Introduction

One of the civil institutions in Mexico that is most used and, unfortunately, abused is undoubtedly the adverse possession action, which on other occasions is known as acquisitive prescription or usucapion. This civil institution allows anyone who has come to possess an asset—it can be movable or immovable—to be declared an owner by judicial resolution but without having completed the process to do so.

Figure that is nothing more than one of the many ways that the State has to regularize land ownership since it is precisely the State that is interested in ensuring that real estate is not amortized, that is, that the assets pass into dead hands, that they do not pay public services, and that the State does not obtain resources in its payment of rights and even the payment of property taxes or other real estate taxes.

However, this figure has given rise to abuse by legal operators since multiple simulations have been made with it when purchasing homes in Mexico. So much so that, as you will see, the Mexican Supreme Court of Justice had to intervene by issuing binding precedents that limit the origin of this civil action. This is to avoid procedural fraud and, more importantly, defend property rights.

Furthermore, there is an erroneous notion that using the adverse possession action exempts the payment of taxes, especially Income Tax. Hence, with little knowledge of the subject, real estate agencies arrange with their clients to simulate adverse possessions to avoid paying taxes. As will be seen soon, this is an illegal act that the Tax Administration Service (SAT) can enforce through criminal and fiscal means.

Finally, I can only clarify that although the 32 federal entities in Mexico regulate this figure, each one may have nuances that make it different to a certain extent, so I warn the reader that to discuss this topic, I will base myself on the Civil Code of the State of Chihuahua. You should be aware that seeking professional advice in the state you reside in is still necessary if anything here changes. Also, if the reader is a foreigner, to acquire property in Mexico, you must comply, for example, with the regulations regarding foreign investment. See the entry Foreign Invesment in Mexico for more information.

Table of Contents

• 1) Characteristics
• A) Definition
• B) Object of the Adverse Possession Action
• C) Who can Prescribe Goods?
• 2) Who Does Study the Adverse Possession Action?
• 3) Requirements of the Civil Claim
• 4) Elements of the Adverse Possession Action
• A) The Possession as Owner
• B) Possession Period
• 5 Years
• 10 Years
• Increase of the Period
• Necessity to Prove the Possession as Owner
• C) Continuous Possession
• D) Peaceful Possession
• E) Public Possession
• 5)  Adverse Possession Action in Good and Bad Faith
• A) Good Faith
• Certain Date
• B) Bad Faith
• C) Common Rules
• 6) Adverse Possession Action Prohibitions
• 7) Adequacy of the Evidence
• 8)  Taxes Regarding the Adverse Possession Action
• A) Income Tax
• B) Tax on Transfer of Ownership of Real Estate
• 9) Adverse Possession’s Judgment Registration

1) Characteristics

A) Definition

Adverse possession action is a means of acquiring property by virtue of its possession, through the passage of a certain time, and under the conditions established by law.

B) Object of the Adverse Possession Action

Only goods in commerce can be subject to this action, except for the exceptions established by law.

The state of Chihuahua, its municipalities, and other public legal entities shall be considered individuals for the prescription of their assets that are susceptible to private property.

In that sense, assets that apparently belong to the ‘government’ may also be subject to adverse possession action as long as they are not used for a public service or in common use. This is right, considering the systematic and contra-sense interpretation of articles 735, 738, 741, and 1150 of the Civil Code of the State of Chihuahua^[1].

Finally, it’s illustrative to weigh whether a government property is intended for a public service or common use, the following binding precedent of the First Chamber of the Mexican Supreme Court of Justice that resolved a legal conflict over the property where the Ciudad Juárez International Airport, Chihuahua is located: GOODS INTENDED FOR A PUBLIC SERVICE. ARTICLE 741 OF THE CIVIL CODE OF THE STATE OF CHIHUAHUA DOES NOT AUTHORIZE THE STATE TO ASSIGN THAT DESTINATION WITHOUT THERE PREVIOUSLY EXISTING A LEGAL ACT THAT INVOLVES OR HAS AS A CONSEQUENCE THE ACQUISITION OF THE DOMAIN OF THE PROPERTY^[2].

C) Who can Prescribe Goods?

All those capable of acquiring by any other title can acquire goods by the adverse possession action; minors and other incapacitated persons can do so through their legitimate representatives.

In any case, people with the capacity to alienate can renounce the prescription earned but not the right to prescribe for the future.

Finally, if several people own something in common, none can prescribe against its owners or co-owners. Still, it can be prescribed against a stranger; in this case, the prescription shall benefit all participants.

2) Who Does Study the Adverse Possession Action?

Like any civil action, the claim must be filed before a civil judge in the state of Chihuahua. However, the ordinary civil procedure applies to adverse possession action, so the trial must be conducted pursuant to the rules of the ordinary trial. If you want to know more about this topic and what to expect, see the entry Basic of the Ordinary Civil Trial in Chihuahua, Mexico.

3) Requirements of the Civil Claim

Like any ordinary civil lawsuit, the requirements that the lawsuit must contain are the following:

I.- The declaration of the court before whom it is promoted.

II.- Your name or company name and address to receive notifications.

III.- Clearly state the petitions of your claim.

IV.- The clear, concise, and chronological narration of the background’s case.

V.- The legal regulations that you consider applicable

VI.- Offer the evidence that you intend to present at the trial, clearly expressing the particular facts that you intend to prove with them (the latter is very important since if you do not comply with it, the evidence may be discarded and you may lose the trial)

VII.- Signing the claim.

4) Elements of the Adverse Possession Action

For the action of adverse possession, positive prescription, or usucaption to proceed, it’s necessary to prove, in accordance with the binding precedent issued by the Mexican Supreme Court of Justice: POSITIVE PRESCRIPTION. REQUIREMENTS THAT MUST BE PROVIDED FOR ITS PROPIETY the following: A) the possession as owner; B) that the possession was greater than 5 or 10 years; C) that the possession was continuous; D) that the possession was peaceful and E) that the possession was public. Let’s take a look at all of them:

A) The Possession as Owner

This action element is the most important, given that not all possession of a good, much less its tenure, is suitable for prescription acquisition. Hence, if it is not demonstrated in court that possession was entered into as owner, the consequence of the positive prescription action itself shall be inadmissible. The above, pursuant to the provisions of article 796 of the Civil Code of the State of Chihuahua^[3].

First of all, to understand this, I must mention that to possess a thing legally is to exercise de facto power over it and that the right of possession, by itself, can engender multiple rights other than that of prescribing.

Furthermore, according to our legislation, it’s important to clarify that there are substantially two types of possessions: 1) original and 2) derived (for greater clarity, see the precedent: ORIGINARY POSSESSION AND DERIVED POSSESSION. DIFFERENCES^[4]) The first refers to the power that the owner of the thing has, who may or may not be materially using it, as could be the case of a large landowner who, without inhabiting each of his lands, is possessing them as owner.

The second occurs when, through a legal act, the owner of the thing grants the right to a person to use it and retain it temporarily in their capacity as usufructuary, lessee, pledgee, depositary, or any other similar title that derives from a legal act.

On the other hand, there is also a way of using a thing commonly confused, even by the authorities themselves, as possession, which is the mere tenure of things. A tenure that, despite ‘using’ and ‘even enjoying the thing’, as it does not originate in a legal act to convert it into derivative possession or does not have the title of owner to have the character of original possession, is not the object of protection by our legal system. See the criteria of our highest court: POSSESSION. IN ORDER TO BE THE SUBJECT OF PROTECTION IN THE INDIRECT AMPARO PROCEEDING, WHEN THE COMPLAINANT IS A STRANGE PERSON TO THE CIVIL ORDER TRIAL, HE MUST PROVIDE HIS RIGHT TO OWN WITH A TITLE SUPPORTED IN SOME LEGAL FIGURE OR PRECEPT OF THE RELATIVE SECONDARY LEGISLATION^[5].

The lack of protection for the simple tenure of things is reasonable if one considers that there could be a risk that any person may try to prescribe assets by, for example, simply placing objects of their property to ‘mark territory’. A question that, although you think it is laughable, many people have tried. Thus, it’s common for poorly advised people to ‘invade’ properties and place debris or anything else to say that ‘they are possessing’ them. Worst? Due to the supreme ignorance of many authorities (most of them the public administration), they recognize simple tenure as a right of derived possession until you litigate the matter.

In conclusion, regarding this first element of the adverse possession action, you must prove in court that you came into possession as owner and that, therefore, you do not have a derivative possession (such as it could be that you are renting the house that you intend to prescribe) element that varies if you exercise the action in question under the principle of good or bad faith. Principles that I will discuss later.

B) Possession Period

The law, considering the origin of possession as owner, imposes different time periods for the statute of limitations for real estate, these being 5 and 10 years, while for movable property, it is 3 to 5 years. But for now, we are interested in discussing real estate.

In that sense, the rules for the prescription of real estate in Chihuahua are the following:

5 Years

I.- When the real estate is held as an owner, in good faith, peacefully, continuously, and publicly.

II.- When the properties have been subject to a prior possession registration without the need to prove good faith, peaceful, continuous, and public possession.

10 Years

I.- When real estate is possessed in bad faith, as long as the possession is as owner, peaceful, continuous, and public.

Increase of the Period

On the other hand, there are three cases in the law by which the previous terms must be increased, namely:

I.- The deadlines required to prescribe real estate in good faith and bad faith shall be increased by one-third for the possessors of a rural property if he has not cultivated it for most of the time he has possessed it.

II.- The deadlines required to prescribe for good and bad faith in real estate shall be increased by one-third for the possessor of an urban property who has not made the necessary repairs to it or when it has remained uninhabited for most of the time and when it was in his power to inhabit it.

III.- When possession is acquired through violence, even if it ceases and possession continues peacefully, the period for prescribing real estate shall always be 15 years.

In any case, it’s pertinent to clarify in this last point that possession acquired through an antisocial offense with or without violence shall be considered for the prescription from the date the penalty indicated by the Crime Code has expired or the statutes of limitations of criminal action take effect. Considering, of course, possession for its calculation as acquired through violence.

Necessity to Prove the Possession as Owner

It’s important to mention that due to the freedom of legislative configuration that the federative entities have in terms of article 124 of the Political Constitution of the United Mexican States, in many cases, the rules for civil institutions are similar but not equal. In specific cases, there are laws where the lawmakers stated that possession of more than 15, 20, 25, or even 30 years has the effect of not having to prove in court that the plaintiff entered into possession as owner.

Legislations give rise to a series of judicial precedents that, on many occasions, the courts of the state of Chihuahua invoke to bolster their resolutions without applying to the specific case. Among them, the following precedent even issued by the Mexican Supreme Court of Justice draws attention: ACQUISITIVE PRESCRIPTION OF PROPERTIES WHOSE POSSESSION IS FOR MORE THAN TWENTY YEARS, FOR IT TO PROCEED, IT IS NOT NECESSARY TO PROVIDE A JUST TITLE OR THE GENERATING CAUSE OF POSSESSION (LEGISLATION OF THE STATE OF GUANAJUATO)^[6].

Such precedent, of course, is not applicable to the state of Chihuahua since there is no legal provision presented by Chihuahua’s lawmakers in the sense that to prescribe real estate, the exception is to prove the just title or the generating cause of possession or other elements of the action. Certainly not so.

Therefore, in Mexico, you must be cautious, at least in our state of Chihuahua, not to think that because you have owned real estate for up to 30 years, it may be prescribed without correctly proving every one of the elements of the action since, at least in our entity, the requirements for its origin are rigorous. The following precedent serves as a basis for the above: BINDING PRECEDENTS. FOR THE ISSUED ON THE OCCASION OF THE INTERPRETATION OF THE LEGISLATION OF ONE FEDERAL ENTITY TO BE APPLICABLE IN ANOTHER, LEGAL PROVISIONS WITH SIMILAR CONTENT MUST EXIST IN BOTH STATES^[7].

C) Continuous Possession

This element of the action is based on the fact that the possession that the concept of owner has acquired has not been interrupted by one of the following ways:

I.- When the possessor is deprived of the possession of the thing or the enjoyment of the right for more than one year.

II.- Because the possessor is sued or by any other judicial challenge related to the ownership of the property in possession.

However, even with the claim, possession shall be understood as not interrupted by judicial challenge if the plaintiff desists from it or if it is dismissed in court.

III.- Because the person in whose favor the possession and the right to prescribe runs expressly, verbally, in writing, or tacitly, through unquestionable facts, recognizes the right of ownership to another person.

IV.- By abandonment.

V.- By transfer for valuable consideration or free of charge.

VI.- Due to the destruction or loss of the property or because it is no longer in commerce.

VII.- Due to dispossession, if the possession of the dispossessed person lasts more than 1 year.

VIII.- Due to the owner’s claim. To understand this topic, see the following entry         How to Get Back an Invaded Property in Mexico where the rei vindicatio action was analyzed.

IX.-  Due to expropriation for reasons of public utility.

D) Peaceful Possession

This element must be understood as that possession that is acquired without violence. For this, it’s essential to remember that in the previous lines, I stated that, according to the law, possession with violence is indeed viable to prescribe real estate. However, it must be remembered that the legislator refers to the fact that once the crime is extinguished by the status of limitations or the sentence is extinguished, the prescription with ‘violence’ shall begin to be computed. Hence, this element only reinforces how the term for prescription must be computed.

E) Public Possession

Finally, this last element implies that the possession has been known to all or that at least there are indubitable signs that it has been made known in accordance with the maxims of experience, such as that the immediate neighbors of the property have perceived the possessor as the legitimate owner. Or, more simply, when the possession is registered in the Mexican Public Property Registry.

5)  Adverse Possession Action in Good and Bad Faith

To complicate things a little more regarding the first element of the action of the adverse possession or prescription, that is, having entered into possession as owner, it must be said that this possession can occur in two ways: A) in good faith and B) in bad faith. These forms have different periods for their origin and rules, so it is important to consider them. Let’s see what it is about.

A) Good Faith

The adverse possession action in good faith is spoken of when the possessor has entered into possession of the property that is intended to be prescribed based on a just title, a concept that we must understand as any legal act, whether verbal or written, that legitimizes the possessor to behave ostensibly and objectively as the owner, by carrying out acts that reveal his domain or mandate over the property to make it his own. To better understand this concept, read the following precedent:  JUST TITLE, WHICH SHOULD BE UNDERSTOOD AS^[8].

A possessor in good faith is also the one who, in his case, is unaware of the defects of his title that prevent him from possessing as owner. This can happen, for example, when there is the belief that a contract of sale was entered into with the legitimate owner of the property, who in reality did not have this character and, therefore, could not alienate it.

The consequence of having a just title grants some advantages to the plaintiff of this action, such as a shorter period to prescribe, since the one who has entered to possess as owner under the principle of good faith shall be able to sue for the adverse possession action in just 5 years.

On the other hand, I want to clarify that the just title should not be thought of as having the public deed that protects the property—although, in many cases, it does exist—because it would be absurd to have the true title of the property and still want to sue for adverse possession against oneself.

On the contrary, the just title requires a higher degree of perfection to become an owner without having completed the total process of transfer of ownership due to some condition, omission, or negligence.

For example, think of the buyer who acquired a property under a private contract, even though the law demands that it be done through a public deed. Or, the buyer who entered into a contract of sale in a public deed but with a clause of reservation of title, that is, of not obtaining the property owner’s status until the total price is paid.

Even worse, the possessor who claims to have acquired possession as owner through a legal act that alienated the property, but that this act was verbal.

Thus, during our legal practice, we will encounter multiple problems in weighing up whether there is a just title since there will be contracts with no alienation and, therefore, no transfer of the property element. A sine qua non requirement is to consider the first element of the action satisfied, consisting of having acquired possession as owner. Also, contradictory precedents of the highest courts will make us doubt whether to opt for good or bad faith in exercising the adverse possession action.

The following precedents are an example of the above, revealing the case-by-case problem of determining when a legal act does have the nature required by law as a ‘just title’.

SALE WITH RESERVATION OF OWNERSHIP. THE RELATIVE CONTRACT CONSTITUTES A JUST TITLE TO PROVE POSSESSION WITH THE CHARACTER OF OWNER TO EXERCISE THE ACTION OF ACQUISITIVE PRESCRIPTION^[9].

ACQUISITIVE PRESCRIPTION IN GOOD FAITH. WHEN IT IS BASED ON THE FACT OF HAVING CELEBRATED AN ORAL PURCHASE AND SALE, THE KNOWLEDGE THAT THE PROPERTY IS MORTGAGED IN FAVOR OF THE INSTITUTE OF THE NATIONAL HOUSING FUND FOR WORKERS (INFONAVIT), IN TERMS OF ARTICLE 49, FIRST PARAGRAPH OF THE LAW THAT GOVERNS IT, DOES NOT VITIATE THE JUST TITLE FOR THE PROCEEDING OF THE ACTION^[10].

ADVERSE POSSESSION ACTION. THE JUST TITLE NECESSARY TO DEMONSTRATE THE TRANSFER OF OWNERSHIP ACT IS NOT PROVEN BY A VERBAL DONATION^[11].

USUCAPION. THE SIMPLE HOLDER OF THE GOOD OR DERIVED POSSESSION, EVEN IF HE HAS A TITLE IN WHICH THE RIGHTS OF POSSESSION HAVE BEEN TRANSFERRED TO HIM, DOES NOT CONSTITUTE A JUST TITLE TO OBTAIN HIS OWNERSHIP THROUGH THAT FIGURE^[12].

USUCAPION. WHOEVER ASSERTS IT IS ONLY OBLIGED TO DEMONSTRATE THE JUST TITLE WITH WHICH HE CAME TO POSSESSION; THEREFORE THE VERBAL CONTRACT OF TRANSFER OF RIGHTS AS OWNER IS SUFFICIENT TO ESTABLISH THE EXISTENCE OF THAT^[13].

ADVERSE POSSESSION ACTION. THE CONTRACT OF ASSIGNMENT OF POSSESSION RIGHTS DOES NOT IN ITSELF CONSTITUTE THE JUST TITLE SUITABLE FOR THAT LEGAL FIGURE TO OPERATE^[14].

Certain Date

It would not be complete to speak of the just title in the action of prescription for good faith without mentioning that through various precedents of the Mexican Supreme Court of Justice, an attempt has been made to end a despicable practice that consists of simulating legal acts with a date before more than 5 years with the sole purpose of prescribing real estate.

This simulation is common among those pseudo real estate and furniture agents who, with great ignorance, think that by alienating real estate through false simulation actions, the parties save on taxes. A thought that, as we will see later, is wrong.

The point is that the practice in this matter is that two parties who intend to enter into a contract of sale avoid the celebration of this before a notary public and, instead, propose to the buyer to pay the price of the real estate and on the other hand, the seller grants him a private contract of sale with an antiquity of more than 5 years so that the buyer, later, exercises the adverse possession action and he gets the property. All this is done under the verbal agreement that the seller will ‘surrender’ the claim or simply not answer.

Also, this despicable practice of simulating private acts of sale or of any other nature that alienates real estate was used in vile procedural fraud to take away the ownership of property from its legitimate owners since it was enough to review the owner’s data in the Public Property Registry and, sometimes even his official identification, to draw up, like vile criminals, private contracts with false signatures later to sue the adverse possession action in good faith.

Faced with these types of practices that got out of control, the Mexican Supreme Court of Justice intervened and decided that in the case of adverse possession actions in good faith that were exercised based on a just title in writing—remembering that this action in good faith can be exercised even with a verbal contract, but this entails a more complex and reinforced accreditation in court—it must have a certain date. But what does it mean for a private contract to have a certain date?

The certain date in private contracts implies that the date on which it must begin to take effect for third parties and legal purposes is not the one stated in it since this is manipulable, and the contract itself does not provide legal certainty that it was drawn up precisely on that date. Instead, the date for the effects mentioned above that shall be the ‘certain’ one, shall derive from the day on which 1) they are registered in the Public Registry of Property; 2) they appear before a public notary (for example to obtain a certified copy) or 3) one of the signatories dies. The above, as stated in the following precedent: ADVERSE POSSESSION ACTION. THE PRIVATE PURCHASE-SALE CONTRACT EXHIBITED TO PROVE THE JUST TITLE OR THE CAUSE GENERATING THE POSSESSION MUST BE OF A CERTAIN DATE^[15].

In this sense, it would not matter if, in the state of Chihuahua, the adverse possession action was exercised under the principle of good faith and, therefore, a private contract of sale from more than 20 years ago was exhibited if the contract itself does not show a certain date. This is because the 5-year period for the prescription to operate for this concept shall not start counting from the date of the contract itself but from the certain date. Then, if this does not occur, the element of temporality will not be complied with to make the action appropriate to obtain the property of the contested good.

That is why if you, as a buyer of real estate in Mexico, are offered to buy one and simulate a private contract of sale so that you may exercise the adverse possession action, logically, there will not be a certain date sufficient for the action to prosper, so you would be risking your assets. A supposition that unfortunately happens very frequently.

Now, the reader will ask, where is the basis of the certain date? The reality is that in the state of Chihuahua, there is no express statute from lawmakers—due to their apathy and gross ignorance on this subject—however, given the problem that the simulation of adverse possession action came to generate throughout the country, the Mexican Supreme Court of Justice issued a binding precedent that all judges must comply with, that is, that even when there is no express provision to require the certain date in the just title in the state legislation, the judges should not consider the action admissible without complying with this requirement.

Precedent that it’s the following: ADVERSE POSSESSION ACTION. ALTHOUGH THE APPLICABLE LEGISLATION DOES NOT REQUIRE THAT THE JUST TITLE OR TRANSFER ACT OF OWNERSHIP THAT CONSTITUTES THE CAUSE GENERATING THE POSSESSION IN GOOD FAITH BE OF A CERTAIN DATE, THE CERTAINTY OF THE DATE OF THE LEGAL ACT MUST BE PROVEN IN A RELIABLE MANNER BECAUSE IT IS AN ELEMENT OF THE JUST TITLE^[16].

However, with some concern, at least in Ciudad Juárez, Chihuahua, I still know of some judges who do not apply the last two precedents that I mentioned, to the point that, among friends, I often comment that there are judges who are capable of prescribing even properties subject to the public domain, simply due to their sheer ignorance.

Whatever the case, it’s  always best to comply with the law and not put your freedom and assets to chance. Therefore, when you have to exercise the adverse possession action in Mexico under the principle of good faith and as a just title, you show a private document, so make sure that it complies with having a certain date so that the prescription period can be computed.

B) Bad Faith

As regards the adverse possession action under the principle of bad faith at the time of acquiring possession as owner, first of all, it must be said that the period for it to operate is longer since 10 years of possession as owner are needed, continuously, peacefully and publicly for the action to prosper. Why the increase in the period? Because of how possession was entered into.

And the bad faith resides in the fact that the possessor as owner did not enter into possession of the property under a ‘just title,’ that is, a legal act, whether written or verbal, in which the alienation of the property is recorded. On the contrary, the only thing needed is that the possessor proves a cause generating the possession. Cause that must be with the intention or intention of behaving as the owner of the real estate. Or that the possessor is simply aware of the defects that his ‘just title’ may have. Let me explain:

The cause generating the possession does not imply that the plaintiff enters to possess violently—which would not comply with the element of peaceful possession—but is not, therefore, ‘criminal.’ Consider, for example, people who invade abandoned real estate. Of course, there is no consent from the owner to enter to possess as owner. However, in an invasion, one enters to possess regularly to become the owner.

In this example, there would be a cause generating the possession—an invasion—that at first might seem despicable to the legitimate owner but, in the end, is beneficial to the State since a new possessor would be using the real estate and, therefore, probably paying its taxes. Hence, the legislator allows this type of positive prescription for bad faith to operate, but with a considerable increase in its term.

On the other hand, the second assumption that a possession is considered to be bad faith is that the possessor is aware of the defects in his title. This could be the case in which the possessor is aware that the person who sold him, for example, the real estate, is not actually its owner but a relative or supposed agent who never proved to have the authority to sell.

In this case, there would be a defect in the title with which the possession was entered into and, therefore, if it’s proven that the possessor was aware of such a defect, his adverse possession action would not apply under the legal hypothesis of good faith because he is now aware of the defects in his supposed just title. Defects that in any case the judge could somehow notice ex officio and if the action was not exercised in bad faith, he would consider it inadmissible.

From this subject it’s important to mention the following courts’ precedents that also rule the matter:

ADVERSE POSSESSION ACTION OF BAD FAITH AND WITHOUT TITLE. FOR IT TO OPERATE, THE CAUSE GENERATING THE POSSESSION MUST BE FAITHFULLY PROVED^[17].

ADVERSE POSSESSION ACTION OF BAD FAITH DERIVED FROM THE COMMISSION OF A CRIME. THE REQUIREMENT TO DEMONSTRATE THE CAUSE GENERATING THE POSSESSION DOES NOT VIOLATE THE RIGHT TO NON-INCRIMINATION^[18].

ADVERSE POSSESSION ACTION OF BAD FAITH. THE VICES CONTAINED IN THE DOCUMENT THAT CREDIT THE CAUSE GENERATING THE POSSESSION ARE LESS TRANSCENDENT FOR THE ORIGIN OF SAID ACTION^[19].

ADVERSE POSSESSION ACTION. WHOEVER APPEARS TO BE A POSSESSION IN BAD FAITH MUST OFFER SUFFICIENT PROOF TO PROVIDE THE CAUSE GENERATING THE POSSESSION^[20].

C) Common Rules

When the adverse possession action is exercised, care must be taken to attempt it in good or bad faith because once the action is attempted, the course cannot be changed, even if it is evident that the action will succeed. The above, according to the next precedent: ADVERSE POSSESSION ACTION. IF THE ACTION IS EXERCISED BASED ON POSSESSION IN GOOD FAITH, THE JUDGE IS PREVENTED FROM EXACTLY ANALYZING POSSESSION IN BAD FAITH^[21].

On the other hand, great care must be taken when there are indications that the plaintiff was aware that he knew about the defects of his just title because if he attempts the adverse possession action under the principle of good faith. Still, there are elements in the judicial record to conclude that he knew of the imperfection of his just title, the action shall be inadmissible because it was not attempted under the principle of bad faith. This conclusion is supported pursuant to the systematic and harmonious interpretation of articles 778, 796, 797, and 1141^[22] of the Civil Code of the State of Chihuahua.

6) Adverse Possession Action Prohibitions

According to the law, there are certain people against whom the adverse possession action cannot be exercised and, therefore, obtain ownership of their real estate. Legal hypotheses are the following:

I.- Between ascendants and descendants.

II.- Between spouses.

III.- Between the incapacitated and their guardians or curators while the guardianship lasts.

IV.- Between co-owners regarding common property.

V.- Against absent members of the State who are in public service (mayors, governors, etc.)

VI.- Against military personnel on active duty in times of war, both outside and within Chihuahua.

7) Adequacy of the Evidence

At the time of exercising the adverse possession action, the lawyer sponsoring the case must offer suitable evidence to prove every one of the elements of the said action since the adverse possession action is—and with good reason should always be— one of the most complex and technical civil actions to prove in court.

Offer of evidence that must always be made, at least in the state of Chihuahua, thanks to the excellent precedent issued by the then Plenary Court of the Seventeenth Circuit that, with this binding precedent, inhibited the simulation and various procedural frauds that were generated in our entity with this action. A binding precedent is the following:

ADVERSE POSSESSION ACTION. THE SURRENDER OF THE CLAIM IS NOT SUITABLE TO DEMONSTRATE THE “ATTRIBUTES OF POSSESSION” (LEGISLATION OF THE STATE OF CHIHUAHUA)^[23].

The conclusion is true because, as I mentioned in previous sections, it was common for ‘real estate companies’ and other fraudsters to simulate private sales contracts with previous dates so that their clients would acquire ownership of the real estate, but not thanks to the sales contract, but rather to the final judgment derived from the adverse possession action in good faith.

A judgment that commonly was issued after the defendants surrendered themselves in the trial—if the buyer was lucky—and, with this, the ‘win’ of the trial was inevitable. Now, this has been put to a stop with the precedent in question since it forces lawyers to provide a robust body of evidence to prove that the adverse possession action is not only appropriate but that it’s not the product of a vile simulation.

On the other hand, it’s also important to clarify that testimonial evidence plays a crucial role in this trial, so I recommend that at least three witnesses be offered and that they be prepared for the trial hearing. Yes, you read that right. Get ready. The preparation does not intend to make phony testimonies. On the contrary, our duty as attorneys is to help witnesses render their testimony in court just the way this action needs. Let me explain.

One of our roles as attorneys is not only to design the legal strategy and prepare the briefs but also, often, to prepare the evidence within our reach. People’s testimonies are no exception because even though they did perceive certain facts, the way in which they present them is very sparse, or they simply get nervous. This is where the attorney must prepare them and generate the confidence they need to succeed in the Oral Trial Hearing.

In the context of the adverse possession action, this is vital because although a witness may know specific facts, such as the reason why the plaintiff came into possession of the real estate (as owner), where it’s located, and the exact date of that possession, it is also true that if for this trial they are not very precise with the date, address, and other information, their testimony shall not be beneficial. For this, see the following precedents:

ADVERSE POSSESSION ACTION. WHEN A VERBAL CONTRACT OF PURCHASE IS INVOKED AS THE GENERATING CAUSE OF POSSESSION, WHICH EXISTENCE IS INTENDED TO BE ACCREDITED WITH TESTIMONIAL EVIDENCE, THE WITNESSES MUST STATE THE EXACT DATE ON WHICH IT WAS CELEBRATED^[24].

PRESCRIPTION: IT IS NECESSARY THAT THE WITNESSES OFFERED BY THE ONE PROMOTING PROVIDE THAT THE POSSESSION OF THIS IS AS THE OWNER^[25].

Practically, many of the elements that I have already analyzed regarding adverse possession action are difficult to prove by documentary evidence (which plaintiffs rarely have anyway), so it could be said that testimonial evidence is king in this matter. Hence, not only should witnesses be offered correctly, but also questions should be asked to prove the elements of the action and, as I already stated, taught how to answer what they already know.

The above, but not before remembering that the facts must be narrated chronologically and sufficiently; otherwise, the evidence cannot correct such deficiencies. Supports this conclusion, the following precedents:

EVIDENCE. THEY LACK EFFECTIVENESS IF THEY REFER TO FACTS NOT MENTIONED IN THE CIVIL CLAIM OR ANSWER^[26].

CIVIL CLAIM. THE FACTS CONSTITUTING THE ACTION ATTEMPTED MUST BE STATED AND NOT INFERRED FROM THE ACCOMPANYING EVIDENCE^[27].

POSSESSION TO PRESCRIBE. PROPERTY TAX AND PUBLIC SERVICE RECEIPTS. THEY DO NOT CONSTITUTE SUITABLE OR EFFICIENT EVIDENCE TO DEMONSTRATE IT^[28].

POSITIVE PRESCRIPTION OR USUCAPION. THE SURRENDER OF THE CLAIM IS NOT SUFFICIENT TO PROVE BY THE PLAINTIFF THE ATTRIBUTES OF POSSESSION, AS ANOTHER OR OTHER EVIDENCE IS REQUIRED FOR ITS VERIFICATION^[29].

8)  Taxes Regarding the Adverse Possession Action

One of the biggest myths in Mexico about the adverse possession action is that exercising it exempts us from paying ‘taxes’ and other contributions in general^[30]. A statement that, of course, is erroneous. This is because the payments related to the Income Tax and the Property Transfer Tax stand out in addition to the registration fees that must be paid for the acquisition of goods and other contributions. Let’s see what they are about.

A) Income Tax

This tax on the acquisition of goods applies to both individuals and legal entities, given that there is no impediment for legal entities to prescribe real estate. This tax is essentially regulated in articles 9, 16, 130, 131, and 132 of the Income Tax Law. In that sense, legal entities shall pay the tax at the rate of 30%, and individuals shall pay the tax at the rate of 1.92% to 35%, calculated on the appraisal value.

On the other hand, since the adverse possession action occurs more in individuals, I would like to highlight that they must cover as a provisional payment on account of the annual tax the amount resulting from applying the 20% rate on the appraisal amount within 15 business days after obtaining the income.

Also, those individuals who obtain income from the acquisition of goods may make the following deductions to calculate the annual tax:

I.- Local and federal contributions, except for income tax and notarial expenses incurred for the acquisition.

II.- Other expenses incurred as a result of trials in which the right to acquire is recognized.

III.- Payments made due to the appraisal.

IV.- Commissions and mediations paid by the purchaser.

Finally, it’s important to clarify that there is an erroneous notion that the adverse possession action does not entail the payment of Income Tax due to the fact that the figure of withholding by the jointly liable party in a high purchase and sale contract is not updated in public writing. However, even if there is no withholding of this tax carried out by the corresponding public notary, it should not be overlooked since if the Tax Administration Service detects non-payment of this tax, it can validly impose a tax liability on you. Normally, the Tax Administration Service has 5 years to do so. Be aware.

B) Tax on Transfer of Ownership of Real Estate

This tax is municipal and is regulated by articles 155 to 165 of the Municipal Code of the State of Chihuahua. Its object is the acquisition of goods located in the municipality of Chihuahua in question, with the exception of those carried out by the Federation, the federal entities, or the municipalities to form part of the public domain or even of foreign states in case of international reciprocity.

Conversely, individuals or legal entities that acquire real estate or the rights related to it in any municipality in the state of Chihuahua are subject to this tax.

The tax rate is 2% of the taxable base, and this is calculated whichever is greater than:

I.- The value of the property whose ownership is acquired and determined through the appraisal carried out by the Municipal Treasury, a credit institution, or a valuation specialist based on the physical value of the property. Appraisal that it should not be older than 1 year.

II.- The cadastral value.

III.- The value of the property indicated in the act of acquisition.

Finally, the tax must be paid within the following month from the final judgment of acquisition by prescription, in accordance with article 160, section IV of the Municipal Code of the State of Chihuahua.

9) Adverse Possession’s Judgment Registration

As I have already gone on too long with this topic and because the registration of the judgments involves many administrative procedures, for now, I will only mention what must be done once the favorable judgment of the adverse possession action becomes final since you should know, that the judgment must be registered in the Public Property Registry and this implies checking many things, such as the payment of taxes that you already saw in the previous section.

The requirements to register the final ruling of the adverse possession action are the following:

I.- Present a certified copy in duplicate of the final judgment and the order stating that it was enforceable (where it became final)

II.- An official letter issued by the court of first instance ordering the registration of the judgment in the Public Property Registry.

III.- Appraisal not older than 1 year in original and copy.

IV.- Prove the payment of the Tax on Transfer of Ownership of Real Estate.

V.- Certificate of section seven of the Public Property Registry (it’s processed and paid in the Public Property Registry with two copies of the plan of the property that was prescribed)

VI.- Bill of the public water services with its respective payment receipt for a recent month in original and copy. The receipt must not be an agreement or reflect debts.

VII.- Receipt of payment of Property Tax without debts in original and copy (see the entry Local and Municipal Taxes in Chihuahua to know more about this tax)

VIII.- Proof of the declaration of provisional payment of Income Tax (processed on the Digital Portal of the Tax Administration Service)

IX.- Payment of registration fees (the amount of which may vary from year to year)

X.- The general information of the real estate purchaser, whether ratified before the court where the property was prescribed, before a notary public, or before the Public Property Registry itself. Information that must be the following: A) full name; B) date and place of birth; C) marital status (if married, provide exact information on the place and date of marriage, property regime, and name of the spouse); D) domicile and E) occupation.

By Omar Gómez

Partner

Contact the firm at [email protected] or call (656) 774-75-73 for English assistance or (656) 271-41-43 for Spanish.

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^[1] Article 735.- The assets are the domain of the public power or the property of individuals.

Article 738.- The assets of the Public Power are divided into assets for common use, assets intended for a public service and own assets.

Article741.- Assets intended for a public service and own assets belong in full ownership to the Federation, the States or the municipalities; but the former are inalienable and imprescriptible, as long as they are not disaffected from the public service for which they are destined.

Article 1150.- The State, as well as city councils and other legal entities shall be considered as individuals for the prescription of their assets, rights and actions that are susceptible to private property.

^[2] Thesis: 1a./J. 148/2022 (11a.) First Chamber of the Mexican Supreme Court of Justice. Eleventh Judicial Epoch. Binding Precedent. Digital Registration: 2025557.

^[3] Article 796.- Only the possession that is acquired and enjoyed as the owner of the thing possessed can produce the prescription.

^[4] COLLEGIATE COURT OF THE TWENTIETH CIRCUIT. Eighth Judicial Epoch. Not Binding Precedent. Digital Registration: 221456.

^[5] Thesis: P./J. 1/2002. Plenary session of the Mexican Supreme Court of Justice. Ninth Judicial Epoch. Binding Precedent. Digital Registration: 187733.

^[6] Thesis: 1a./J. 19/2007. First Chamber of the Mexican Supreme Court of Justice. Ninth Judicial Epoch. Binding Precedent. Digital Registration: 172709.

^[7] Thesis: VI.2o.C. J/307. SECOND COLLEGIATE COURT OF CIVIL MATTERS OF THE SIXTH CIRCUIT. Ninth Judicial Epoch. Binding Precedent. Digital Registration: 167461.

^[8] Thesis: XXII. J/1. COLLEGIATE COURT OF THE TWENTY-SECOND CIRCUIT. Ninth Judicial Epoch. Binding Precedent. Digital Registration: 204888.

^[9] Thesis: 1a./J. 58/2010. First Chamber of the Mexican Supreme Court of Justice. Ninth Judicial Epoch. Binding Precedent. Digital Registration: 162630.

^[10] Thesis: VII.2o.C.13 C (11a.) SECOND COLLEGIATE COURT IN CIVIL MATTERS OF THE SEVENTH CIRCUIT. Eleventh Judicial Epoch. Not Binding Precedent. Digital Registration: 2025433.

^[11] Thesis: I.3o.C.319 C (10a.) THIRD COLLEGIATE COURT IN CIVIL MATTERS OF THE FIRST CIRCUIT. Tenth Judicial Epoch. Not Binding Precedent. Digital Registration: 2016572.

^[12] Thesis: XXVII.1o.4 C (10a.) FIRST COLLEGIATE COURT OF THE TWENTY-SEVENTH CIRCUIT. Tenth Judicial Epoch. Not Binding Precedent. Digital Registration: 2014491.

^[13] Thesis: (II Región)3o.3 C (10a.) THIRD CIRCUIT COLLEGIATE COURT OF THE AUXILIARY CENTER OF THE SECOND REGION, WITH RESIDENCE IN SAN ANDRÉS CHOLULA, PUEBLA. Tenth Judicial Epoch. Not Binding Precedent. Digital Registration: 2013949.

^[14] Thesis: IV.3o.C.52 C (9a.) THIRD COLLEGIATE COURT IN CIVIL MATTERS OF THE FOURTH CIRCUIT. Tenth Judicial Epoch. Not Binding Precedent. Digital Registration: 160662.

^[15] Thesis: 1a./J. 9/2008. First Chamber of the Mexican Supreme Court of Justice. Ninth Judicial Epoch. Digital Registration: 169830.

^[16] Thesis: 1a./J. 82/2014 (10a.) First Chamber of the Mexican Supreme Court of Justice. Tenth Judicial Epoch. Binding Precedent. Digital Registration: 2008083.

^[17] Thesis: 1a./J. 2/2022 (11a.) First Chamber of the Mexican Supreme Court of Justice. Eleventh Judicial Epoch. Binding Precedent. Digital Registration: 2024088.

^[18] Thesis: 1a./J. 3/2022 (11a.) First Chamber of the Mexican Supreme Court of Justice. Eleventh Judicial Epoch. Binding Precedent. Digital Registration: 2024087.

^[19] Thesis: VII.2o.C.222 C (10a.) SECOND COLLEGIATE COURT OF CIVIL MATTERS OF THE SEVENTH CIRCUIT. Tenth Judicial Epoch. Not Binding Precedent. Digital Registration: 2021537.

^[20] Thesis: PC.I.C. J/13 C (11a.) PLENARY COURT ON CIVIL MATTERS OF THE FIRST CIRCUIT. Eleventh Judicial Epoch. Binding Precedent. Digital Registration: 2024394.

^[21] Thesis: 1a./J. 200/2005 First Chamber of the Mexican Supreme Court of Justice. Ninth Judicial Epoch. Binding Precedent. Digital Registration: 175851.

^[22] Article 778.- Possession acquired in good faith does not lose that character except in the case and from the moment in which there are acts that prove that the possessor is not unaware that he possesses the thing improperly.

Article 796.- Only possession that is acquired and enjoyed as the owner of the thing possessed can produce prescription.

Article 797.- It is presumed that possession continues to be enjoyed in the same concept in which it was acquired, unless it is proven that the cause of possession has changed.

Article 1141.– For the purposes of articles 796 and 797, the cause of possession is said to have been legally changed, when the possessor who did not possess as owner begins to possess with this character, and in such case the prescription does not start to compute except from the day on which the cause of possession has been changed.

^[23] Thesis: PC.XVII. J/17 C (10a.) PLENARY OF THE SEVENTEENTH CIRCUIT. Tenth Judicial Epoch. Binding Precedent. Digital Registration: 2018505.

^[24] Thesis: IV.3o.C.40 C. THIRD COLLEGIATE COURT OF CIVIL MATTERS OF THE FOURTH CIRCUIT. Not Binding Precedent. Ninth Judicial Epoch. Digital Registration: 164273.

^[25] COLLEGIATE COURT OF THE TWENTIETH CIRCUIT. Eighth Judicial Epoch. Not Binding Precedent. Digital Registration: 215593.

^[26] Thesis: VI.2o.C. J/229. SECOND COLLEGIATE COURT OF CIVIL MATTERS OF THE SIXTH CIRCUIT. Ninth Judicial Epoch. Binding Precedent. Digital Registration: 184429.

^[27] Thesis: VI.2o.C. J/198. SECOND COLLEGIATE COURT OF CIVIL MATTERS OF THE SIXTH CIRCUIT. Ninth Judicial Epoch. Binding Precedent. Digital Registration: 190323.

^[28] Thesis: I.5o.C. J/33. FIFTH COLLEGIATE COURT OF CIVIL MATTERS OF THE FIRST CIRCUIT. Eighth Judicial Epoch. Binding Precedent. Digital Registration: 215161.

^[29] Thesis: 1a./J. 44/2020 (10a.). First Chamber of the Mexican Supreme Court of Justice. Tenth Judicial Epoch. Binding Precedent. Digital Registration: 2022377.

^[30] If you want to know more about what are the contributions contemplated in Mexico, see my entry called Contributions Contemplated in Mexico.