MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
6.6 Determination of New Rent Rental increases or changes are negotiable between parties. The standard practice involves applying an agreed-upon percentage increase to the existing monthly rent at the end of a speci - fied period, typically on an annual basis. Semi- annual increases are less common but still pos - sible. In the case of new developments, such as shopping centres, rent increases might also be tied to the number of stores open or the centre’s capacity. 6.7 Payment of VAT VAT is 16% and payable on the rent of real estate used for commercial purposes. Rents payable under lease agreements for residential purposes are not subject to VAT, unless the leased prem - ises include furniture. 6.8 Costs Payable by a Tenant at the Start of a Lease It is customary for tenants to pay the first month’s rent in advance, plus a security deposit, typi - cally equivalent to one or two months’ rent. The deposit is held by the landlord as a guarantee to ensure the tenant fulfils their obligations under the agreement. In commercial leases (shopping centres), the landlord (or previous tenant) may also request a one-time payment referred to as goodwill or key money, the amount of which usu - ally depends on the standards and success of the shopping centre. 6.9 Payment of Maintenance and Repair Maintenance and repair costs for common areas are typically covered by tenants through “condo- minium quotas” or common area maintenance fees, paid to the landlord, building manager or shopping centre manager. Regulations deter - mine how these costs are shared. Shopping centre leases may also include advertising/mar -
keting fees, calculated as a fixed amount or rent percentage, usually paid monthly. 6.10 Payment of Utilities and Telecommunications Utilities and telecommunications that serve a property occupied by several tenants are usu - ally paid on a pro rata basis and reflected in the maintenance. 6.11 Payment of Property Taxes It is customary for the owner/landlord to pay for the real property tax of the leased property. However, there is a tendency, mainly in indus - trial and commercial facilities, to use triple net lease conditions where the landlord pays for the property tax, property insurance and mainte - nance cost. 6.12 Insurance Issues Neither federal nor state civil codes mandate insurance for leased properties, but tenants are generally expected to cover civil liability and fire damage. Landlords typically insure the prop - erty, though commercial and industrial tenants may be required to cover risks like earthquakes and floods. Common area insurance is usually included in maintenance fees. Business inter - ruption insurance is uncommon unless financ - ing is involved, as it mainly covers closures due to Acts of God or force majeure. 6.13 Restrictions on the Use of Real Estate Pursuant to the federal and state civil codes, the tenant must use the leased property solely for its agreed-upon purpose or pursuant to its intended nature and destination. If a tenant violates this provision, the landlord has the right to terminate the lease agreement.
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