MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
the lease agreement will continue for an undetermined period. In such a case, either party may terminate the agreement, generally by giving 30 days’ written notice to the other party in the case of residential property and one year in case of rural, commercial or industrial properties. 6.18 Right to Assign a Leasehold Interest The tenant may not sublet the leased property or a portion thereof, or assign the tenant’s rights, without the consent of the landlord. If breached, both the ten - ant and subtenant should be liable for damages. 6.19 Right to Terminate a Lease Pursuant to the federal and state Civil Codes, a land- lord is entitled to terminate a lease in the following cases: • failure to pay the rent; • failure to use the property for the agreed-upon use; • subletting of the property, without the landlord’s consent; • material damages to the leased property attribut - able to the tenant; and • where the tenant modifies the form of the leased property without the express consent of the land - lord. On the other hand, a tenant is entitled to terminate a lease in the following cases: • the leased property is not in good condition; • total or partial loss of the leased property; and • hidden defects or flaws in the property prior to the lease and unknown to the tenant. The parties may also agree on events of default differ - ent from or in addition to those provided by the law. 6.20 Registration Requirements The Civil Codes require lease agreements to be in writing. The state Civil Codes may provide certain registration requirements. The Civil Code for Mexico City, for example, establishes that lease agreements with a six-year term (or more) must be recorded in the RPP, or when advance payments of more than three years’ rent are made. In the case of Mexico City, landlords are required to register lease agreements
no more than 30 days after their execution in the new digital registry for lease agreements (see 1.3 Propos- als for Reform ). 6.21 Forced Eviction The landlord is entitled to terminate the lease agree - ment and start a procedure to enforce eviction when a termination cause provided by law or the lease agree - ment occurs. The duration of the eviction process may vary, but on average it may last up to two years. 6.22 Termination by a Third Party Expropriation of the leased property for public util - ity and judicial sale are grounds for termination. The landlord and tenant are entitled to receive an indemni - fication from the competent authority. The landlord will be indemnified in accordance with the expropriation decree. Generally, the tenant will receive an indem - nification equal to six months’ rent, provided it has occupied the property for more than one year, though this will depend on the applicable Civil Code. Addi - tionally, the tenant may receive compensation for the value of any necessary improvements made during the last six months. 6.23 Remedies/Damages for Breach In Mexico, landlords can recover unpaid rent and property damage beyond normal wear if a tenant breaches a lease. Leases often include penalties and moratorium interest, but if penalties apply, landlords cannot claim additional damages. Penalties cannot exceed the main obligation and typically range from one to two months’ rent per overdue month after lease expiration. Security deposits, usually one to two months’ rent, are held in cash and refunded after verifying property conditions. While letters of credit are rarely accepted, bond policies are commonly used to ensure tenant compliance. Deposit and guarantee terms vary based on lease negotiations and local regulations.
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