Landlord and tenant, what expenses should each cover and why?

Previously, we discussed ABC of the lease to clarify the many doubts that exist about this very important document in which the rights and obligations of the lessor and lessee are established. Be very careful, remember that when you rent or lease property, this contract must be in place, and it does not matter if you rent it to your close friend or if your uncle gives you his house for rent. Don’t just do it verbally, this contract must be concluded, otherwise, there is no way to file a claim with the relevant authorities if – for some reason – circumstances have changed and they want to remove you from the property without prior notice or if the tenant is not responsible for malfunctions in the property.

On this occasion, we interviewed Ernesto Mina, Member of the National Board of Directors of the Mexican Association of Real Estate Professionals (AMPI) and National Legal Vice President of the said institution, to speak precisely about the expenses that, in terms of rental, the property owner and the tenant must bear.

Expenses incurred by the property owner

Expenses 1. Investigation of property left in escrow

One of the expenses incurred by the landlord is to carry out the corresponding investigation into the property that the tenant leaves as security.

The expenses will correspond to the investigation to be carried out and the payment of the corresponding rights to the Public Registry of Property or the Institute of Recording Function – in the case of the State of Mexico – for two documents:

  1. Certificate of freedom from burdens and proof of the true paper. The first is a public document duly signed by the Registrar and Public Registry Administrator, which legalizes the x-rays of property given by the tenant as security.
  2. A certificate of real papers is a document that is not as official as the first but is issued by the public registry with this exception, it also shows the state of the property. According to Meana, there is no real newspaper in the state of Mexico, and only the above-mentioned certificate can be obtained.

Expenses 2. Realizing tenant credit

The landlord can also afford to investigate the tenant in front of the credit bureau or BuhoLegal, to find out if there is any legal dispute regarding it or not and also so that there is transparency regarding it. Credit and solvency of the same tenant.

Expenses incurred by the tenant

  1. Pay the deposit

The down payment made by the tenant is a Month’s deposit It guarantees the fulfillment of its obligations in two areas: in terms of rent and the damages that occurred at the time of the eviction of the property and that generate a debt.

“One or two deposits per month may be required, depending on the type of business or residential that matches the property. This is money that does not cause VAT (Value Added Tax) because it is a deposit that is only made to ensure that obligations are met. When a tenant makes Any unit to be vacated and delivered properly to the owner, i.e. when the unit has no damage and no debt is outstanding, then the obligation will be at the time specified in the contract, that the owner return this deposit to the landlord’s tenant”, as Ernesto Mina points out.

  1. Rent payment

The other payment that the tenant agrees to pay is to pay rent at the time and in the manner specified in the lease agreement. It is very important to note that a deposit should never be understood as a monthly rent payment. The law states – and it must be assumed – that the deposit is only a guarantee of the fulfillment of future obligations. When the rent is paid on the terms agreed in the lease agreement, and if everything else is in order, the landlord will have to return the deposit to the tenant.

“Only when there are damages, and at the time of eviction and handover, the landlord knows of them, or in case the rent has not been paid in full – the deposit cannot be returned and this will be a matter of preparing a register where the corresponding details are put and roughly quantified in how much such damages can be distributed.”, adds AMPI’s national legal vice president.

In the next installment, we’ll review what kind of property breakdowns go along with payment to a landlord or tenant and see what alternatives exist when the parties have strong disagreements and decide to take action to end their relationship. Do not miss it!

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