Commercial Maintenance in Mexico: Triple-Net and Shell Clauses

Under the Federal Civil Code (Código Civil Federal), effective 31 August 1928, those who hold the right to corporately exploit a space, whether it be a premises on a central floor or a monumental warehouse and shed (in a corporate polygon) in Mexico, assume heavier burdens. With a market less over-regulated for businesses than for housing, risk mitigation responsibilities prevail, dictated by the principle of "Voluntad de las Partes" (Will of the Parties) through potent B2B contract stipulations (Art. 78, Code of Commerce; Art. 1832, CCF).

1. The Triple-Net Concept / General "Shell & Core"

Commonly, landlords do not operate maintenance under any perspective as if it were a cozy inn. They deliver the large buildings in Mexico and Latin America typically in "Obra Gris or Cascarón / Shell & Core", thereby assuming from the day of reception an absolute waiver towards the interior damages of the corporate center or of fine plumbing added by the company. Responsibilities are typically fractioned in this way:

Landlord (Owner / Admin Fund):

By law (Art. 2412, CCF), the landlord is obligated to perform necessary repairs to maintain the property in good condition unless there is an express agreement to the contrary (salvo pacto en contrario). In commercial "Triple-Net" leases, this obligation is routinely shifted to the tenant. Where the landlord retains responsibility, it typically affects the exterior and the fundamental concrete slab or roofs:

• Infiltrations and strong structural cracks that affect the roof and primary base floors (The "General Roof Leaks" and institutional rooftop pluvial maintenance).
• Colossal cracks and post-earthquake preventive repairs or those requiring geotechnical engineers.

Tenant (Lessee / B2B Operator):

Under the principle of contractual freedom (Art. 78, Code of Commerce), tenants usually cover under their account ANY other comprehensive material repair to their connected adjacent private networks:

• Their total maintenance of installed ceilings, internal climate network, installations or base electrical rooms, interior freight elevators, and mandatory fire extinguishers or requirements or demands for permits imposed by municipalities and Civil Protection.
• Notification Obligation (Art. 2415, CCF): The tenant is legally obligated to notify the landlord as soon as possible regarding the need for repairs that fall under the landlord's responsibility, under penalty of paying for any damages caused by the failure to notify.

2. Liability and Insurance

If there are leaks caused by the landlord in a Mexican commercial mall and these rain down onto a premises below and this derives crushing the inventory, the lessee may seek compensatory damages (daños y perjuicios) under the Federal Civil Code (Arts. 2412, 2416) before the competent Civil Courts (Juzgados de lo Civil). Mexican law does not provide for punitive reparations, focusing instead on actual damages and lost profits.

To safeguard against catastrophes and natural disasters, leases typically include: Contractual Civil and Third-Party Liability Insurance Policies by the Tenant (Locatario).

While there is no federal statutory requirement in the CCF for tenants to maintain insurance, every local mercantile operator must typically endorse or extend (under a "Mandatory Protection or Insurance Clause") in the owner's name, a strong insurance policy for "Civil Works, Fires, Catastrophes due to Rain and Floods". The omission of the tenant or operator in having it expire or if it should expire without notifying the Owner in a timely and valid manner is an automatic cause for severe and penalizable cancellation. Only this system ensures peace of patrimonial investment in parks or zones in commercial development faced with disasters.

3. Maintenance Fees ("Common Area Maintenance / CAM Charges")

Of course, companies in Plazas and Towers in Aztec territory are compulsorily subject to and must accrue an additional fee ("Communal Maintenance Fee Additional to rent") subject to the Value Added Tax (IVA) and liquidable together with the amount of the total corporate receipt.

Under Art. 1 of the Value Added Tax Law, commercial rent and maintenance fees are subject to:

• A standard 16% VAT (IVA).
• A reduced 8% VAT (IVA) in designated northern border regions.

It is charged to settle and be distributed among all areas or meters (by proration per m2 of adhered premises):

• Massive repair and outsourced private security for perimeter fences, corporate escalators, lighting, and road ornamentation of gardens of the entire B2B complex, the control and decision of which indeed remains by general obligation with the base owner or else, the contracted general condominium administration regime for the purposes.

Maintain AAA Control with Landager

Drawing a transparent line separating prorated monthly property tax fees, mandated expenses, respective VAT, or the direct charge to premises B and premises C; results in exhausting flow disputes. Through the technology and integrated directive software of Landager, you can efficiently make all base and maintenance billings transparent separately. This leaves your institutional mind clear to operate finances flawlessly before audits of all kinds in the country without the anxiety caused by endless complaints and inconsistencies between one corporate premises and another within a space or park administered by your managers in Mexico.

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