Based on current economic conditions, particularly those stemming from the COVID-19 pandemic, inflation and the cost of living in Mexico has increased notably. One of the most recognized economic indicators in Mexico to evaluate increases in inflation is the National Consumer Price Index (INPC per its acronym in Spanish), which in recent years went from 3.7% in February 2020 to 8.7% in September 2022, and then back down to 4.45% in September 2023.

As a result of the above volatility of the INPC, Mexican property owners, especially in commercial and industrial leases, have recently attempted to change the formula or method for calculating annual rent increases, or to determine the rent when extensions of the original lease term are permitted in a lease.

Among the new methods that have been utilized, in certain cases landlords have attempted to increase rent based on a comparison of the rents of similar spaces within the corresponding geographical area to determine the new rent for the extension or following year. However, such method may be ambiguous and complicated for the parties, allowing potential abuse that may result in unnecessary problems because of the arbitrariness and ambiguity of said method.

Another method that landlords have sought to apply is to establish a fixed percentage rent increase. Although this method is very clear and easily determined, it does not take into account the risk that such percentage increase may be disproportionate for one of the parties given the current economic uncertainty.

Finally, a method that landlords may consider to be fairer for both parties is to continue using the INPC as an indicator for the rent increase, but limit the increase to a percentage agreed upon by the parties in the lease. This means that the rent increases are set in accordance with the INPC, but if the increase of the INPC is greater than a certain percentage, such as 7%, the rent will not be increased by more than said percentage.

It is important to take into consideration the term of the lease and other factors to decide the best method of rent increase or adjustment in lease agreements.

On July 15, 2023, the Federal Center for Mediation and Labor Registration (Federal Center) took an important step toward modernizing Mexico’s labor law system by implementing the National Registry of Representation Credentials (RENPE). This innovative digital tool aims to simplify individual pre-trial labor conciliation procedures, thus speeding up the resolution of labor disputes.

The new Registry provides for the issuance of an identity card (ID), similar to a voter registration card, which will contain the following information: registration number, company name, name of the legal representative and the date it was issued. The RENPE allows for the registration of notarial instruments detailing information of legal representative, and creates a certificate containing a unique QR code that includes the key information described above. This certificate becomes an official form of identification which certifies the accredited and recognized authority of the legal representative.

When the legal representative attends a hearing, he or she must, before appearing, show his or her ID to the mediator, who must submit it to a reading of the QR code, which will enable the mediator to immediately identify if such person is already registered with the Federal Center and, as a consequence, may appear at individual mediation hearings before any office of the Federal Center.

During the hearings, legal representatives will be able to display their ID and the mediator will be able to scan the QR code to quickly verify the authenticity and validity of the record. This streamlines the process and avoids potential confusion or delays in resolving labor cases. Article 684 of the Federal Labor Law provides that mediators have legal authority to attest to documents and, therefore, they can certify that the instruments with which the parties demonstrate their authority are true, and must also keep them in the file of the proceeding.

The RENPE represents a significant advance in the digitization and modernization of the Mexican labor law system, facilitating the work of legal representatives and promoting a more efficient judicial system. Undoubtedly, this implementation marks a milestone in the digital transformation of the legal field.

It is under this premise that the Federal Center intends to achieve expedited justice in the labor law arena, which will benefit parties who often do not have the time or resources to defend their rights.

Finally, beginning July 17, 2023, all documents submitted for validation began to be reviewed, to subsequently issue appointments to compare said documents against the relevant originals, which will need to be provided just once. The foregoing process will occur before any mediator will be able to validate the information that is being provided and make it clear that the submitted documents are true copies of the documents that were presented online at the time of registration.