✅ 1. Why a Professional Lease Agreement is Essential
Many landlords in Cabo San Lucas, San José del Cabo, and East Cape still rely on informal or verbal rental agreements. This is one of the biggest mistakes you can make as a property owner.
Without a solid lease agreement, you risk:
✔ Unpaid rent with no legal recourse.
✔ Losing your right to deduct from the deposit because there’s no documented proof of damages.
✔ Tenants refusing to leave after the lease ends, forcing you into lengthy legal battles.
A strong, professional lease protects you legally, financially, and gives you control over your property.
✅ Golden Rule for Landlords: Never rent without a written, signed, and detailed lease agreement.
Mini-Case Example
Juan, a local landlord, lost $25,000 MXN because his tenant damaged walls and furniture — but he had no written inventory or photos attached to the lease. The tenant denied causing the damage, and Juan couldn’t legally deduct from the deposit.
✅ Lesson: Always document the property’s condition in writing and with photos before handing over the keys.
✅ 2. Essential Clauses Every Landlord Must Include
These clauses are NON-NEGOTIABLE if you want to protect your property, avoid legal disputes, and ensure a smooth rental experience:
1. Rent Payment Terms – Clearly state the amount, currency (MXN or USD), due date, and late fees (e.g., 5% penalty after 5 days late). Always require payments via bank transfer for legal proof.
2. Security Deposit –
✔ Unfurnished properties: One month’s rent.
✔ Furnished properties: One or two months, depending on furniture value.
✔ Luxury properties: Always two months due to higher repair or replacement costs.
3. Maintenance Responsibilities –
✔ Tenants handle minor repairs (light bulbs, clogged drains).
✔ Landlords are responsible for structural issues, roof leaks, and major appliances if included.
4. Property Use & Guests – Limit use to residential purposes only. Subleasing is strictly prohibited without written consent. Long-term guests should be limited (define maximum days).
5. Pet Policy – If pets are allowed, specify type, size, and the tenant’s full responsibility for any damage. Consider a pet deposit for furnished or high-end properties.
6. Rent Increases & Renewal – Standard annual increases in Cabo are 5–7%. Clearly state renewal terms and how much notice you or the tenant must give before the lease ends.
7. Early Termination & Penalties – Tenants who leave early forfeit the deposit or must pay 1–2 months of additional rent (write this clearly in the lease).
8. HOA Rules – Tenants must follow HOA or community rules. Repeated violations should allow you to terminate the lease.
9. Eviction Protection – Include a clause for immediate termination in cases of non-payment, illegal activities, or serious property damage.
✅ 3. How to Protect Your Property and Legally Use the Deposit
A security deposit is your primary financial protection, but you must handle it correctly to avoid disputes and ensure it holds up legally.
1. Detailed Move-In Inventory – Create a complete written list of all items, appliances, and the property’s overall condition. Attach clear dated photos or videos, and have both you and the tenant sign and keep a copy.
2. Periodic Inspections – Include a lease clause allowing periodic inspections with at least 24 hours’ notice. This lets you detect maintenance issues early, preventing costly damages or negligence.
3. Clear Termination & Deposit Rules – State explicitly in the lease that tenants will forfeit their deposit if they:
✔ Leave early without fulfilling the lease term, or
✔ Fail to give the required written notice (usually 30–60 days).
4. Proof of Damages Before Deductions – Always take dated photos, videos, and keep receipts for any repairs before deducting from the deposit. This protects you if the tenant disputes the deductions legally or through PROFECO.
5. Higher Deposits for High-Risk Rentals – For luxury homes, fully furnished properties, or rentals with high-end appliances, always request two months’ rent as a deposit to cover potential high-value repairs or replacements.
✅ Pro Tip: Attach the signed inventory and inspection photos as an annex to the lease. This strengthens your legal position if disputes arise.
✅ 4. Screening Tenants Properly
Selecting the right tenant is just as critical as having a solid lease agreement. Proper screening reduces the risk of unpaid rent, property damage, and legal disputes. Always verify identity, financial stability, and rental history before signing.
Documents to Request:
• Mexicans & Locals:
✔ Official ID (INE or passport)
✔ Proof of income (nómina, bank statements, or tax returns)
✔ A fiador (co-signer) for long-term leases is highly recommended.
• Expats:
✔ Passport
✔ Proof of income or employment (bank statements or work contract)
✔ Consider requesting a higher deposit (two months) if they have no fiador or Mexican credit history.
Questions to Ask Potential Tenants:
• Why are you moving? (Look for reasonable answers such as work relocation or needing more space.)
• Where do you work or what is your source of income?
• How long do you plan to stay? (Longer stays mean fewer turnovers and reduced vacancy costs.)
• Do you have pets? (Clarify your pet policy upfront to avoid conflicts later.)
Red Flags to Watch For
❌ Refusal to provide documentation.
❌ Urgency to move in immediately with cash only (common scam tactic).
❌ History of frequent moves or unresolved rental conflicts.
✅ Pro Tip: Always verify employment or income, and when possible, request references from previous landlords to confirm reliability.
✅ 5. Should You Rent Furnished or Unfurnished?
The decision to rent furnished or unfurnished depends on your target tenants and rental strategy. Each option has distinct benefits and considerations for landlords in Cabo.
Furnished Rentals
✔ Ideal Tenants: Expats, digital nomads, corporate clients, and seasonal professionals.
✔ Higher Rental Income: Can command 20–40% higher rents than unfurnished properties.
✔ Faster Occupancy: Attractive to tenants seeking move-in-ready homes.
✔ Considerations:
- Higher wear & tear on furniture and appliances.
- Requires a detailed inventory with photos and signatures to protect your deposit.
- Always request a higher deposit (two months) for luxury or fully furnished properties.
Unfurnished Rentals
✔ Ideal Tenants: Long-term Mexican families, local professionals, and established expats.
✔ Lower Wear & Tear: Tenants bring their own furniture, reducing your maintenance responsibility.
✔ Longer Lease Terms: More likely to sign 12–24 month contracts, ensuring stable income.
✔ Considerations:
- Lower monthly rent compared to furnished units.
- Best for landlords seeking long-term, low-maintenance tenants.
✅ Pro Tip: In Cabo, a mixed strategy works well — offer furnished rentals in expat-heavy areas (El Tezal, San José Hotel Zone) and unfurnished rentals in family-oriented communities (Puerta de Hierro, Cumbres del Tezal).
✅ 6. How to Choose the Right Tenant (Locals vs Expats)
Selecting the right tenant depends largely on understanding who your property appeals to. Locals and expats have different rental patterns, which directly affect lease terms, deposits, and maintenance considerations.
Mexican Families & Locals
✔ Longer Lease Terms – Typically stay 12–24 months, especially if upgrading homes or relocating for work.
✔ Financial Verification – Always request a fiador (co-signer) or strong proof of income (nómina, bank statements).
✔ Preferred Property Type – More likely to choose unfurnished homes, bringing their own furniture and causing less wear & tear.
✔ Stable Tenants – Families and professionals generally provide lower turnover and more consistent rent payments.
Expats (New & Established)
✔ Higher Rent Potential – Often willing to pay more for furnished homes, especially in desirable areas like El Tezal or San José Hotel Zone.
✔ Shorter Stays – Many sign 6–12 month leases, especially remote workers or seasonal residents.
✔ Higher Deposit Requirements – If no fiador or Mexican credit history, request a higher deposit (two months) for added security.
✔ Ideal for Furnished & Luxury Rentals – Corporate professionals and retirees often seek move-in-ready, fully equipped homes.
✅ Pro Tip: Tailor your rental strategy to your ideal tenant: furnished for expats seeking convenience, unfurnished for locals seeking stability.
✅ 7. Marketing Tips: How to Rent Your Property Faster in Cabo
The Cabo rental market is competitive, but with the right strategy, you can reduce vacancy time and attract quality tenants quickly.
1. Price Competitively
Research similar rentals in your area (size, amenities, and location). Overpriced listings stay vacant longer, while competitive pricing attracts reliable long-term tenants.
2. Offer Furnished Options (When Possible)
In expat-heavy areas like Cabo San Lucas, El Tezal, and San José Hotel Zone, furnished properties rent significantly faster, especially to digital nomads, corporate clients, and seasonal professionals.
3. Professional Photos & Detailed Descriptions
High-quality images are non-negotiable. Include well-lit photos of every room, highlight amenities (A/C, pool, parking), and write clear, attractive descriptions.
4. List on Trusted Platforms & Work with Professionals
Post on recognized platforms and collaborate with licensed real estate advisors. Professionals help screen tenants, manage showings, and secure proper lease agreements.
5. Flexible Lease Terms
• 12-month leases are ideal for locals and long-term tenants.
• 6-month leases can attract expats, digital nomads, and seasonal workers willing to pay higher monthly rent.
✅ Mini-Case Example
Lisa, a foreign investor, reduced her condo’s vacancy time by 70% by:
✔ Offering a 12-month lease with a small monthly discount,
✔ Posting professional photos online, and
✔ Highlighting included services (internet and HOA fees).
✅ Lesson: A mix of competitive pricing, great presentation, and flexible lease terms leads to faster rentals and better tenants.
✅ 8. Legal Requirements & Taxes for Landlords
Understanding your legal obligations is essential to avoid tenant disputes and potential fines.
Basic Legal Obligations
✔ Provide the property in habitable condition – The home must be safe, clean, and functional at the start of the lease.
✔ Return the deposit if no damages or unpaid bills – Only documented damages beyond normal wear, unpaid rent, or utility debts can legally be deducted.
✔ Respect the lease duration – You cannot evict tenants without legal cause or before the agreed lease term unless stated in the contract.
Taxes & Facturas (Invoices)
If you plan to rent to companies, expats, or long-term tenants who request invoices, you must:
✔ Register under RESICO or another tax regime to issue invoices legally.
✔ Charge 16% VAT if required under your tax regime.
✔ Report rental income to SAT to remain compliant.
If you choose not to invoice:
✔ You are limited to local tenants who don’t require facturas.
✔ You may lose opportunities with corporate clients and expats, who often prefer invoiced rentals for tax purposes.
✅ Pro Tip: Work with an accountant to determine the best tax strategy and to ensure compliance with Mexican tax laws, especially if you own multiple rental properties.
✅ 9. What to Do if Tenants Don’t Leave After the Lease
This is one of the biggest fears for landlords, but Mexican law protects you if you have a properly drafted lease. Acting quickly and following legal steps is key.
1. Send a Formal Written Notice
✔ Notify the tenant in writing (WhatsApp, email, or a formal letter) that the lease has ended and they are required to vacate the property.
✔ Include the specific date the lease expired and the date you expect them to leave.
2. Keep All Records as Evidence
✔ Save all written communication (WhatsApp messages, emails, letters).
✔ Document every interaction, as this can be used in legal proceedings.
3. Start the Legal Eviction Process if Necessary
✔ If the tenant refuses to leave, you are legally entitled to start eviction proceedings based on your lease agreement.
✔ Work with a local real estate lawyer to file the proper documentation in court.
4. Avoid Self-Help Evictions
❌ Never change the locks, cut utilities, or remove tenant belongings yourself.
✔ These actions are illegal and can be used against you in court, even if the tenant is violating the lease.
✅ Pro Tip: A well-written lease that includes clear termination and eviction clauses will significantly speed up the legal process if tenants overstay.
✅ 10. Pre-Renting Checklist (Screenshot This)
Before handing over the keys, follow this checklist to protect yourself and rent your property faster and safer:
1. Inspect and Repair the Property – Ensure everything is functional (plumbing, electricity, appliances) to avoid tenant complaints later.
2. Decide Furnished vs Unfurnished – Choose based on your target tenant (expats prefer furnished; locals prefer unfurnished).
3. Set Competitive Rent – Research similar properties in your area and adjust for amenities, location, and condition.
4. Prepare a Professional Lease Agreement – Include all essential clauses to protect you legally and financially.
5. Screen Tenants Carefully – Verify identity, income, and rental history; request a fiador or higher deposit when needed.
6. Take Move-In Photos & Create an Inventory List – Document the property’s condition in writing with dated photos, and have the tenant sign it.
✅ Pro Tip: Print this checklist or save it on your phone for quick reference before signing with any new tenant.
✅ 11. FAQs for Landlords in Cabo (15 Questions)
1. How much deposit should I ask for?
✔ 1 month for unfurnished homes; 1 or 2 months for furnished or luxury properties.
2. Can I ask for rent in USD?
✔ Yes, but it must be clearly stated in the lease.
3. Can I evict for non-payment?
✔ Yes, but you must follow formal legal eviction procedures.
4. Who pays for maintenance?
✔ Tenants pay for minor repairs; landlords cover structural issues and major appliances.
5. What can I legally deduct from the deposit?
✔ Unpaid rent, overdue utilities, and damages beyond normal wear and tear (with proof).
6. Should I allow pets?
✔ If you do, include a clause making tenants responsible for any pet-related damage.
7. Can I increase rent anytime?
✔ No, only at the end of the lease term, unless periodic increases are written into the contract.
8. What if I sell during the lease?
✔ The new owner must honor the existing lease until it expires.
9. Should I register the lease?
✔ Not mandatory, but highly recommended for stronger legal protection.
10. What if tenants violate HOA rules?
✔ You can terminate the lease after repeated violations if this is specified in the contract.
11. Can I charge late fees?
✔ Yes, but they must be reasonable (5–10% of the monthly rent) and clearly stated in the lease.
12. Do I need landlord insurance?
✔ Recommended for high-value or luxury properties; covers damages, liability, and sometimes unpaid rent.
13. Can I increase rent after renovations?
✔ Yes, but only at lease renewal and with proper advance notice (typically 30 days).
14. Can I do inspections during the lease?
✔ Yes, but always give reasonable notice (at least 24 hours), unless it’s an emergency.
15. Can I keep the deposit if tenants leave early?
✔ Yes, if the lease clearly states early termination penalties or forfeiture conditions.
✅ Final Thoughts
A strong lease agreement is your best protection as a landlord in Cabo San Lucas, San José del Cabo, and East Cape.
Whether you’re a local property owner, a Mexican investor, or a foreign landlord, always:
✔ Use a detailed written lease with all essential clauses,
✔ Screen tenants carefully to avoid future problems,
✔ Document everything (photos, inventories, receipts), and
✔ Know your legal rights to act quickly if issues arise.
⸻
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