Things to Consider When the Lessor Is Not the Owner of Leased Real Property

September 8, 2011
Things to Consider When the Lessor Is Not the Owner of Leased Real Property

In general, lessors own the real property they lease to their lessees. However, several exceptions provided by thelocal civil codes allow a person other than the owner to lease real property in Mexico based on: (i) instructionsreceived from the owner, in which case the agreement will be considered as if executed by the owner; (ii) theowner’s authorization of a certain person for such purposes, in cases in which the authorized individual will grantthe lease directly without intervention by the owner; (iii) authorization to the lessee to sub-lease, either generallyor by means of specific authorization from the owner; and (iv) the express authorization by law conferred uponindividuals such as guardians, executors and those who have parental custody, in accordance with the limitationsestablished by applicable local civil codes. It is important to review the legal capacity to grant a lease with respectto real property by one who is not the owner, including the temporary limitations and legal effects that this mayimply. For example, numerous civil codes establish that an executor may not lease real property for a periodgreater than one year unless he/she has the consent of the beneficiaries. This limitation is five years with respect to guardians and those with parental custody. In the case of a sublease, it is common for local civil codes toestablish exceptions under which the sub-lessee may assume the obligations of the sub-lessor with respect to thelessor, depending on the form in which the lessor authorized the execution of the sublease agreement. Eventhough the scope and effect of these provisions are greatly debated, they result in practical consequences of greatimportance. Consequently, in the event one is looking to grant or receive real property pursuant to a subleaseagreement, or lease real property from someone other than the owner, it is highly advisable to review theprovisions of the civil code applicable to the location of the real property in order to evaluate correspondingrestrictions, requirements and implications prior to executing an agreement.

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