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rent paid in pesos, what's the law?


Lexy

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I've visited numerous websites that mention rentals being available month-to-month, or for, "the season." Everyone's breaking the law?

A lease is not month to month. A lease is for a minimum of one year and it is less than 5 years.

Renting month to month is not in the Landlord Tenant Code. We are not discussing monthly rentals.

Renting month to month is like renting a hotel room, completely different, and that is the same as in the law in U.S.

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If I was renting or leasing for a year or more I would want a contract stipulating the ANNUAL amount, not monthly.

I had a friend who always paid his rent for one year in advance. Complicated things when he died before the year was out.

I think under the law, multiplying the one-month rent times 12 is the same as the annual amount without stating the annual amount.

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A lease is not month to month. A lease is for a minimum of one year and it is less than 5 years.

Renting month to month is not in the Landlord Tenant Code. We are not discussing monthly rentals.

Renting month to month is like renting a hotel room, completely different, and that is the same as in the law in U.S.

Can you please point out the specific section of the law that defines a 'lease' as requiring a term between 1 and 5 years? Any definition of a lease that I've found says only that a term be specified, not that it must be within minimum or maximum limits.

Perhaps Mexican law does specify such, and it would be enlightening to learn so.

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Like so many other 'laws' in Mexico, it pretty much boils down to whether or not there is enforcement. I imagine there are a lot of rental 'arrangements' here that would not qualify as 'legal' under the law.

If you go to court the judge enforces it. Most landlords are not going to spend money fighting for a lease that is not legal.

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It does not appear that they would be taking advantage of you. They give you the option of paying in either pesos or dollars at that day‘s exchange rate. By law, they could demand payment in pesos, but that would not change the dollar amount, which is the reference point in your contract.

RV Gringo, you are unclear on what I am saying. My bank trust fee of $450US is a constant. If Banorte insists that I pay the equivalent amt. in pesos at whatever their (Banorte's) rate of exchange that day happens to be, I would be paying a conversion fee for changing dollars to pesos. If they used the mid-market exchange rate for the day, that would be different, but that is not what they have tried to get me to do in the past, rather they wanted me to buy pesos at their "buy" rate. As I'm sure you are aware, whenever one changes currencies, the bank always gets their cut. For that reason I insist that I be allowed to pay in dollars. And if my official contract with them states that I can pay in either/or, than I don't see how they could legally demand payment in pesos. Like I said, they always back down after first quoting me the amount in pesos and me pointing out the either/or clause.

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If it was illegal to write a lease in dollars you would see one of two things. Landlords would perhaps pull their properties off the market since most people do not have a mortgage and wait for the peso to stabilize or try and guess what it will be in a year and then price it that way. Either scenario would not be good for renters. There are always unintended consequences when people try to thwart the free market.

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Maybe Joco or someone else can show me the error of my ways for the following scenario.

I have a house I decide I want to rent for $1000 US per month. You look at it and decide you would like to lease it for that price. We agree that I will stop by on the first of the month and you will give me a US dollar check for that amount. I send that check to my US bank and it shows up in my checking account. Maybe I buy some stuff on Amazon and have Estafeta ship it to us or perhaps I withdraw some pesos from an ATM. Does anyone seriously care what I do with that $1000 or how many pesos I get in a currency exchange? But if during the lease you decide you want to pay me in pesos you have that right. The day before I come by you check the official rate according to the Mexican central bank and the next day you give me that many pesos. The person paying can always choose pesos, not the recipient unless previously agreed to.

Maybe I'm just stupid but for the life of me I don't see the problem.

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RV Gringo, you are unclear on what I am saying. My bank trust fee of $450US is a constant. If Banorte insists that I pay the equivalent amt. in pesos at whatever their (Banorte's) rate of exchange that day happens to be, I would be paying a conversion fee for changing dollars to pesos. If they used the mid-market exchange rate for the day, that would be different, but that is not what they have tried to get me to do in the past, rather they wanted me to buy pesos at their "buy" rate. As I'm sure you are aware, whenever one changes currencies, the bank always gets their cut. For that reason I insist that I be allowed to pay in dollars. And if my official contract with them states that I can pay in either/or, than I don't see how they could legally demand payment in pesos. Like I said, they always back down after first quoting me the amount in pesos and me pointing out the either/or clause.

Haha, I wish our trust was only $450, good for you. We just take an old fashioned paper check and drop it at the bank. They have never demanded pesos.

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Maybe Joco or someone else can show me the error of my ways for the following scenario.

I have a house I decide I want to rent for $1000 US per month. You look at it and decide you would like to lease it for that price. We agree that I will stop by on the first of the month and you will give me a US dollar check for that amount. I send that check to my US bank and it shows up in my checking account. Maybe I buy some stuff on Amazon and have Estafeta ship it to us or perhaps I withdraw some pesos from an ATM. Does anyone seriously care what I do with that $1000 or how many pesos I get in a currency exchange? But if during the lease you decide you want to pay me in pesos you have that right. The day before I come by you check the official rate according to the Mexican central bank and the next day you give me that many pesos. The person paying can always choose pesos, not the recipient unless previously agreed to.

Maybe I'm just stupid but for the life of me I don't see the problem.

You are correct. A lease or rental agreement denoted in USD is legal with the option of paying pesos at the buy rate for USD at the time of payment. If the rent remains the same in the currency of choice and agreed to at the time of signing the contract and remains at that amount for the duration of the contract, then there hasn't been an increase in the rent and the rate of exchange with the peso only matters if the renter chooses to pay in pesos at the time of payment so that the owner will receive the same amount of USD that the contract stipulates.

I would gladly go to court if I were the owner and someone challenged the payment as the poster joco has suggested and watch them waste more money on their "legal services".

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Maybe Joco or someone else can show me the error of my ways for the following scenario.

I have a house I decide I want to rent for $1000 US per month. You look at it and decide you would like to lease it for that price. We agree that I will stop by on the first of the month and you will give me a US dollar check for that amount. I send that check to my US bank and it shows up in my checking account. Maybe I buy some stuff on Amazon and have Estafeta ship it to us or perhaps I withdraw some pesos from an ATM. Does anyone seriously care what I do with that $1000 or how many pesos I get in a currency exchange? But if during the lease you decide you want to pay me in pesos you have that right. The day before I come by you check the official rate according to the Mexican central bank and the next day you give me that many pesos. The person paying can always choose pesos, not the recipient unless previously agreed to.

Maybe I'm just stupid but for the life of me I don't see the problem.

What is wrong with it? This is Mexico, not the U.S. I doubt the landlord who gets a U.S. bank check for rent is paying the Mexican taxes on the rent. Before that $1000 leaves Mexico, are you paying the IVA tax, reporting the income to the Hacienda or to IRS?

Mexicans are paid in pesos, so you are preventing Mexicans from renting your property and that is illegal. Mexicans are paid the same pesos every month no matter the fluctuation of the dollar is so why should they have to pay more rent because of the exchange rate?

Do you think in the U.S. you could base the rent on what the Euro does? How would that go over? Tell the tenant to pay you rent in Euros or get dollars exchanged for Euros or pay in dollars based on the exchange rate for Euros.

Why should a tenant be pleased with where you decide to spend your money? Why risk it? Here's a scenario, you tick a tenant off, the tenant reports you or sues you to get their money back because you based the lease on dollars instead of fixing the pesos amount then you are ordered to pay thousands of pesos to the tenant, in taxes and you are looking at being deported for violating the law.

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You are correct. A lease or rental agreement denoted in USD is legal with the option of paying pesos at the buy rate for USD at the time of payment. If the rent remains the same in the currency of choice and agreed to at the time of signing the contract and remains at that amount for the duration of the contract, then there hasn't been an increase in the rent and the rate of exchange with the peso only matters if the renter chooses to pay in pesos at the time of payment so that the owner will receive the same amount of USD that the contract stipulates.

I would gladly go to court if I were the owner and someone challenged the payment as the poster joco has suggested and watch them waste more money on their "legal services".

The peso rate must be fixed at the exchange rate at the time the contract is signed otherwise there is no contract stating the price. If rent is paid based on the exchange rate when the rent is paid monthly, that increases or decreases the agreed to rent and that violates the lease. There is no fixed payment.

Why is this hard to understand? The only legal currency in Mexico is pesos. Dollars can be in a contract but the amount paid is in pesos at the Bank of Mexico rate at the time the lease was signed.

By basing rent on dollars and not pesos, you are also preventing Mexicans who are paid in pesos from renting.

Go to court over this issue, and a Mexican judge who hears it will rule against you. Why would Mexicans want you to prevent Mexicans from renting and allow you to have a contract that ignores the original agreed to amount of rent?

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If it was illegal to write a lease in dollars you would see one of two things. Landlords would perhaps pull their properties off the market since most people do not have a mortgage and wait for the peso to stabilize or try and guess what it will be in a year and then price it that way. Either scenario would not be good for renters. There are always unintended consequences when people try to thwart the free market.

Because a landlord in Mexico cannot receive dollars in rent, he will quit renting. OK, let the house sit vacant. It amazes me that people think they can own property in another country and ignore the currency in that country.

If a landlord wants to throw a temper tantrum and let his house sit until he thinks the exchange rate is favorable to him, let him. Better yet, sell the property. We can rent in pesos from the Mexican who buys the property.

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Just a curious question. When you pay your rent does your landlord give you a factura or just an ordinary receipt?

Just an ordinary receipt. They own 5 Pemex gas stations and they don't want to claim the money they are earning.

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Joco is correct. You are living in Mexico and the official language of this country is Spanish, the official currency is MX pesos and the Mexican constitution and laws are unique to this country. If you don't like it, go back to where you came from.

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Joco is correct. You are living in Mexico and the official language of this country is Spanish, the official currency is MX pesos and the Mexican constitution and laws are unique to this country. If you don't like it, go back to where you came from.

The next claim will be that all contacts must be written in Spanish for them to be legal.

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The next claim will be that all contacts must be written in Spanish for them to be legal.

All contracts MUST be written in Spanish to be legal. You MUST have an official translation in English or other language or those who do not understand Spanish.

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Three consecutive false and inflammatory posts. Not sure that is a new record, but it might be close.

Your comments are odd.

This is from a Mexico Supreme Court decision. I assume you think the Supreme Court of Mexico decision is false and inflammatory also.

"In the legal system Mexicans are permitted to contract obligations in foreign currency; however, there is no beating the obligation to pay in that currency but must be in pesos.
The Congress has the power to "make rules to determine the relative value of foreign currency", as stated in Article 73 , section XVIII, of the Constitution of the United Mexican States and the seventh paragraph of Article 28 of the Constitution. The power of Congress to determine the relative value of foreign currencies are updated by monetary law. Actually what it does is prohibit the legal tender of another currency in Mexico, solving the problem of payment where an obligation is contracted in a currency other than the Mexican peso. Whose law also makes a reference to the provisions issued by the Bank of Mexico.
The power of Congress to determine the relative value of foreign currencies are updated by monetary law. Actually what it does is prohibit the legal tender of another currency in Mexico, solving the problem of payment where an obligation is contracted in a currency other than the Mexican peso. Whose law also makes a reference to the provisions issued by the Bank of Mexico. The Bank of Mexico has authority to regulate the changes and to issue general rules. In its organic law passed by Congress in Article 35 the bank's role in determining the exchange rate is explained"

``

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What is wrong with it? This is Mexico, not the U.S. I doubt the landlord who gets a U.S. bank check for rent is paying the Mexican taxes on the rent. Before that $1000 leaves Mexico, are you paying the IVA tax, reporting the income to the Hacienda or to IRS?

Mexicans are paid in pesos, so you are preventing Mexicans from renting your property and that is illegal. Mexicans are paid the same pesos every month no matter the fluctuation of the dollar is so why should they have to pay more rent because of the exchange rate?

Do you think in the U.S. you could base the rent on what the Euro does? How would that go over? Tell the tenant to pay you rent in Euros or get dollars exchanged for Euros or pay in dollars based on the exchange rate for Euros.

Why should a tenant be pleased with where you decide to spend your money? Why risk it? Here's a scenario, you tick a tenant off, the tenant reports you or sues you to get their money back because you based the lease on dollars instead of fixing the pesos amount then you are ordered to pay thousands of pesos to the tenant, in taxes and you are looking at being deported for violating the law.

Joco, I figured if the price of rope dropped enough you would buy some and we'd have a hanging.

We arrived in Ajijic in 2001 and after buying a big old house we turned it into Casa Flores B&B. We had, and still have, a Mexican attorney who got us hooked up with a contador (accountant). We have paid faithfully all Mexican taxes we owed as well as to the IRS. At any given time we had at least 4 employees and sometimes 6 when we were open for lunch to the public for about 2 years. We know all about paying IMSS, severance, holiday pay, aguinaldo and we have been to Labor Court where we won.

If you are charging anyone for the advice you have been giving I hope you have good E&O coverage.

Contracts written in any language are legal in Mexico and if legal action is necessary then you must pay to have said contract translated into Spanish so the judge can rule.

I suspect you are correct that many landlords do not have permission to work (which includes renting a house) nor do they declare the income and pay taxes on it but in our case the letter of the law was followed.

Good Day!

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Three consecutive false and inflammatory posts. Not sure that is a new record, but it might be close.

Al--I'm assuming you're referring to Joco's three posts as inflammatory? Joco does have others who disagree with her (or him). Could you tell us why you consider them inflammatory and false? Actually to me she sounds reasonable and informed.

With these opposite points of view on this thread, somebody's wrong. Are you sure, Al, that you have the facts to say who it is who's wrong?

Lots of things here get done that aren't according to Mexican law. That's how it goes.

It is fact that leases are to be written in Spanish, according to the law, with another written in English for one who needs it to be.

My current lease was given to me in both Spanish and English. For years, a former landlord and I had only a lease in English. That was fine with both of us.

It is when someone has a disagreement with the landlord--like being required to pay each month's rent according to the exchange rate that day--you have to resort to Mexican law to settle the issue. A lawyer can settle the matter. It doesn't have to end up in court.

That's what my original post was asking. Getting so many opinions--and they seem to be mostly opinions--doesn't answer the question, but it's certainly an engaging topic, isn't it.

Lexy

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Three consecutive false and inflammatory posts. Not sure that is a new record, but it might be close.

Joco, I figured if the price of rope dropped enough you would buy some and we'd have a hanging.

We arrived in Ajijic in 2001 and after buying a big old house we turned it into Casa Flores B&B. We had, and still have, a Mexican attorney who got us hooked up with a contador (accountant). We have paid faithfully all Mexican taxes we owed as well as to the IRS. At any given time we had at least 4 employees and sometimes 6 when we were open for lunch to the public for about 2 years. We know all about paying IMSS, severance, holiday pay, aguinaldo and we have been to Labor Court where we won.

If you are charging anyone for the advice you have been giving I hope you have good E&O coverage.

Contracts written in any language are legal in Mexico and if legal action is necessary then you must pay to have said contract translated into Spanish so the judge can rule.

I suspect you are correct that many landlords do not have permission to work (which includes renting a house) nor do they declare the income and pay taxes on it but in our case the letter of the law was followed.

Good Day!

Once again I agree with both posts and wouldn't hesitate to take this matter to court for legal action with the English language contract translated into Spanish by a perito.

The paying of taxes is another matter that would have to be dealt with separately by Hacienda and would not void the contract.

Mexican owners do not need any sort of "permiso" to rent properties.

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Once again I agree with both posts and wouldn't hesitate to take this matter to court for legal action with the English language contract translated into Spanish by a perito.

The paying of taxes is another matter that would have to be dealt with separately by Hacienda and would not void the contract.

Mexican owners do not need any sort of "permiso" to rent properties.

Who said Mexican owners needed permission to work? That is kind of a no-brainer isn't it?

If a foreign owner is out of the country the tenant can be harassed to pay the taxes. The tenant might win but it isn't worth the pain of dealing with the tax authorities.

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Joco, I figured if the price of rope dropped enough you would buy some and we'd have a hanging.

We arrived in Ajijic in 2001 and after buying a big old house we turned it into Casa Flores B&B. We had, and still have, a Mexican attorney who got us hooked up with a contador (accountant). We have paid faithfully all Mexican taxes we owed as well as to the IRS. At any given time we had at least 4 employees and sometimes 6 when we were open for lunch to the public for about 2 years. We know all about paying IMSS, severance, holiday pay, aguinaldo and we have been to Labor Court where we won.

If you are charging anyone for the advice you have been giving I hope you have good E&O coverage.

Contracts written in any language are legal in Mexico and if legal action is necessary then you must pay to have said contract translated into Spanish so the judge can rule.

I suspect you are correct that many landlords do not have permission to work (which includes renting a house) nor do they declare the income and pay taxes on it but in our case the letter of the law was followed.

Good Day!

Hanging? How emotional and silly.

I didn't realize all of this was about you and your business. Running a B&B is not leasing property to tenants but I don't want to explain that.

If you change a contract to Spanish in order to go to court, you invalidate the contract. Contracts must be all originals and the only contract that can go to court is the original contract. If it is not in Spanish it is not viable.

I am so glad that you are legal and pay taxes.

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