Aval, Guarantor or Co-Signer: What Is the Difference in a Lease Agreement in Mexico?

A clear, practical guide to renting in Mexico without confusion.

When someone is about to rent a property in Mexico, one of the most common questions is: "Am I being asked for an aval, a guarantor or a co-signer, and what is the difference?"

These terms do not mean the same thing and, in fact, one of them is used incorrectly in most cases. Here we explain it without complicated legal language.

First, the most important point: the "aval" does not apply to lease agreements

In Mexico, people colloquially call every kind of guarantee an "aval", but legally that is incorrect.

The guarantor (aval) is a figure of commercial law, regulated by the General Law of Negotiable Instruments and Credit Transactions (Ley General de Títulos y Operaciones de Crédito), and it only serves to guarantee negotiable instruments such as promissory notes, checks and bills of exchange.

In a rental, the correct figures are the guarantor or the co-signer.

What is a guarantor in a lease agreement?

The guarantor is an individual or a company that backs the contract with real estate they own:

• The guarantor holds a property in their name
• That property is offered as collateral
• If the tenant defaults, the landlord may demand payment from the guarantor and, as a last resort, seize the real estate to recover what is owed

Common requirements for a guarantor

• Property free of liens and registered with the Public Registry of Property
• Reasonable value in proportion to the rent
• Located where inspection and seizure are possible
• Background check approved by the legal lease policy (póliza jurídica)

The background check usually takes 3 to 5 business days, because the Public Registry must be consulted, it cannot be done during holiday periods, and the lien-free certificate is valid for one month. At Mundo Urbano, this check is already included in the cost of the legal lease policy.

What happens if the tenant does not pay?

• The landlord may sue the tenant
• If the tenant does not pay, the landlord may demand payment from the guarantor
• If the guarantor does not respond, a judge may order the seizure of the property

What is a co-signer?

It is a different and very common figure today. A co-signer is an individual or a company (a relative, friend, business partner or employer) who signs the contract together with the tenant and takes on exactly the same obligations as the tenant.

The co-signer is liable for rent, debts, damages, fines, penalties and the return of the property, among other obligations. The landlord may demand payment from the tenant, the co-signer or both. There is no need to sue the tenant first; even so, in the event of a default, the first step is to seek an out-of-court settlement.

Advantages of a co-signer

• No property required
• Faster than a guarantor
• Can be an individual or a company
• Usually combined with a legal lease policy

That is why it is one of the most widely used figures in modern leases, especially with companies or corporate profiles.

Common requirements for a co-signer

1. Income of 3 to 1: if the rent is $30,000, a minimum net income of $90,000 is expected.
2. Relationship with the tenant: friend, relative, business partner, etc.
3. No relevant legal or criminal record.
4. Verifiable income: bank statements, employment contract, payroll, invoices or tax returns.
5. Good history with the credit bureau (Buró de Crédito).
6. Does not need to live in the same city as the property.

If the co-signer is a company, the criteria are similar, adjusted to corporate documentation: articles of incorporation, powers of attorney, financial or bank statements, tax status certificate and the legal representative's ID.

Differences between a guarantor and a co-signer

• Is property required? Guarantor: yes. Co-signer: no.
• Type of guarantee: guarantor, real estate; co-signer, a personal or corporate commitment.
• Can a property be seized? Guarantor: yes. Co-signer: not directly.
• Same liability as the tenant? Both: yes.
• Which is faster? The co-signer.

Which one is better?

There is no single answer. It depends on each owner's requirements, the tenant's profile, the rent amount, the type of property and the outcome of the legal lease policy review.

Having real estate advice and the right legal lease policy prevents conflicts, misunderstandings and unnecessary risk. If you have questions about which guarantee to offer, we will gladly guide you.