• What is it?
  • What are my rights and obligations?
  • How can I get it; and what are my benefits?

“En el mar la vida es mas sabrosa” / “Life is better at the beach”

1. What is a Federal Zone?

The Maritime Terrain Federal Zone, commonly known as the “Federal Zone,” is considered as:
a. In the case of a beach, it is the 20-meter coastal strip of firm accessible and contiguous land to such beach. And in the case of a river, it is the 20-meter strip of the riverside starting from the delta, going 100 meters along the river.
b. Regarding reefs and cays located in the Mexican seas, their total surface shall be considered the Federal Zone.
c. As to lakes, lagoons, estuaries or natural deposits of sea water communicated directly or indirectly with the sea, the 20-meter strip of Federal Zone will start from the point where the biggest annual deposit of water or limit of the zone where the “Highest Tide” is found.

Be aware that there are specific regulations for marinas, artificial marinas and farm estuaries, but I will not mention such regulations to keep this article as simple as possible.

Based on the above stated, you can find Federal Zone in:
• Beachfront properties (horizontal and inclined lands, as well as cliffs).
• Lakesides.
• Sides of estuaries, lakes or rivers.
• Reefs and cays.

Also, based on the above, please be careful not to “buy” a Federal Zone (which is equivalent to buying the Eiffel Tower, the Brooklyn bridge or waterfront property in Arizona!), and consider it as part of your property in the following cases:
• Property near to estuaries, lakes or rivers.
• Property on cliffs.
• Coasts with rocks and with no beach.

In this regard, please be aware that the Federal Zone is considered as goods of common use of the Mexican Federal Government, with the understanding that a Federal Zone cannot be transferred, lost by possession, seized or subject to any kind of lawsuit as to its possession. In short, a Federal Zone cannot be transferred or acquired.

2. Which are the uses of the Federal Zone?

The options to legally use of a Federal Zone are the following:
1 Protection
2 Ornament
3 General use (including a profitable activity such as a restaurant or a hotel)

3. How can I legally use the Federal Zone?

Any resident (company or individual) in Mexico can use a Federal Zone through a concession granted by the Mexican government; in this particular case the corresponding authority is the Secretary of Environmental and Natural Resources. (SEMARNAT, for its acronyms in Spanish).

Any foreigner owning a beachfront property through a Mexican corporation or through a bank trust can apply for a concession for use of the Federal Zone in favor of the Mexican corporation or trustee bank holding the property so as to use or exploit it.

4. Which is the term of Federal Zone Concession?

The concession can be granted for up to 50 years in accordance with the applicable law; however the specific regulation for the Federal Zone provides a maximum term of 20 years. Once elapsed, and if certain conditions are fulfilled, the concession can be extended through prior request to the environmental authority.

5. Which are my rights by having a Federal Zone Concession?

The concession over a Federal Zone does not give to the concessionary any ownership right, i.e., the concessionary can only use or exploit such Federal Zone in accordance with its concession title, but is not the owner in any manner.

On the other hand, the concession rights for a Federal Zone can be assigned (transferred) with the authorization of the environmental authority.

6. How can I file an application for the Federal Zone Concession?

The Federal Zone Concession can be granted by the Environmental authority by filing an application and the term for its resolution is:
1. 272 business days, generally; and
2. A specific term of 208 business days whenever the investment is valued 200,000 times the minimal wage in Mexico, (which is 45 pesos per day, times 200,000 i.e., approximately 9,000,000 pesos).

7. Which are my obligations by having a Federal Zone Concession?

The obligations for a concessionary are the following:
• To use the concession pursuant to its terms and conditions.
• To use the concession’s rights after the date of approval by the authority
• To start an authorized construction within the term provided in the concession, and to inform its completion within the following three days.
• To be liable for the damages caused by hidden defects of the construction or derived from repair or maintenance works.
• To cover the expenses for the survey of the property that is the subject matter of the concession
• To comply with the applicable law and regulations
• To allow inspections by the authority
• To build only the approved constructions
• To evict and deliver the federal zone at the end of the term of the concession

8. Can I lose the Federal Zone Concession?

a. Yes, the Federal Zone concession is terminated for the following reasons:
• End of term of the concession.
• Fulfillment of purpose of the concession, or impossibility to fulfill it.
• Death of concessionary.
• Dissolution, winding up and bankruptcy of the concessionary corporation.
• Loss of the property that is subject matter of the concession
• Expressed waiver by the concessionary.
b. Yes, the Federal zone concession is revoked for the following reasons
• Sub-concession, lease, encumbrance or performance of any act or contract entitling a third party to the rights provided in the concession, or execution of actions, legal or factual, that may change the conditions of the concession.
•To carry out any construction activity not provided by the concession, without the approval of the authority.
• Failure to settle two continuous payments of governmental fees provided in the concession.
• Performing or allowing the performance of criminal acts within the federal zone.
• Opposition or obstruction by the concessionary, its relatives or employees to authority inspections.
• Failure to fulfill the obligations provided by law and the title of the concession.
• Violation or breach of the laws, regulations or the conditions provided in the concession by the concessionary.

9. Apart from the legal point of view, which are the benefits of having a Federal Zone?

• More important than anything else: By having a Federal Zone, you can protect the area that adjoins your property for environmental purposes, therefore, you can save a small piece of our planet.
• No merchant (motorcycles, horseback ridings, parachuting, jet skiing, massages, food vendors, etc.) can obtain a permit to run a business in the Federal Zone if a concession to use it has already been granted.
• In a certain way, the value of your property can be increased, considering that you have a concession over the Federal Zone, not forgetting that you will not own the Federal Zone and that in order to transfer its rights, it shall be necessary to obtain a permit from the environmental authority.

Nowadays, a lot of service providers offer their services for the obtention of a concession over a federal zone. There is a wide range of fees and time tables available, but please look for professional service providers who are able to explain to you in advance the following aspects: Requirements, costs to be incurred, timetables, restrictions, terms, etc., and also, it is important that you receive copies of all the documentation so adequate and regular follow-ups to your application can be made, until its final completion.

ABOUT THE AUTHOR: Agustin Galindo is an attorney at law and founder of Galindo Abogados, S.C. Fully bilingual, he specializes in real estate, tax, civil, and commercial matters including litigation. You can visit the firm’s website at: www.galindoabogados.com and you can contact him by e-mail at agustingalindo@prodigy.net.mx, or his office by telephone (755) 554-9915 and 755-554-9916.