21 replies to this topic

[Ajijic]

http://www.thepeople...sfully-sheds-th

Why is it some want to quote and charge in US$ for rent, homes, cars, various other items and services here in Mexico? To me it is offensive and arrogant and disrespectful to Mexicans. This country Mexico has about 107,000,000 and maybe .5% are Americans. Do you see items in the US and Canada priced in pesos? Plus it is illegal to ask for US$ when based on the article above which states: "The Mexican government in September 2010 enacted a new law which basically restricts the use of US Dollars for almost all purchases inside of Mexico".

[gimpychimp]

When you say "some" want to charge in U.S.D., I must point out that it is often Mexicans who are ones insisting on U.S. dollars. When we bought our home, both the builder and the major real estate company insisted that we pay them in U.S. dollars to their accounts located in the United States. This wasn't done for our convenience, because we had Canadian dollars. It cost us a fortune in exchange at that time. A local furniture supplier often quotes in U.S.D. and someone told me they went to a specialist in Guad and he also wanted to be paid in U.S.D., and they insisted that they wanted to pay him in pesos. He wasn't happy about that. These were all Mexicans, and of course well-to-do Mexicans. I agree totally with what you're saying, that since pesos are the national currency, that should be the currency used. Your question should be addressed to Mexicans, though. I think they are the ones who started this trend, or at least encouraged it, due to a common world-wide fixation on acquiring U.S.D. Are they hiding this income from the Mexican tax department by keeping accounts in the United States? I don't understand it or know what the financial advantages to them are exactly, but there must be something to it. You're very right in that you will never see pricing in pesos in the U.S., no matter how large their Mexican population becomes.

[barbara habacht]

on a recent shopping trip to Southern Texas we noticed dual pricing at restaurants and independent stores as well as national fast food chains...... US DOLLARS/MEXICAN PESOS were quoted as accepted. The USA border crossings all offer a choice of dollars or pesos....there is a penalty in the form of a poorer exchange rate.

[Ajijic_hiker]

I pay my rent in US Dollars that are directly deposited in a bank in the US, at the request of the Mexican owner who lives in Guadalajara.

[Bisbee Gal]

In my other home town, Bisbee, near the Sonoran border, our local Safeway and other stores accept pesos. No idea on the exchange rate given.

[Griffin]

It is illegal to have a contract in Mexico stating payment in any denomination other than pesos. If I correctly remember which Code, it is stated in the Finance Code. No business advertisements can be in any currency other than pesos either.

I imagine if a border company accepts payment in pesos and dollars that is perfectly legal but it cannot run ads stating prices in dollars.

Landlords want rent payment by U.S. check deposited in a U.S. bank to avoid the Hacienda taxes on rent. Watch out for this because Hacienda can involve the renter in this violation of the law and a renter doesn't want to get stuck with part or all of the back taxes.

[Ajijic]

Good point Griffin as when the landlord is out of the country the tenant by law must withhold Hacienda's taxes (about 25%) and deposit them into the Hacienda bank account. So as you say the tenant has huge liabilities. In these situations every tenant is seriously breaking the law.

[pappysmarket]

My Mexican attorney told me that a contract agreed to by 2 or more consenting individuals in Mexico is enforceable in the Mexican court system whether pesos, USD or any other worldwide currency is noted in the contract. That doesn't mean anything said by an attorney is true, but that was the response I got.

[Griffin]

My Mexican attorney told me that a contract agreed to by 2 or more consenting individuals in Mexico is enforceable in the Mexican court system whether pesos, USD or any other worldwide currency is noted in the contract. That doesn't mean anything said by an attorney is true, but that was the response I got.

If the contract is not legal, does not follow the law, then it is not enforceable. People cannot agree to violate the law. Why people think legislators write laws only to allow people to consent to ignore the law, is beyond me. Get another attorney.

[ambconsultants]

1) Private parties can contract in dollars but payments must be accepted in pesos.
Acccording to the Mexican Monetary law.
Artículo 8º.- La moneda extranjera no tendrá curso legal en la República, salvo en los casos en que la
Ley expresamente determine otra cosa. Las obligaciones de pago en moneda extranjera contraídas
dentro o fuera de la República para ser cumplidas en ésta, se solventarán entregando el equivalente en
moneda nacional, al tipo de cambio vigente en el lugar y fecha en que deba hacerse el pago.

In private contracts some articles in the law do not have to be obeyed to the letter as is common in Rental contracts and coporate law. Changes must not be against public interest. Very delicate line. Eg. Rental law offers protection for renters and some articles can be renounced expressly in the contract betwen the parties and others cannot

[Ajijic_hiker]

It's also the law to wear seat-belts and we all know how THAT law is enforced.

[jaykay]

Sadly, it is being inforced if you are driving an American plated car.

[Xcalaker]

Don't you find it odd then that Aduana (at the border) and Banjercito stipulate payment in dollars?
Every real estate contract I have entered into was always denominated in dollars.
Also, couldn't 2 parties enter into contract where the consideration is trading beans for corn?
I just don't think the 'has to be pesos' position is necessarily true. Mis dos centavos.

[Ajijic]

My comments are not aimed at anyone directly; however, three points which I believe should be valid are:

1. Based on numerous articles, the Mexican government is trying to limit cash in US $ which is the main currency of the narcos. So, again, Americans if using US$ here in Mexico may very well be enabling narcos and in the least breaking the law. Keep in mind the number one user of drugs from Mexico are Americans and the US is the number one source of weapons making narco activity a huge problem. To some, this may be acceptable even if illegal. Many want to complain about all the wrongs in Mexico including crime, services, infrastructure, corruption but when it suits it is OK for expats to break the law, especially when money and taxation (not paying taxes on rental income, working illegally etc) are involved.

http://travel.usatoday.com/destinations/dispatches/post/2010/10/mexico-currency-\ law-pesos-dollars-drug-cartels/127503/1

2. When you sell an item in US$ depending on the exchange rate on the day in which it was bought, for 99.5% of the population in Mexico who have no US$ source of income, the selling price of your item varied. So one day you item was up in value and another down. It may work for the seller of course but was that fair to anyone other than a person with US$? Was it fair to a Mexican with pesos? Was it fair to ask a buyer to break the law? After all this is Mexico.

Take for example the case of a person buying a home. The buyer and seller sign a contract two months ago and sale closes next week. The seller's home was priced in US$. The buyer is not an American as is typical as fewer home buyers are and could much more likely be a Mexican or an expat from any other country but not the US. If the peso dropped say 5% in the time between signing the contract and next week's closing the buyer on a $300K home needs to pay another $15,000! I know of this happening and people literally did not close.

3. Would you price services, cars, homes, rents, etc in the US in MXN P? Of course not, yet there are many times more Mexicans in the US than Americans in Mexico. And, if you would not price items in the US in MXN P then ask yourself why not? And, when answering is that not the same reason you would not price items in Mexico in US$? As they say what is good for the goose is good for the gander!

None of my comments are directed at one person but rather the issue.

[Mainecoons]

A very well reasoned argument. Particularly when one realizes that the dollar "dropped" nearly 5 percent in just this past week. I wouldn't expect that to last long as it was mainly based on a lot of wistful thinking and hot air about the fiscal mess in Europe.

If I were selling today, I'd definitely price in Pesos. This area will continue to attract the rising middle class of Mexico and Guadalajara IMO. Pricing in Pesos is an important attraction to this group of buyers and if handled correctly, doesn't alienate the others.

Thank goodness, though, we aren't having to sell now.

[Griffin]

I still haven't found the Code that prohibits advertising or contracts in dollars but the new law that took place September, 2010 might be part of it because it limits how many dollars a business can accept. Other than landlords trying to get around paying taxes to Hacienda by depositing dollars in the U.S., it states that the landlords cannot deposit the dollars in a MX account anyway. How a large real estate transaction can be paid in dollars is a mystery to me, but the buyer and seller would be violating the law.

http://travel.usatod...artels/127503/1

But under a new currency law that took effect last month, restaurants, stores and other businesses can now accept a maximum of $100 in cash per transaction.

Effective Sept. 14, as part of an effort to stem drug-related money laundering, the Mexican government capped the amount of dollars foreigners can trade for pesos at banks and money exchangers to no more than $1,500 per month.

http://www.thepeople...sfully-sheds-th

The Mexican government had made it clear that they will no longer allow ANY businesses to accept US dollars including American companies regardless of the operation or who is paying in American dollars. That’s right, this means if you’re a US citizen and fly into Mexico for vacation or business your hotel is no longer allowed to exchange cash dollars into pesos at the front desk which was customary up until 2011.

Also in Mexico if you travel to a local bank regardless of the bank name or national origin including HSBC from China which is the fastest growing bank in Mexico you are no longer able to exchange US Dollars for pesos. Only account holders at banks have the option of depositing US Dollars into their bank accounts but this is for deposits only and not exchange and then you have to have a special type of account set up that is more costly. Of course even if you do have a special account that allows you to deposit US dollars your bank will charge you a service free for depositing foreign currency into your account and then probably another service fee for a withdrawal but that’s another issue all together.

http://gomexico.abou...s-in-mexico.htm

The measure WILL NOT AFFECT purchases made with credit cards or debit cards in Mexico.

The measure WILL NOT AFFECT the amount of cash (in Mexican pesos) an international tourist can withdraw from an ATM machine on a daily or monthly basis.

http://lifejustbecam...llars-or-pesos/

Change #2 Businesses can not deposit US Dollars into their bank accounts even if they hold a US dollar account. This effects local businesses a lot. And this change will directly affect visitors. Let me build a visual for you. If your hotel bill was 1500 USD for the week and you paid in cash, then the business owner could not use that money for 3 weeks. HOW? If the money can not be deposited then the business has to go tot he bank once a week to change 500 usd each week as per the rules. Then once it is turned into pesos then it can be deposited into their account so they can pay employees, suppliers, etc. Your 1500 usd bill really would not be realized for 21 days, which makes it hard for some small businesses. Businesses may get to the point of not accepting US currency or any foreign currency as they have bills to pay.

[rufus]

If one has their business financed by a bank in the US, and they have to make their loan payments in US dollars, it makes sense to have dollars deposited in their bank NOB. Why accept payment in pesos just to have to convert them to dollars to make your payments. They lose on the service fee, and rate fluctuation might be small, but on big payments they can make a real difference.

And who cares what other people do in their financial matters, that is their business.

Rufus

[Griffin]

Taxes on a real estate transaction are paid in pesos. The government cares how transactions are paid.

[papirex]

http://www.thepeople...sfully-sheds-th

Why is it some want to quote and charge in US$ for rent, homes, cars, various other items and services here in Mexico? To me it is offensive and arrogant and disrespectful to Mexicans. This country Mexico has about 107,000,000 and maybe .5% are Americans. Do you see items in the US and Canada priced in pesos? Plus it is illegal to ask for US$ when based on the article above which states: "The Mexican government in September 2010 enacted a new law which basically restricts the use of US Dollars for almost all purchases inside of Mexico".

It is a very rare thing in most of México, it seems to occur mostly in areas with many outsiders, or ex-pats. Here in Morelos state that practice is almost unknown. Anytime you see anything priced in US Dollars, it is a safe assumption that it is overpriced.




Forget what Federal laws say, If they were not adopted by the state you live in, or if they were adopted with amendments, they may not apply as originally written. Remember, Federal laws do not apply in all states here, unless the individual states adopt them.




Anytime I see anything priced in US Dollars, I ignore it, as I believe it is overpriced, it almost always is, especially housing.




Rex

[rufus]

Remember in the 1980's when Asian buyers of Mexican oil welched on their contracts, and suddenly the Mexican Government had a terrible debt crisis? The inflation was horrible. I found a thousand peso note that my mother had inadvertantly stuck into a book as a book mark. It was worth $125 US dollars when it went into the book. By the time I found it, it wouldn't buy a coloring book for the kids.
Even wealthy Mexican business people suddenly were dependent upon loans from their NOB relatives to keep the heads above water. Loans in dollar amounts have to be repaid in dollar amounts.

Rufus