Amendment to Mexico City Real Estate Laws

The purpose of this document is to inform our clients about certain recent amendments to real estate laws enacted in Mexico City (“CDMX”), specifically concerning the reforms to Mexico City’s Civil Code (“CCDF”) (Código Civil para el Distrito federal), Mexico City’s Housing Law (Ley de Vivienda para la Ciudad de México) (“Housing Law”), and Mexico City’s Constitution (Constitución Política de la Ciudad de México) (“CCM”).

‍

I. Amendments to the CCDF and the Housing Law concerning Real Estate matters.

‍

On August 29th, the Plenary of the Local Congress of CDMX enacted a decree approving several amendments to the CCDF and the Housing Law regarding lease agreements. The reforms establish a cap on monthly rent increases and a new obligation for landlords to register any lease agreement it executes within a new digital registry.

‍

The decree amended Article 2448-D of the CCDF, establishing that rent increases cannot exceed the inflation rate reported by the Bank of México (Banco de México) for the previous year, relative to the agreed upon monthly rent.

‍

Moreover, the decree mandates the creation of a digital registry for lease agreements (the “Lease Registry”), to be immediately authorized and managed by the Government of CDMX. Thus, Landlords will be required to register any lease agreements they enter into within 30 (thirty) days of execution. Lease agreements already in effect when the decree enters into force must be registered by the landlord within 90 (ninety) of the Lease Registry’s creation.

‍

The Lease Registry will be established according to the mechanisms provided by the Government of CDMX and within 30 (thirty) days of the decree’s enactment, meaning it should be in place by September 29th, 2024. Our firm will remain vigilant for any announcements from the Government of CDMX regarding the creation of the Lease Registry and its operational guidelines.

‍

Regarding the Housing Law, several articles were amended to incorporate the CDMX Housing Information System (Sistema de Información de Vivienda de la CDMX) and establish penalties for non-compliance.

‍

The penalties provided for in the Housing Law applicable to developers and construction supervisors under the amended law are: (i) temporary suspension of construction; (ii) cancellation of authorizations; (iii) temporary or definitive closure; (iv) fines of up to MXN $1,200,000.00; and (v) cancellation of registration with the Secretary of Urban Development and Housing of Mexico City (Secretaría de Desarrollo Urbano y de Vivienda de la Ciudad de México) for up to 6 (six) years.¹

‍

In addition, the Government of CDMX will promote the public production of affordable rental housing for low-income individuals.

‍

II. Amendments to the CCM concerning Real Estate matters.

‍

On September 3rd, a decree amending Article 3 of the CCDF came into effect, emphasizing guiding principles such as human dignity, respect for human rights and respect for private property.

‍

The amendment to said article focused on the guiding principle of respect for private property, eliminating the word “private” from its text, aligning it with the terms of the Political Constitution of the United Mexican States (Constitución Política de los Estados Unidos Mexicanos) (the “CPEUM”). The amended text now reads:

‍

“(...) respect for property in the same terms of Article 27 of the Political Constitution of the United Mexican States (...)”.

‍

As a result, private property in CDMX will be governed by the provisions of Article 27 of the CPEUM, which include the following key points:

‍

1. Ownership of land belongs to the Nation and the Nation has the authority to transfer it to private individuals, thereby creating private property.
2. Expropriation can only occur for reasons of public utility and must provide compensation to the private property owner.
3. The nation has the right to impose on private property public interest regulations, ensuring the conservation of natural resources susceptible of appropriation and promoting balanced national development of the country, as well as improved conditions for those living in both rural and urban areas.
4. Only Mexican citizens by birth or naturalization and Mexican corporations have the right to acquire of land, water and their accessions, or to obtain concessions for mining or water exploitation. The State may grant the same right to foreign nationals, if they agree before the Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores) to be treated as nationals with respect to such property and not to invoke the protection of their governments with respect to such property.
5. Stock commercial companies may own rural land only to the extent necessary to fulfill their corporate purpose. In no case may such companies own land dedicated to agriculture, livestock or forestry activities which are greater than twenty-five times the established limits.
6. Federal and State laws, within their respective jurisdictions, will determine the cases in which private property may be declared for public utility purposes. The corresponding administrative authorities will issue the necessary declarations in accordance with these laws.

‍

Should you have any questions, comments or require any additional information on how these reforms may affect your operation, the Mijares Real Estate team can assist you in adapting to these regulatory changes and maximizing opportunities in this evolving legal environment.

‍

_____

‍

¹ Housing Development Companies: Companies that primarily engage in the development of housing with their own resources and private financing.