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Lexy

rent paid in pesos, what's the law?

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I guess the US auto manufacturers had some crystal ball when they decided to move significant manufacturing plants to Mexico. Whilst they may be losing on some some of their initial brick and mortar investment , they are now producing cars for significantly less money and there is more employment for Mexicans

Thanks to the American politicians who have agreed to let these cars enter into the US duty free thus costing millions of American jobs. There really is no free lunch.

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I take out my money in pesos because I live in Mexico. That means I am enjoying having extra pesos to spend as I choose which I would not have if my rent was in U.S. dollars. The extra pesos would go to the landlord. She would have more to spend and I would have less, because we live in a peso economy.

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Nice effort pappysmarket but I think you're whistlin' in the wind. This is one of the most revealing and saddest conversations that I have seen here.

Jaja, I think you are right! Now if only my devious mind could come up with a plan to, let's say, "cash in" on this?

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Actually I think if people had leases in $US and paid with that currency there would be less confusion and less envy. They probably wouldn't even think about the landlord getting more pesos and would never feel "poorer". PT was right.

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OP's original question deals with legal issues but the comments that have followed seem to lean toward answering the question of what is fair.

The tenant and lanlord make an agreement of price at the onset of a lease. Nationalities of the parties don't matter at this point but each one thinks that the cost of the rental at the stated currency is acceptible and fair.

Here's where you need a programmer. I'm retired so don't call. The only scenario that plays consistently for the life of the lease is if both parties are US and the tenant either transfers US funds to landlord's US bank or withdraws pesos each month at an ATM. Everything here is equal otherwise known in economics as ceteris paribus. As multiple currencies are introduced so are winners and losers, especially in a time where currencies are fluctuating a lot.

If the US tenant has transferred a year's worth of money down then the relationship between the currencies costs him more or less than the original agreement. If the Canadian tenant agrees to the USD price then movements between those 2 currencies creates a perceived entity that gets more than the original agreement and the other less. Things get more complicated for the Canadian paying in pesos to a landlord from the US.

My sense is that tenants and landlords are reluctant to strike a price at some relationship between currencies. One poster mentioned $12,500 pesos for a $900USD lease. Each side is afraid of getting screwed should the relationship between currencies go against them. Neither wants to be on the losing side of their currency.

Many of us own so this question is totally irrelevant but for landlords and tenants out there would you agree to a lease in pesos for some fixed period based on a static or average relationship of currencies over some recent period of time?

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I take out my money in pesos because I live in Mexico. That means I am enjoying having extra pesos to spend as I choose which I would not have if my rent was in U.S. dollars. The extra pesos would go to the landlord. She would have more to spend and I would have less, because we live in a peso economy.

Xena and I are on the same page on this issue. Our income is in USD. The exchange rate is in our favor--in an unprecedented way these days--when we change our dollars into pesos to live here at Lakeside.

But something is happening now in the rental market sparked by this incredible exchange rate. When did we see in years past landlords of rentals demanding to be paid in USD or current peso equivalent each month, as we are seeing now? With the current exchange rate, such an agreement between tenant and landlord is disproportionately in the favor of the landlord. And I'm asking, how come?

When I was searching for a suitable rental in 2015, all rentals were quoted in USD. Nevertheless Mexican landlords that I encountered would then set a peso amount they actually wanted. (I was told a number of times that they couldn't or didn't want to take a check in dollars. Maybe this has changed.) This was the rent to be paid for the duration of the lease. That makes sense to me.

What I am questioning is any lease that gives a landlord the advantage of an ever-increasing monthly rent income for the duration of a lease based on an exchange rate.

John Shrall (post # 31) is on to what I think is fair: an agreement between landlord and tenant that fixes a peso amount due for the duration of a lease.

I've learned a lot listening to you all respond to my post. I'm convinced that a landlord has no right to earn an increase in rental income every month or so during the duration of a lease to the disadvantage of the renter.

Just an alert for the next time a renter signs a lease that gives a landlord something more in his favor than in yours, the renter.

Lexy

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Currency fluctuations are a fact of financial life especially if you live in a country other than the one where you keep your financial resources. If the dollar was falling, which it well can do, would we be hearing all this chit chat about "fairness" etc?

This too will pass folks.

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OP's original question deals with legal issues but the comments that have followed seem to lean toward answering the question of what is fair.

The tenant and lanlord make an agreement of price at the onset of a lease. Nationalities of the parties don't matter at this point but each one thinks that the cost of the rental at the stated currency is acceptible and fair.

Here's where you need a programmer. I'm retired so don't call. The only scenario that plays consistently for the life of the lease is if both parties are US and the tenant either transfers US funds to landlord's US bank or withdraws pesos each month at an ATM. Everything here is equal otherwise known in economics as ceteris paribus. As multiple currencies are introduced so are winners and losers, especially in a time where currencies are fluctuating a lot.

If the US tenant has transferred a year's worth of money down then the relationship between the currencies costs him more or less than the original agreement. If the Canadian tenant agrees to the USD price then movements between those 2 currencies creates a perceived entity that gets more than the original agreement and the other less. Things get more complicated for the Canadian paying in pesos to a landlord from the US.

My sense is that tenants and landlords are reluctant to strike a price at some relationship between currencies. One poster mentioned $12,500 pesos for a $900USD lease. Each side is afraid of getting screwed should the relationship between currencies go against them. Neither wants to be on the losing side of their currency.

Many of us own so this question is totally irrelevant but for landlords and tenants out there would you agree to a lease in pesos for some fixed period based on a static or average relationship of currencies over some recent period of time?

The whole idea of a legal contract is to remove the subjective idea of "fairness " and replace that with something that is pretty clear for both sides to be able to interpret.

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Currency fluctuations are a fact of financial life especially if you live in a country other than the one where you keep your financial resources. If the dollar was falling, which it well can do, would we be hearing all this chit chat about "fairness" etc?

This too will pass folks.

Yes, currency fluctuations happen. But this particular unprecedented USD/MXN exchange rate that in a year has jumped from about 14 or 15 in May or June 2015 to a high of 18.44 in January 22, 2016, calls for a renter's due diligence. To say the least. And actually, I'm questioning the legality of what landlords are doing more than so-called "fairness."

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Me too. I'm surprised that contract here are not all in $MXP. Did anyone (Spencer?) answer the question of the OP? What is legal and what is not?

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Remember that in 2009 the rate was about 15.5:1. In 2011 it was 11.5 : 1.

Paying in pesos on a rate based on dollars doesn't always work in the landlord's favor.

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The law on rent in clear. A lease cannot increase the rent more than 10% on a new lease. It certainly cannot increase the rent during the term of the lease. If a lease is based on dollars and paying the equivalent in pesos, that increases the rent each month recently. It certainly keeps out Mexican renters who are paid in pesos which is obviously illegal.

The pesos looks the same to Mexicans if they are not buying U.S. products. If someone is not spending money to buy U.S. products, his pesos buy the same in Mexico.

Why should a landlord in Mexico get more pesos because the currency in another country is getting a better rate?

A lease must follow the law, not to want people agree. That means if two people agreed to an illegal act, the act is legal because they agreed and ignored the law. You cannot agree to violate the law.

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Last year we had to get Spencer involved with writing our new lease. As per the owners request our lease is in USD and we have to pay in pesos. So it must be legal to do that if Spencer wrote up our lease.

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There are usually two opposing sides who go to court. One side loses even though bought are represented by lawyers. Why assume that all lawyers know the law?

TITULO DECIMO TERCERO
De la Moneda
Artículo 635.- La base de la moneda mercantil es el peso mexicano, y sobre esta base se harán todas las operaciones de comercio y los cambios sobre el extranjero.
Artículo 636.- Esta misma base servirá para los contratos hechos en el Extranjero y que deban cumplirse en la República Mexicana, así como los giros que se hagan de otros países.
Artículo 637.- Las monedas extranjeras efectivas o convencionales, no tendrán en la República más valor que el de plaza.
Artículo 638.- Nadie puede ser obligado a recibir moneda extranjera.
Artículo 639.- El papel, billetes de banco y títulos de deuda extranjeros, no pueden ser objeto de actos mercantiles en la República, sino considerándolos como simples mercancías; pero podrán ser objeto de contratos puramente civiles.

Google Translate:

TITLE THIRTEEN
Mint
Article 635. The basis of commodity currency is the Mexican peso, and this basis all trading operations and changes will be made on
Foreign.
Article 636.- This same base serve to contracts made in the Abroad and that must be met in Mexico and turns
that are made from other countries.
Article 637.- Actual or conventional foreign currencies shall not the Republic more value than the square.
Article 638.- Nobody can be forced to receive foreign currency.
Article 639.- The paper, banknotes and foreign debt securities not They are subject to commercial acts in the Republic, but considering
as mere commodities; but may be purely civilian contracts.

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Another law under Profeco, states that all prices must contain all charges. If rent is fluctuating because it is based on an exchange rate, that violates this consumer protection law.

Hoy entra en vigor la reforma al Artículo 7 bis de la Ley Federal de Protección al Consumidor que exige a los proveedores mostrar precios de forma notoria y visible
Los precios deben corresponder al monto total a pagar e incluir impuestos, comisiones, intereses, seguros y cualquier cargo adicional. De lo contrario, Profeco puede sancionar al proveedor con 1,220,000 pesos.
México, DF, a 16 de noviembre de 2010. El derecho del consumidor a pagar sólo la cantidad señalada en las etiquetas o anuncios se confirma a partir de hoy con la entrada en vigor de la reforma al Artículo 7 bis de la Ley Federal de Protección al Consumidor (LFPC).
El monto total a pagar, precisa la nueva adición a la LFPC, debe contener "impuestos, comisiones, intereses, seguros y cualquier otro costo, cargo, gasto o erogación adicional que se requiera cubrir con motivo de la adquisición o contratación respectiva, sea esta al contado o a crédito".
Por lo tanto, el precio de todo bien, producto o servicio que se exhiba a la venta o en publicidad debe incluir la totalidad de los cargos extra. La Procuraduría Federal del Consumidor (Profeco) podrá sancionar con una multa de 1,220,000 pesos a los proveedores que no cumplan con la reforma.
Esta medida protege a los consumidores contra empresas que publiciten sus productos o servicios sin mostrar el costo real a pagar en caja, como ocurre con las promociones en tarifas aéreas, paquetes vacacionales, compra de automóviles, tarifas de telefonía móvil, televisión de paga y ventas por internet. Dicha publicidad se considerará engañosa si no indica el costo total al consumidor.
La disposición aplica para todos los sectores que ofrecen bienes o servicios al consumidor, tanto proveedores directos (fabricantes) como intermediarios (supermercados o tiendas de autoservicio).
Desde la incorporación del Artículo 7 bis a la LFPC en 2004, los proveedores tienen la obligación de exhibir de forma visible el monto total a pagar por bienes, productos o servicios.
La adición a este artículo fue publicada en el Diario Oficial de la Federación el 19 de julio de 2010 y entra en vigor a partir de hoy. En el nuevo párrafo de la Ley se hace hincapié en que el monto total a pagar debe mostrarse de manera notoria y además precisa que este monto debe contener todo cargo adicional.
Los proveedores están obligados a informar y respetar precios, tarifas, garantías y demás condiciones que ofrezcan. Si esto no sucede, el consumidor afectado puede presentar su queja en las delegaciones y subdelegaciones de Profeco o llamar al Teléfono del Consumidor (5568 8722 desde el DF y área metropolitana; 01 800 468 8722, larga distancia sin costo desde el resto del país).
Today comes into force the amendment to Article 7a of the Federal Consumer Protection Act that requires suppliers show prices markedly and visible
Prices must correspond to the total amount due and include taxes, fees, interest, insurance and any additional charge. Otherwise, PROFECO can sanction the supplier with 1,220,000 pesos.
Mexico City, November 16, 2010. The right of the consumer to pay only the amount stated on the labels or ads starting today confirmed with the entry into force of the amendment to Article 7a of the Federal Law of Protection Consumer (LFPC).
The total to be paid, amount precisely the new addition to the LFPC, must contain "taxes, fees, interest, insurance and other costs, charges, expenses or additional expenditure that is required to cover the occasion of the acquisition or respective contracts, be it cash or credit. "
Therefore, the price of all goods, product or service for sale or display advertising should include all the extra fees. The Federal Consumer Protection Agency (Profeco) may sanction with a fine of 1,220,000 pesos to suppliers who do not comply with the reform.
This protects consumers against companies that advertise their products or services without showing the actual cost to be paid in cash, as with developments in airfares, vacation packages, car purchase, mobile phone tariffs, pay television and sales by Internet. Such advertising is considered misleading if not indicated the total cost to the consumer.
The provision applies to all sectors that offer goods or services to the consumer both direct suppliers (manufacturers) as intermediaries (supermarkets or convenience stores).
Since the incorporation of Article 7a to LFPC in 2004, providers have an obligation to visibly display the total amount to pay for goods, products or services.
Adding to this article it was published in the Official Journal of the Federation on July 19, 2010 and comes into force from today. In the new paragraph of the Law it emphasizes that the total amount due should be displayed conspicuously and also states that this amount must contain any additional charge is made.
Suppliers are required to report and observe prices, rates, guarantees and other conditions offering. If this does not happen, the affected consumer can file your complaint with the delegations and sub Profeco or call Consumer (5568 8722 from Mexico City and the metropolitan area; 01 800 468 8722, toll free from the rest of the country) .

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Last year we had to get Spencer involved with writing our new lease. As per the owners request our lease is in USD and we have to pay in pesos. So it must be legal to do that if Spencer wrote up our lease.

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

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There seems to be a major misconception about this issue. I used to pay my rent with a check in USD ever since I moved here. My Mexican landlords were always able cash these checks. But, since FATCA or whatever, we USians can no longer use checks here - no one will accept them now. So, I had to resort to making a couple of extra trips to the ATM to get out my rent money to pay in pesos.

As the peso devalued, I had to ask myself, should I pay the current exchange rate, which was increasingly more pesos, or pay the peso rate at the time I moved to my current house. I have a great relationship with my landlords and of course do not want to cause a problem.

If you still could pay your rent with a US check, and the landlord exchanged it, yes, they would be getting a lot more pesos.

BUT... It costs me far fewer dollars to withdraw these pesos! So, in paying lots more pesos to the landlord, which of course benefits them greatly, and that is fine... I am not actually paying more rent! I spend more freely and withdraw more pesos, but the dollar amount I am spending has hardly changed. So, what is the problem?

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Many of us bought houses in Chapala area that were priced in US Dollars. To rent out that home you'll probably want rent in US Dollars. I just looked at a contract from an agent that is priced in US Dollars but specifies that peso equivilent payment is acceptable based on the current FX quote and gives a website to use for the conversion. I suspect that they must allow payment in pesos to be legal. (as in the peso is legal tender for all transactions)

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Many of us bought houses in Chapala area that were priced in US Dollars. To rent out that home you'll probably want rent in US Dollars. I just looked at a contract from an agent that is priced in US Dollars but specifies that peso equivilent payment is acceptable based on the current FX quote and gives a website to use for the conversion. I suspect that they must allow payment in pesos to be legal. (as in the peso is legal tender for all transactions)

Absolutely correct!

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This site says contracts must be in pesos and not be in dollars but if it is, it must specify the dollars amount to be paid in pesos at the exchange rate when the contract is signed. The exchange rate cannot float.

http://derecho.jorgemafud.com/2009/08/23/como-establecer-obligaciones-en-dolares/

Establecer obligaciones de pago en dólares de los Estados Unidos de América es de lo más común en México pero, cuáles son sus implicaciones? En principio, tomemos en cuenta que los dólares no son moneda “válida” en México y es por eso que, al redactar contratos donde el precio se pacte en dólares es importante ser precisos para no caer en situaciones que nos puedan complicar su cobro.
La Ley Monetaria de los Estados Unidos Mexicanos (la “Ley Monetaria”) establece, entre otras cosas, que la unidad del sistema monetario en México es el peso y que las únicas monedas circulantes serán (a) los billetes del Banco de México, S. A., (B) las monedas metálicas de 50, 20, 10, 5, 2 y 1 pesos, y de 50, 20, 10, y 5 centavos © las monedas metálicas conmemorativas de acontecimientos de importancia nacional, en platino, en oro, en plata o en metales industriales y (d) las monedas metálicas, acuñadas en oro y en plata.
Más adelante, la Ley Monetaria establece que la moneda extranjera no tendrá curso legal en la República, con algunas excepciones, por lo que las obligaciones de pago en moneda extranjera se solventarán en México entregando el equivalente en moneda nacional, al tipo de cambio vigente en el lugar y fecha en que deba hacerse el pago. Lo anterior nos trae como problema el poder definir con exactitud cuál será el “tipo de cambio” al que deben pagarse dichas obligaciones en moneda extranjera.
Considerando lo anterior, cuando en algún contrato o documento tengo que redactar una obligación de pago en dólares de los Estados Unidos de América o en cualquier otro tipo de moneda extranjera, lo recomendable es establecer algo similar a esto:
“El Comprador se obliga a pagar al Vendedor la cantidad de USD $100,000.00 (cien mil dólares de los Estados Unidos de América 00/100), los cuales serán pagaderos en pesos, moneda nacional, al tipo de cambio “Fix” publicado por el Banco de México en el Diario Oficial de la Federación el día anterior a la fecha en la que se realice el pago.”
Podrás notar que mencioné el tipo de cambio “fix” publicado por el Banco de México…. Cual es este tipo de cambio? Si entramos a la página de Internet del Banco de México veremos en la página principal que uno de los “principales indicadores” es el FIX (pesos por dólar) determinado en cierto día. También nos dice dicha página que el tipo de cambio Fix es:
“…el tipo de cambio que determina el Banco de México para solventar obligaciones denominadas en dólares de los EE.UU.AA., pagaderas en la República Mexicana.” “…es determinado por el Banco de México los días hábiles bancarios con base en un promedio de las cotizaciones del mercado de cambios al mayoreo para operaciones liquidables el segundo día hábil bancario siguiente.” “El tipo de cambio que se debe de utilizar el día de hoy para calcular el equivalente en pesos del monto de las obligaciones de pago denominadas en dólares de los EE.UU.A. para ser cumplidas en la República Mexicana, debe de ser el publicado por el Banco de México en el Diario Oficial de la Federación el día hábil bancario inmediato anterior.”
Como siempre, estoy a tus órdenes para apoyarte en el (81) 8399-0579… llámame. Te recuerdo que puedes suscribirte al Newsletter de Mafud Abogados también. Saludos.
Google bad translate:
Establish payment obligations in dollars of the United States of America is most common in Mexico but, what are its implications? In principle, take into account that the dollars are not currency "valid" in Mexico and that is why, when drafting contracts where the price is agreed in dollars is important to be precise to avoid falling into situations that may complicate his recovery.
The Monetary Law of the United Mexican States (the "Monetary Law") provides inter alia that the unit of the monetary system in Mexico is the weight and the only circulating coins will be (a) the notes of the Bank of Mexico, SA (B) the coins of 50, 20, 10, 5, 2 and 1 pesos, and 50, 20, 10, and 5 cents © commemorative coins of events of national importance, platinum, gold , silver or industrial metals and (d) the coins, minted in gold and silver.
Later, the Monetary Law provides that foreign currency will not be legal tender in the Republic, with some exceptions, so the payment obligations in foreign currency shall be solved in Mexico delivering the equivalent in national currency, the exchange rate in the place and date of the payment to be made. This brings us to define the problem as exactly what the "exchange rate" to those obligations payable in foreign currency.
Considering the above, when a contract or document have to draft a payment obligation in dollars of the United States of America or any other foreign currency, it is advisable to establish something like this:
"The Buyer agrees to pay the Seller the amount of USD $ 100,000.00 (one hundred thousand dollars of the United States of America 00/100), which shall be payable in pesos, the national currency exchange rate" Fix "published by the Bank of Mexico in the Official Gazette on the day preceding the date on which payment is made. "
You'll notice I mentioned the exchange rate "fix" published by the Bank of Mexico .... What is this rate? If we go to the website of the Bank of Mexico will see on the front page that one of the "leading indicators" is the FIX (pesos per dollar) determined on a certain day. That page also tells us that the exchange rate is Fix:
"... The exchange rate determines the Bank of Mexico to settle liabilities denominated in dollars EE.UU.AA. payable in Mexico." "... Is determined by the Banco de Mexico bank business day based on an average of the market price of wholesale changes to operations settled the second banking day following. "" The exchange rate to be using today to calculate the equivalent amount in pesos denominated payment obligations in dollars EE.UU.A. to be fulfilled in Mexico, it must be published by Banco de Mexico in the Official Gazette the banking business day immediately preceding. "
As always, I am at your service to support you in the (81) 8399-0579 ... call me. I remind you that you can subscribe to newsletter Mafud lawyers too. Regards.

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Many of us bought houses in Chapala area that were priced in US Dollars. To rent out that home you'll probably want rent in US Dollars. I just looked at a contract from an agent that is priced in US Dollars but specifies that peso equivilent payment is acceptable based on the current FX quote and gives a website to use for the conversion. I suspect that they must allow payment in pesos to be legal. (as in the peso is legal tender for all transactions)

Absolutely correct!

Ditto

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Many of us bought houses in Chapala area that were priced in US Dollars. To rent out that home you'll probably want rent in US Dollars. I just looked at a contract from an agent that is priced in US Dollars but specifies that peso equivilent payment is acceptable based on the current FX quote and gives a website to use for the conversion. I suspect that they must allow payment in pesos to be legal. (as in the peso is legal tender for all transactions)

Can you imagine a sale or rent being based on Euros in the U.S.? How long would that last?

Because in this area, many owners wanted money in dollars and have checks sent to the U.S. to hide any tax obligations, that doesn't make paying in dollars instead of pesos legal.

Like the attorney site I posted says, dollars are not legal but if a contract has dollars the amount converted to pesos is the exchange rate at the time of signature. You can't have rent floating with the exchange rate.

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The fixed exchange rate on the day of signing must be the exchange rate posted by the Bank of Mexico, not any other.

http://derecho.jorgemafud.com/2009/08/23/como-establecer-obligaciones-en-dolares/

"You will notice that the exchange rate mentioned "fix" published by the Bank of Mexico .... What is this rate? If we go to the website of the Bank of Mexico will see on the front page that one of the "leading indicators" is the FIX (pesos per dollar) determined on a certain day. That page also tells us that the exchange rate is "

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