cadastral registries have existed both at the state and municipal levels. Thirdly, the large amount of Mexican land (just over 50%) that is held in communal ejido parcels is principally registered through yet another system, the National Agrarian Register.

However, the National Institute of Statistics and Geography has led an initiative to link the cadasters and registries and standardize their contents. This initiative started with three of Mexico’s states in 2010, and was expanded to the rest of Mexico’s states starting in 2011. The completed initiative is expected to render a standardized, unified cadastre and public property registry with GIS data and permitted use information available to the public.

SQ 3   Is zoning/permitted use information included are use regulations respected and enforced? See above.

SQ 4   Are Geographic Information Systems (GIS) including Global Positioning Satellite (GPS) information used to create and update the registry? See above.

Source:
1) National Institute of Statistics and Geography. Program to Modernize and Link the Public Property Registry and Cadaster.
http://www.inegi.org.mx/geo/contenidos/catastro/presentacion_modernizacion.aspx

2) National Institute of Statistics and Geography. Integration of the Cadastral and Registry Information System. Presentation at UN-GGIM. 4 February 2013.
https://ggim.un.org/docs/meetings/2ndHighLevelForum/Session%201/Cadastral%20Information%20System%20MEXICO.pdf

1.2.2  Title Registry

Very Weak – Ranking – 150th out of 189 – Trend ↓ – the current state of registries is very fragmented, and registration requires numerous steps and significant time and cost.

1.2.2.1 What is the number of procedures required to register the transfer of a property from one owner to another? 7

1.2.2.2 What is the duration of time in calendar days that it would take to complete the transfer? 74

1.2.2.3  What is the total cost of the transfer including all fees, taxes, etc. expressed as a percentage of the value of the property? 5.3%

Source – Doing Business 2014 – Registering Property, World Bank
http://www.doingbusiness.org/data/exploreeconomies/mexico

1.2.3  Mortgage Registry

Status – Weak. The Mexican mortgage market has grown significantly in the past 15 years, but structural weaknesses persist.

Survey Questions

SQ 5   The mandatory use of notaries or similar officials slows down and adds cost to the process. Does a notary need to be involved in the registration process? Notarios play a central role in Mexico’s real estate sector, as all property transfers require notario involvement, and are subject to a significant fee.

SQ 6   Is information in the registry available electronically? Upon the completion of the overhaul of Mexico’s property registry systems that is currently underway by the National Institute of Statistics and Geography, property registry information should be available electronically.

SQ 7   Title insurance is indemnity insurance against financial loss from defects in title and from the invalidity or unenforceability of mortgage liens. Is title insurance available to lenders? Title insurance is widely available in Mexico.

Source:

1) Focus on Mexico. Roles of Notary and Lawyer in Mexico.
http://www.focusonmexico.com/Mexico-Topics/Legal-System-in-Mexico/Notary-versus-Lawyer.html

2) Linda Neil. Title Insurance in Mexico. In Baja Insider.
http://www.bajainsider.com/baja-real-estate/titleinsurancemexico.htm

3) Penner and Associates, Mexico Law guide. Registries in Mexico.
http://www.mexicolaw.com/Registries%20in%20Mexico.htm

 

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1.3 Formal Ownership

Core Question: Do citizens understand and trust property rights institutions and avoid the informal sector? No – Weak – homeownership has recently surged, and private land ownership is an emerging norm – but Mexico’s persistently high level of informality inhibits the country’s performance in this indicator.

Survey Questions

1.3.1 Land

SQ 8   What is the status of land ownership?  Strong – Following the 1992 Agrarian Law, land in Mexico’s ejidos (thought to comprise around 54% of the country’s arable land, and home to around half the country’s rural population) is fungible for market transactions such as sale, lease and private transfer of ownership.

Source: Dell, Melissa. Path Dependence in Development: Evidence from the Mexican Revolution. October 2012.
http://scholar.harvard.edu/files/dell/files/revolutiondraft.pdf

1.3.2 Home Ownership

SQ 9   What is the percentage of formal home ownership? Strong – At around 80%, the rate of homeownership is extremely high in Mexio, even by developed-country standards. The high level of homeownership was attained following strong growth in the country’s housing and mortgage markets during the 2000s.

This growth, in turn, was driven in large part by a policy package implemented starting in 2001 that encompassed reforms at INFONAVIT, Mexico’s largest public mortgage bank; the establishment of CONAVI, a housing-sector coordination agency; launch of a subsidy program for home purchases by low-income families; promotion of co-financing products and mortgage-backed securities; and the creation of a mortgage guarantee program through development bank SHF.

However, despite the quantitative gains in homeownership, qualitative concerns remain about the gains (e.g. relating to shoddy physical construction, problematic location or lack of amenities for the homes). Even so, the prevalence of “”official”” slums is relatively low, at around 14%.

Source:

1) Housing Finance in Mexico: Current State and Future Sustainability. Inter-American Development Bank. November 2011. http://www.iadb.org/en/research-and-data/publication-details,3169.html?pub_id=IDB-TN-287
2) Eulich, Whitney. In Mexico, low-income homeowners watch their dreams crumble. Christian Science Monitor, 26 June 2013. http://www.csmonitor.com/World/Americas/2013/0626/In-Mexico-low-income-homeowners-watch-their-dreams-crumble
3) UN Habitat Urban Indicators. http://data.un.org/Data.aspx?d=MDG&f=seriesRowID%3A710

1.3.3  Informal Sector

What is the percentage of services firms that report competing with unregistered or informal firms? Very Weak – 70.3% of firms report competing with informal businesses. This compares unfavorably with the 62.3% rate that prevails in Latin America, or the 55.5% global average.

Source: http://www.enterprisesurveys.org/

 

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In-Country Assessment Information