Dreams Shattered in Mexico

LA CRUZ DE HUANACAXTLE, Mexico —  Doug and Dru Davis sold their San Diego County home several years ago to buy a $200,000 house on the beach here.

The value of their new place not far from the resort of Puerto Vallarta increased fivefold -- until some developers moved the beach.

The couple’s serenity was shattered last fall when construction crews began dredging the bay in front of their property to reclaim land from the sea. A planned marina, hotel and high-rise condos now threaten to block their ocean view.

Instead of watching whales glide just a few hundred yards off their patio, the couple fear they’ll soon be looking at garbage bins, a service road and beer trucks.

“This is sending a terrible message to investors,” said Doug Davis, 61. “You think you’re buying oceanfront property and then the [Mexican] government lets someone build in front of you.”

Flush with equity from the steep run-up in U.S. real estate prices, American boomers are snapping up properties in Mexico, helped by a change in rules that has made it easier to purchase in coastal zones that were once off limits to foreigners.

But some buyers are finding out the hard way that consumer protection hasn’t kept pace with soaring demand.

No agency on either side of the border keeps statistics on the number of Americans who have encountered problems. But interviews with homeowners, real estate experts and government officials reveal real estate deals gone sour and a host of potential pitfalls.

Some would-be buyers have had brokers disappear with their deposit money. Others have had their homes seized in land disputes. A few have even landed in jail.

U.S. officials warn that Mexico’s murky land record system exposes foreigners to complex title disputes in courts that may not give them a fair shake.

“There is a history of problems,” said Liza Davis (no relation to Doug and Dru Davis), public affairs officer at the U.S. Consulate in Tijuana. “We ask people to go in with their eyes open.”

The most high-profile dispute in recent years was the eviction of dozens of U.S. citizens from the Punta Banda peninsula south of Ensenada in Baja California in 2000.

Mostly retirees, the homeowners built their dwellings on so-called ejido land, communal farmland that has been the source of complicated title struggles nationwide. Mexico’s Supreme Court ruled that the group from which the Americans bought their land was not the rightful owner, forcing some of the Americans to abandon homes worth hundreds of thousands of dollars.

Such extreme cases are the exception rather than the norm, according to international tax expert Patrick Martin, a partner in the San Diego law firm Procopio, who said there were plenty of satisfied Americans who have bought Mexican property without a hitch.

“If done properly and carefully it can be a very attractive investment,” Martin said.

In La Cruz de Huanacaxtle, the Davises and other homeowners said they did meticulous research before purchasing. They just never imagined that someone would be allowed to drain their ocean like a bathtub and build on land reclaimed from the sea, effectively elbowing them off the waterfront.

Doug Davis said he was stunned by the lack of transparency when he and other homeowners, mostly Americans, began asking questions about the $50-million project, whose Mexican developers are four well-known local businessmen.

The 17 affected property owners had to hire attorneys to obtain basic information about building and environmental permits.

The homeowners said the original plans called for a much smaller marina development and that officials had yet to show them permits authorizing the expansion in front of their homes.

Armando Zepeda Carrillo, an official with Mexico’s Department of the Environment and Natural Resources, said the expanded project obtained all the necessary permissions. The agency has not responded to requests by The Times to view those documents.

The local prosecutor denied the homeowners’ request to halt the project until the developers and government could demonstrate that all approvals were in place.

Heavy-equipment operators continue to dig and dredge just yards from the homeowners’ seawalls.

Dru Davis said she was taking antidepressants to cope with the stress. The couple fears that their property, which they calculate was worth more than $1 million, could end up losing half that value.

About 1,400 miles north in Baja California, Bob Torres says the $63,000 he lost on a modified trailer home was nothing compared with being deprived of his liberty.

In March, the Van Nuys cinematographer and his wife were arrested, shackled and held in a Tijuana prison because of a legal dispute with the owner of a Rosarito trailer park who was trying to evict them from their prized oceanfront lot.

Released on bail after three sleepless nights, they fled to the United States with no plans to return to their favorite getaway.

“Rosarito has a bitter taste for me now,” Torres said. “I would not invest in Mexico again.”

Torres, 60, said the decision was particularly painful because he and his wife had vacationed in Rosarito since they were children. Many of those years were spent in a seaside trailer park called La Barca, where the couple in 2002 secured a $300-a-month long-term lease on a lot with a spectacular ocean view.

Starting with a 35-foot travel trailer, they added on little by little, eventually creating a two-story, four-bedroom structure with a deck. Weekends and vacations were spent barbecuing with other longtime residents, mostly Americans, who formed a little expatriate family south of the border.

Torres said things changed dramatically last year when Fidel Valdespino, son of the park’s longtime owner, took charge of a major portion of La Barca after his father’s death the year before.

Torres said he arrived one weekend in September to find the water pipes to his dwelling had been severed.

Other former tenants, speaking on condition of anonymity, said that about the same time, their water and electricity were cut, access to the public beach was blocked with debris and the park was swept by a rash of burglaries. An abandoned trailer sprouted graffiti in English that read: “Gringos go home. This is Mexico.”

The word around La Barca was that Valdespino was trying to pressure the tenants to give up their bargain-priced, long-term leases to make way for a more profitable condominium development. Many fled as conditions deteriorated.

Among the holdouts were the Torreses. Arriving at La Barca on March 18 for what they thought would be a relaxing weekend, they were arrested after Valdespino claimed that they had damaged the water pipes at the trailer park. A local judge found them guilty without hearing their testimony, according to their attorney, Jose Heing Chig Bazua.

The frightened pair spent three days and nights in the notorious La Mesa penitentiary in Tijuana. They were released after signing an agreement with Valdespino to remove their dwelling from La Barca within 30 days.

Valdespino denied making the allegations against the couple, saying the agreement for them to leave was a mutual one.

Informed that the structure mysteriously caught fire over the Easter weekend, the Torreses had a contractor haul it away for scrap.

“I am not going to fight it,” Torres said. “I fear for our lives.”