Frequently Asked Questions
No, a land lease for more than 9 years 11 months is not legal. However, leases of the 9 year 11 month term are legally renewable if there is a fair market adjustment made upon each renewal. Renewals beyond three terms can be entered into, but in the event of a dispute are not defendable in court under Mexican Law. If you enter into a renewable lease agreement with a Mexican land owner and at the end of the first 10 years the land owner decides he does not want to recognize that second ten year lease you thought you had, he does not have to do so. You have no recourse, because you entered into that agreement which was designed to circumvent Mexican Law, thereby giving you no legal status to use the Mexican Court System. When you lease land, the lease should be 9 years and 11 months to stay within the lease land laws. It is possible and perfectly legal for the Mexican land owner to give you a new 9 year 11 month lease at the end of your first 9 year 11 months. It is also possible to pre agree with the land owner that a specific number of renewals will be made available to you. Just remember that in the event of a dispute, you will have no recourse.
It's been suggested a Lease Land arrangement is acceptable if:
- you are limiting your second home investment to a smaller total purchase amount rather than a Bank Trust purchase
- only if you can obtain a 9 year 11 month lease.
- Only if you have full confidence in the reliability of the Mexican land owner.
Just be sure the total investment you are willing to pay for the structure on lease land is an amount you can average over a 30 year period.
Land lease rents run from about $50.00 to as much as $600.00 per month. Most leases have a “cost of living adjustment” at the end of your lease for the next lease term. Often there’s a 10% fee when you sell the structures that pass to the new land owner and your buyer will probably have a nominal increase in the rent as well, usually a 10% increase.
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