Mexican landlord and tenant laws are judged by the Global Property Guide to be Pro-Tenant between landlord and tenant. 

While Mexican rental law provides important protections for tenants, especially regarding security of tenure and eviction procedures, landlords are also granted certain rights to ensure they are financially protected and can maintain control over their property.

The law is generally tenant-friendly, particularly in regard to eviction procedures, automatic lease renewals, and rent control in some areas. However, landlords are still able to enforce lease terms and demand guarantees, ensuring a reasonable level of control and security for their investments.

Rents: Can landlord and tenant freely agree rents in Mexico?

Rents in Mexico can be freely agreed by the landlord and tenant, and formalized in a Contract of Lease (Contrato de Arrendamiento). 

Mexico has a rent control system in place, primarily affecting the Federal District (now Mexico City) and a few other states. Under this system, yearly rent increases for certain leases cannot exceed 85% of the increase in the federal district’s general minimum wage for the year when the lease is renewed or extended.

In cases where the tenant renews a one-year lease, the landlord is allowed to increase the rent by up to 10% from the previous rent amount.

It is also common for lease agreements to include clauses that allow for annual rent adjustments based on a specific Consumer Price Index (CPI) agreed upon by both parties. If the rent is set in US dollars, the reference CPI is typically that of the United States. If the rent is in Mexican pesos, the reference is usually the INPC (Índice Nacional de Precios al Consumidor), the official consumer price index for Mexico.

Deposits

Under the Civil Code in Mexico, lease agreements must include any guarantees that the parties have agreed upon, but the code does not specify a maximum deposit amount. Typically, the landlord requires a one-month security deposit when signing a residential lease.

Although monthly rent is often paid in advance, a security deposit is not always required for residential units. In some cases, additional guarantees, such as institutional bonds or solvent guarantors, may be requested. Unless otherwise stated, the guarantor's obligations typically end when the lease term expires.

It is common for the lease to specify that the tenant cannot use the security deposit to cover the final rent payment. The landlord is not obligated to return the deposit until the tenant has returned the property in good condition, excluding normal wear and tear, and after confirming that all utility payments (for which the tenant is responsible) have been fully paid.

What rights do landlords and tenants have in Mexico, especially as to duration of contract, and eviction?

In Mexico, each of the 31 states has its own civil laws governing landlord-tenant relationships and property ownership. As Mexico is a federal republic, these laws can vary from state to state. The Civil Code of each state includes specific regulations related to leases, property transactions, and ownership rights.

Therefore, if you're considering investing in real estate in Mexico, it’s essential to understand the property laws of the specific state where you plan to invest. Familiarizing yourself with the local civil laws regarding buying, renting, and owning property will help you make informed decisions and choose the best locations for real estate investment.

Historically, in Mexico, the law has favored the tenant. It takes time, effort and legal expense to evict existing tenants. Notice is required for eviction at the end of a contract, otherwise, the time-limited lease will convert into a indefinite-term lease. Fortunately, under the current provisions in effect since October 19, 1998, the agreement may thereafter be terminated under a 15-day notice. No reason need by given by the landlord for the termination. But the problem is that if despite the landlord's notice, the tenant remains in possession after termination of the agreement, the landlord will need to go to court to request eviction. A trial and enforcement of a final resolution for termination of the lease agreement, eviction of property and/or collection of rents may take from one year (if the tenant does not exercise appropriate defenses) to several years, in highly disputed cases. The average duration of the judicial dispute is approximately eighteen months.

In case of death of either tenant or landlord, the lease agreement will not expire, and therefore, the spouse or concubine, children and other relatives of tenant will have the right to remain with lease agreement, provided that they inhabited the leased property during tenant's lifetime. This provision cannot be waived with respect to residential leases.

How effective is the Mexican legal system?

In Mexico, property laws tend to favor tenants, making it difficult for landlords to evict tenants when a lease expires. If a landlord wishes to end a lease, they must provide a time-limited notice before the lease expires; otherwise, the lease automatically becomes an indefinite-term lease.

If the tenant does not leave the property voluntarily after the lease ends, the landlord must follow a legal procedure that involves a judge issuing an eviction order. If the tenant refuses to comply with the order, the landlord can request the police to assist in the eviction.

The rights and responsibilities of both tenants and landlords are outlined in the Mexican Constitution of 1917 and in the Civil Code of each state in Mexico. These laws govern eviction processes and other obligations for both parties.

Depending on the situation, evicting a tenant in Mexico can take anywhere from two to seven weeks, but this process can take longer if the tenant appeals or requests a delay.

Legislation

Due to the fact that Mexico is a Federal Republic, each of the 31 states has its own regulations in connection to leases. These regulations are comprised by the Civil Code of each state.

Brief History: Recent changes in Mexican landlord and tenant law

The current Federal Civil Code was published in the Federal Official Gazette on March 26, 1928 and has been in effect since October, 1932. Since then, it has undergone several amendments.

On December 30, 1948 an important decree was published in order to indefinitely extend the term of leases in Mexico City, causing a rent freeze for properties leased at that time. On December 30, 1992 this decree was abolished, though a grace period ranging from thirty days to four years (depending on the type of property and value of the rent payments) was given to existing leases.

In 1993 important amendments were included with respect to lease agreements for residential properties, which did not become effective for residential properties at that time leased until October 19, 1998. For agreements entered prior to this date, the tenant was granted the right to renew the agreement for two additional years, provided it was current in the payment of rents. With respect to leases entered after October 19, 1998, such tenant's right was eliminated, and now the minimum compulsory term of lease agreement is one year, unless the parties mutually agree to early-terminate the agreement.