So What’s This Federal Zone?

And why is it so important?
BY: IVAN GUERRERO

The Federal zone comprises Federal Maritime Terrestrial Zone ( the Spanish acronym is ZOFEMAT), and Reclaimed Land (terrenos ganados al mar, or land gained from the sea).

Zofemat is an area that extends up to 20 meters, (about 60 feet), from the hide tide line inland, and reclaimed land  consists of that  fraction of land that may exist between the Zofemat land and the adjacent private property. (Beach front lot).

Both Zofemat and Reclaimed Land are part of the federal zone and belong to the Mexican nation and are administered through the Ministry of Environmental Matters (Secretaria del Medio Ambiente y Recursos Naturales).

A. Can I acquire land in the Federal Zone?

Although Zofemat cannot be bought, the Mexican government grants private individuals or entities a permit to use a part of it. This is known as a concession, but we might call it a lease.

The concessions granted by the Mexican government over Zofemat land are classified according to the intended use and could be for (i) protection, (ii) adornment, (iiii) economic activities or (iv) general use. Around here, concessions are often granted for tourist facilities such as bars and restaurants. All of those businesses on Medano Beach are Zofemat concessions. Concessions are commonly granted for a 15 year period and can be renewed for additional terms. 

Reclaimed Land, on the other hand, can also be part of a concession but the most interesting fact about it is that it can be changed from public domain to private domain and thereafter subject to acquisition through a specific administrative process before the Ministry of Environmental Matters.

An important fact to consider is that (i) owners of beachfront properties have preferential rights to obtain a concession over the adjacent federal zone and (ii) owners of lots that have obtained a concession over the adjacent federal zone have a preferential right for acquiring adjacent Reclaimed Land.

Please note that not all beachfront properties have adjacent Reclaimed Land. A specific survey process needs to be conducted in order to determine this.

B. Can I apply for concession of Federal Zone?

Non-Mexicans cannot apply for the concession directly, but can through the fideicomiso, a bank trust, which holds title to the front beach property while you hold title to the fideicomiso.. It is important to consider this fact when your fideicomiso is being drafted, because it needs to specify this in its purposes. If for some reason this is not spelled out within the original terms of the fideicomiso, it can be later added, although a specific amendment process needs to be carried out and consent from trustee is needed.

You might want to discuss this with your legal advisor before executing the trust agreement because some trustees‘ internal policies have changed recently and they are no longer allowed to conduct this process for the benefit of their clients. You might also want to conduct a specific due diligence process concerning the federal zone before acquiring a beachfront property. If there is a current concession, it is important that all rights to it are transferred to your fideicomiso as part of the transaction in order to avoid unnecessary problems in the future.

C. Is it complicated to obtain a concession over Federal Zone?

The process to obtain a concession over Zofemat land is not complicated itself, although you need the right professional team and patience because it can take between one and two years.

Acquiring Reclaimed Land is more complex and it requires an additional one to two year term, but this is because you will be buying land from the federal government and many internal procedures need to be conducted before the Ministry of Environmental Matters.

Although obtaining a concession over Zofemat land and/or acquiring Reclaimed Land sounds long and complicated, it should be a top priority for those acquiring beachfront properties in order to protect their real estate investments.

Ivan Guerrero is a Mexican lawyer and leads the Los Cabos office of the renowned law firm Portilla Ruy-Diaz y Aguilar, S.C. He is a member of the American Bar Association and focuses on complex corporate, real estate and intellectual property matters and can be contacted at iguerrero@portilla.com.mx. For further information and to view his full credentials please visit www.portilla.com.mx. This article is for educational purposes only and should not be relied on as legal advice or to create a lawyer-client relationship.