FRAO Tells Us All About Mexican Leases

The good, and the bad, and we add the ugly

What is the difference between a rental agreement and lease agreement? And do you  have to join your community’s HOA? These and many other questions were answered at the October FRAO (Foreign Residents Action Office) breakfast meeting this month. Juan Carlos Gutierrez, attorney in civil, criminal, and labor law, presented vital information regarding non-Mexicans wishing to rent or purchase properties and homes in Mexico.

Article 27 of the Mexican Constitution states that only Mexicans by birth or naturalization, or Mexican corporations may acquire title to lands and their usage within 60 miles of the border or the ocean.  However, its easy peasy to sneak around that by owning a bank trust that owns your property. That bank trust is called a fideicomoiso. This adds a little money to the transaction,, as the bank is happy to take a couple hundred dollars a year for this. Shop that, it varies. At this time fideicomisos are being offered by most local banks. Banamex, however is not issuing any new Fideicomisos  Scotiabank is reported to be the most expensive, however there is less paperwork and time spent in the process. Most of these trusts are for 25 years and are usually renewable but not always. Read your individual contract carefully!

In Mexico there is no difference between a lease and a rental contract; they are all “rental contracts,” and may be written for one month, one year, or ten years; the duration is not important here and there is no maximum time limit. Most rental properties in Mexico are considered month-to-month and may be referred to as a lease, but it is what we would call a rental contract.

All legal contracts are written in Spanish only. Get over it, silly Americanos! That’s the law.

Someday this requirement to buy a fideicomiso  may change, but if you are a retiree, probably not in your lifetime. There has been a bill proposed in the Mexican congress to abandon this silly charade of the fideicomiso, but the banks were able to defeat it. It’s a money maker for them.  If for whatever reason you no longer need it, its easy to cancel the fideicomiso. (For a fee of course).

Some contracts, usually between individuals, may be written in Spanish and another language. If the two languages do not say exactly the same thing, only the information printed in Spanish is valid. It’s best when signing any contract to bring a trusted friend who is fluent in Spanish, to translate the contract for you. Don’t believe anybody when they tell you both sides are the same. A single word can change the whole Magilla. You might pay to get a certified translation, and that’s not cheap because those people have passed a test and are licensed.

Owning a house on leased (rented) land in a campo has its own distinctions. In some campos, if you die without a beneficiary, the campo repossess the house, and this is legal. Again, read your contract carefully. Not all campo landowners are nice guys. 

There are some unscrupulous owners out there who spend a lot of time and effort making the lives of their tenants miserable. One method of screwing with the tenants is to not deposit monthly rent checks, and then claim they never received the payment, giving a strong reason to evict. True, rent checks, especially those going through the Mexican mail may get lost…but not three months in a row. Check your banking statements to ensure each check is cashed.  If you suspect hanky-panky, or your landowner outright refuses your rent check, deposit payment at civil court and receive a receipt for the deposit. This is known as consignment. For help, contact the FRAO office in the Rosarito city hall, That’s what they are there for…to help foreigners in need.

Another concern of many expats is the threat they may be forced out of their home by the campo or condo owner. Devious owners may threaten eviction, but you do have rights…if you have legal documentation! Without a legal Mexican Visa of some type, even a visitor’s visa, you may be thrown out of your home legally.

And, something the FRAO isn’t going to tell you is, the national past time is not soccer, it’s squatting. It is almost impossible to get a Mexican off a property he wants to stay on, and if a foreigner has the guts, the gall, and the chutzpah of a Mexican, it is very difficult to get them out. Squatting is a huge problem in this country.

A word about security deposits: You may or may not get it back, even if you leave the residence spotless. And do you really want to pay an attorney $1000 – $1500 to reclaim your $400 deposit? I think not.