lease

The importance of adequately administering Lease Agreements.

By- Lic. Mauricio Tortolero

In order to carry out operations in Mexico, many companies decide to lease real property. This is done by means of the execution of a lease agreement for a fixed period of time, which includes all of the rights and the obligations of the lessor and of the lessee regarding the use of the real property.

It is common for such period of time to be divided into an original term during which the lease agreement will be in force, and in one or more renewal periods during which the lessee has the right to extend the original term of the lease agreement provided that the lessee is up to date in the compliance of its obligations stated in the lease agreement.

Since the lessee negotiates the lease agreement in order to have certainty of the conditions under which it may use the real property during the period of time agreed upon with the lessor, it is important that once such agreement is executed, the lessee carries out the following actions in order to properly administer the lease agreement:

  1. Review the lease agreement in order to prepare a document listing the obligations of the lessee, describing each one of them, and defining the date on which such need to be complied with by lessee. Some of such obligations may include: (i) the renewal of the insurance policies and the delivery to the lessor of the documents that evidence such renewal, (ii) the payment of the utilities, taxes and fees, in addition to the delivery to the lessor of the documents that evidence such payment, and (iii) the filing of the notices with the lessor as are required by the lessee in order to exercises its rights in the agreement, including the right to extend the period of time during which the lease agreement is in force, and
  2. Appoint at least two individuals who work for the lessee in order to ensure that the obligations of the lessee in the lease agreement comply within time and form. Such will apply in the event that the lessee does not have a Legal Department.

All of the above are in order to avoid incurring in any omission with regard to its obligations in the lease agreement that will grant to the lessor the right to terminate same early, or that will cause that the term of the lease agreement to end naturally as a result of lessee not exercising the right to extend the original term of the lease agreement, placing the lessee in disadvantage to negotiate with the lessor regarding its continued occupation of the real property, or the conditions under which the lessor will accept that the lease agreement remains in force.

Our specialists in real estate law look forward to answering any questions that you may have regarding your lease agreement, in addition to resolving any issue that may arise in order to ensure that the obligations and rights remain in force and without change.

Leobardo Tenorio-Malof   |   ltenorio@tplegal.net
Héctor Torres-López   |   htorres@tplegal.net
Alejandro Pedrín   |   apedrin@tplegal.net
Mauricio Tortolero   |   mtortolero@tplegal.net
Daniel Gancz-Kahan   |   dgancz@tplegal.net
Alejandro Ceballos   |   aceballos@tplegal.net

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