Do you rent a home in Baja California?

By Fulano

Does your lease require your rent be paid in dollars?  Boy, do I have news for you. Read about one of the best kept secrets in Baja California.

Every state in Mexico has its own laws, including a Civil Code (Codigo Civil) which defines the laws by which people can legally conduct business, among many other legal concerns. Many expatriates have sat by the sidelines and watched the peso slide from around 10:1 some ten years ago to the current exchange rate of close to 21:1, while they continued to pay their rent in the dollar amount specified in the lease. It is commonly believed that for a lease which specifies rent in dollars, it is unhinged from any movements in the dollar-peso exchange rate.

Not true!

Even if your home lease specifies that rent shall be paid in dollars, the Civil Code of Baja California says otherwise. Article 2273 of the Civil Code for the State of Baja California states:

The rent or lease price may be a sum of money or anything else equivalent, provided it is a sum certain and determined.

The agreed rent for leasing a house intended for your residence should be defined in national currency. In the case where it is defined in foreign currency, it shall be understood to be payable in the equivalent amount in local currency at the exchange rate prevailing on the date the respective contract was concluded.

The above provisions are of public order and social interest and, therefore cannot be waived.

This means, if you have a lease which requires the rent be paid in dollars, you can legally look to the peso exchange rate in existence at the date the lease was executed, and pay a fixed rent in the equivalent amount in pesos. This following graphic is an example of a 4-year home lease signed on January, 1, 2013 for $1,000 dollars per month. It shows the amount the tenant should have paid if Article 2273 was followed:

Do you have to pay your landlord in Mexico in dollars? No, you do not. Aside from Article 2273 of the Civil Code for the State of Baja California, which specifically says rent can be paid in the equivalent amount in local currency, there is also Article 8 of the Monetary Law of the United Mexican States, which says:

Foreign currency shall not be legal tender in the Republic, except in those cases where the law expressly determines otherwise. Payment obligations in foreign currency contracted for within our outside the Republic, to be fulfilled in it, will be settled by delivering the equivalent sum in national currency, at the exchange rate which exists at the place and time payment is made.

Well that summarizes the law for Baja California. Now, getting your landlord to go along with it is entirely another matter!