MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
On the other hand, a tenant is entitled to termi- nate a lease in the following cases: • the leased property is not in a 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 different 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 regis - tration requirements. The Civil Code for Mexico City, for example, establishes that lease agree - ments 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. 6.21 Forced Eviction The landlord is entitled to terminate the lease agreement and start a procedure to enforce eviction when a termination cause provided by law or the lease agreement, occurs. The duration of the eviction process may vary, but on average it may last up to two years. No eviction moratoriums or related restrictions were implemented by the government during the COVID-19 pandemic. 6.22 Termination by a Third Party Expropriation of the leased property for public utility and judicial sale are grounds for termi - nation. The landlord and tenant are entitled to receive an indemnification from the competent authority. The landlord will be indemnified in accordance with the expropriation decree. The
tenant will receive an indemnification equal to six months’ rent, provided it has occupied the property for more than one year. Additionally, the tenant may receive compensation for the value of any necessary improvements made during the last six months. 6.23 Remedies/Damages for Breach Upon the event of a tenant breach and/or lease termination due to tenant’s breach, in accord - ance with general provisions of Mexican law, landlords are entitled to recover the direct and consequential damages directly resulting from the breach, including but not limited to unpaid rents and damages suffered by the property exceeding normal wear and tear. Parties are also entitled to negotiate and insert in the lease conventional penalties and moratorium interests for tenant’s breach. If penalties are inserted, the landlord will not be entitled to demand damag - es as well. Penalties, however, cannot lawfully exceed the amount of the main obligation. Pen - alties typically included are one to two months’ rent for each month during which the tenant unduly keeps occupying the leased premises when the lease term has elapsed. Regarding security deposits, it is common for landlords in Mexico to hold security deposits posted by tenants as a form of guarantee against damages and/or unpaid rent fees. These security deposits are most commonly held in cash, usu - ally in an amount which is equivalent to one to two months’ rent. The specific requirements and regulations regarding security deposits may vary depending on the terms negotiated between the landlord and tenant in the lease agreement. Security deposits must usually be returned to the tenant, either fully or in part, within a reason - able timeframe, once the lease agreement term is completed and the landlord verifies the state of the property and any deductions that should
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