RESIDENTIAL LEASES IN THE MEXICAN COASTS
By Peter Thompson, Attorney-At-Law
There are 3 basic ways for a U.S. citizen to acquire the use of Mexican land for residential purposes in the so-called "Restricted Zone," which is land within 50 miles of the coast and 100 miles of the border. One way is the 50 Year Mexican Bank Trust� "fideicomiso." Another way is a "concession" if the land is within the 20 meters strip from mean high tide called the "Federal Zone." The only other legal way to acquire residential property in the Restricted Zone is under a Mexican lease. In many cases it is advantageous to try to get a lease rather than a trust because you are obligating yourself to pay for only 10 years rather than 50. This particularly makes sense when it is imperative to avoid the costs associated with setting up a trust. THE TEN YEAR LIMITATION Mexican leases are very similar to leases in the United States, with one very important exception. The Mexican Civil Code limits contracts for the lease of residential property to a period of 10 years or less. One might be inclined to speculate that this 10 years lease limit stems from earlier days when foreign interests tied up the best tracts of land for long periods of time, thereby denying the native Mexicans enjoyment of their best land. But, this limitation is not directed against the foreigner: It applies equally to Mexicans. One constantly hears of "30" or "99" year leases. Although a document may read "99 Year Lease," that document cannot be enforced in a court of law for more than 10 years. Of course, if the landlord and his successors choose to honor the 99 year term, then there is no problem. References you might hear to a "30 Year Lease" might really refer to the 30 year Bank Trust, so ask to see the actual document. It's common practice to get a "10 plus 10", which is ten year lease with an option to renew for another ten years. In my opinion, that kind of arrangement is not enforceable in Mexico because it would be viewed by a court as a subterfuge to evade the 10 year limit. OTHER TYPICAL PROVISIONS Other provisions in Mexican leases are similar to those used in the United States. They can include familiar clauses such as limits on rent increases, limits on transferability, recovery of attorneys' fees in litigation, and agreements on jurisdiction and place of suit. The landlord has the duty to make repairs to the property (except for ordinary wear and tear), to avoid hindering the tenant in the use of the property and to remedy any injury caused by hidden defects. In addition to paying the rent on time, the tenant has the duty to make good any damage caused to the property by his fault or negligence, and for damage from fire, unless as a result of an act of God or faulty construction. The tenant must make the repairs for ordinary wear and tear caused by the inhabitants. TOURIST OR IMIGRATION VISA Before you sign a lease in Baja, make sure you have valid tourist visa in your possession. Unless you have some type of legal Mexican visa such as a tourist visa, or an imigrante or imigrado visa, you lack the legal capacity to enter into contracts in Mexico. The 180 day multiple entry tourist visa may be obtained upon proof of citizenship (your passport) at, among other places, any Mexican consulate in the United States, or at the Mexican Immigration Offices located in most Mexican border cities. TRAILER PARKS Trailer Parks on the Mexican coast usually lease their spaces, although many landowners are now offering 50 year trusts. To illustrate a typical lease situation, imagine that a U.S. citizen leases a space from a Mexican landlord in a trailer park over-looking a Baja beach. Then he buys a trailer and places it on his space. Little by little over the years, he adds stylish brick-work, creating a patio, an extra room or two or a deck. Now, he needs to move back to the U.S. to take care of his aging mother, and advertises the trailer for sale. You want to buy it. Fine, but consider: what are you actually buying? The trailer can't be sold separately and moved because it is now attached to the land and probably couldn't be removed without major damage. Also, you probably wouldn't want to try because trailer spaces are becoming hard to get in Baja, and you have to put the trailer somewhere! Finally, the lease may give the landlord a right to first refusal which allows the landlord to retain the trailer at his trailer park by purchasing it from the tenants. The first thing to do is to look at the lease to see if the space can be freely transferred. Also, you want to know if rent increases are limited in the lease. In any case, in addition to "buying the trailer" you will probably have to negotiate with the landlord for either an assignment of the existing lease or an entirely new lease. The moral of this story is that before you pay money for a trailer on leased property, first go to the Mexican landlord, establish a good relationship with him or her and nail down the terms of the new lease. FEDERAL MARITIME LAND ZONE A final thought: if you are intending to lease beachfront land, remember that the strip of firm, high ground 20 meters landward of the mean high tide line is owned by the federal government of Mexico and can be used by private persons (Mexicans and foreigners alike) only by means of a concession with the federal government. So, make sure that the 20 meters strip is not included in the property you are privately leasing. In conclusion, with the exception of the 10 year limit, the necessity for a tourist visa and the federal zone caution, acquiring land through a Mexican lease is not so very different from having a lease in the U.S.
