In what could hurt perceptions of the real estate investment environment in Mexico, the federal government sent soldiers armed with M-16 rifles to Tulum earlier this month to close down five hotels. While some of the hotel owners have been there for up to two decades, the federal environmental prosecutor Patricio Patron is just now claiming that the land is protected and ordering they be closed and eventually demolished. The federal officials are arguing that they have no permission to be on protected lands near the Tulum ruins, despite land titles that were issued by the state that the state says are valid.

John Kendell, the owner of one of the hotels, The Mezzanine, told the Associated Press that the federal government just wants to take control of land that is worth millions of dollars. “Using the army to close down businesses is illegal,” said Roberto Palazuelos, the president of the Tulum Hotel Owners Association to NuWire Investor. It’s not clear why the government sent the military to take control of a beach resort filled with foreign tourists practicing yoga and attending spa treatments.

Tourism officials have been visiting the site and are fighting on the side of hotel owners in attempt to preserve Mexico’s image. This incident puts a spotlight on the problems of the Mexican government including corruption and a slow moving judicial process. The 2008 Economic Freedom report by the Heritage Foundation gave Mexico a score of 33 out of 100 in freedom from corruption. Corruption is pervasive in the government, though a transparency law in 2002 is a good step forward. Real estate disputes in the Mexican court system could take years according to the 2007 Investment Climate Statement by the U.S. State Department. ” A weak judicial system produces slow resolution of cases and is subject to fairly significant corruption” states the report on Mexico from the 2008 Economic Freedom Index site.

I think a majority of people who learn about this situation will agree that it is wrong, and immediate action must be taken by the government to correct the absurd actions of a few misguided individuals. Sure environmental protection is important, but there were some serious errors in not discovering this 20 years ago when the tenants first started building. If someone in the federal government doesn’t fix this error, it could weaken investor confidence for many years and hurt tourism and foreign investment.

Tulum, Mexico Real Estate in Dispute NuWire Investor

Mexico Launches Battle for Tulum Beach Associated Press