Buying Real Estate in Mexico : Escrow Explained


If you are in the process of buying a property in Mexico, you might want to consider settling the deal using an «Escrow» service. Indeed, the advantages are numerous.


But what is an « Escrow » service and why is it interesting?

Definition of Escrow: It is a financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions from both buyer and seller,  or until obligations have been fulfilled by all parties involved in the transaction.

Basically, it means that the buyer and the seller agree on a third party (usually an attorney or an escrow company) to manage an account (escrow account) into which the transaction money will be transferred.

Escrow money is always linked to the terms of the purchase contract and funds are only released based on an “instruction letter”.  That document contains the terms and conditions to follow before the money can be delivered to the seller.

Why is it interesting?

It is a very safe method of payment.  It provides security to the buyer and the seller.

The buyer is ensured that the funds will be delivered to the seller if and only if the latter fulfills all the contractual obligations and terms in the “instruction letter”. If anything wrong happens, the escrow service will keep the money in the escrow account and will return it to the buyer.

For the seller, the use of an escrow service is the guarantee that the buyer has the money to purchase the property. The funds are held in the escrow agreement prior to the conditions being met and upon fulfilling them, the seller will receive the funds.

If you are interested in using such service, ask your real-estate agent for references. As a professional in the business, he/she has all the useful resources in his/her personal network and will provide you with very useful information.

Once you find the escrow company you want to do business with, the 2 documents you will need are:

– The property title (a legal description of the property that will be transferred).

– An identification which can be a passport or a driver´s license.

The company will then draft an escrow agreement, which will be executed by the buyer and the seller. And that escrow agreement is the official document through which the service of the escrow company will be hired.

We hope this Escrow explained article was helpful !  Please call us with any questions you may have.  Judi Shaw | 1 604 628 7247 Direct | +521 984 116 3251 Mexico Cell