MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
6.2 Types of Commercial Leases Mexican civil law recognises only one type of lease agreement, although specific rules are provided in the federal and state civil codes, depending on the purpose or location of the leased premises. 6.3 Regulation of Rents or Lease Terms Lease terms are freely negotiable, but federal and state civil codes impose binding provi - sions, mainly for residential leases and, in some states, commercial leases (eg, a 20-year maxi - mum duration). Reviewing state civil codes is essential. It should be noted that civil codes already contain legal provisions applicable to the impediment of the use of leased premises, mainly in commer - cial leases where the leased premises cannot be operated due to a force majeure. For example, Article 2431 of the Federal Civil Code, also appli - cable to commercial leases, provides that, if, by reason of an Act of God or force majeure, the tenant is completely prevented from using the leased premises, no rent shall be due while the impediment lasts, and if such impediment lasts more than two months, the tenant may request the termination of the agreement. Similar provi - sions are included in the civil codes of the vari - ous states of Mexico. Some states recognise the “unforeseeability theory” , which aims to balance obligations if extraordinary, unpredictable national events make one party’s obligations excessively bur - densome. Under specific conditions, the affect - ed party may seek adjustments to restore fair - ness in the contract.
6.4 Typical Terms of a Lease Length
Normally, the length of a lease term is freely negotiable; however, it must be taken into account that civil codes may contain provisions for minimum and maximum terms. For example, the minimum term of a residential lease agree - ment, pursuant to the Civil Code for Mexico City, is one year for both parties, and may be extended at the tenant’s will for up to one more year, under certain circumstances. Lease of real properties destined for commerce and industry, under the same Code, cannot exceed 20 years. Landlords and tenants may freely determine whether a term is binding and may even agree on penalties to be paid if the binding term is breached by any party. General Rules Federal and state civil codes hold landlords liable for property defects that hinder its use, unless caused by tenant negligence. Tenants handle minor repairs, while landlords maintain the structure and perform major maintenance. Tenants are typically responsible for ordinary upkeep and must return the property in its origi - nal state, allowing for normal wear and tear, though maintenance terms can be negotiated. Rental payments are flexible, with monthly pay - ments being the most common. 6.5 Rent Variation Mexican civil law allows parties to negotiate rental updates freely, without mandatory or auto - matic increases. Typically, rent is updated annu - ally based on the National Consumer Price Index published by the National Institute of Statistics and Geography in the Federal Official Gazette, sometimes with additional points. In shopping centre leases, tenants may pay variable rent, alongside or instead of fixed rent, usually as a percentage of net sales.
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