If you were to ask a Mexican homeowner to tell you what an escrow account is, the likelihood is that they probably would not know what you were talking about. The reason being is that Mexico real estate transactions are closed at the Notary Public’s office. All payments are done from buyer to seller. The public deed for a deal is signed and the seller receives a check from the buyer for the full purchase price.
If you are an American or Canadian considering purchasing real estate in Mexico, then an escrow might be ideal for you. You can deposit 100 percent of the purchase price in an escrow account or use a combination of a direct down payment and put the outstanding balance in an escrow account. This depends on if the seller or developer requires a down payment, you and your real estate agent can try to negotiate.
Foreigners who purchase second homes or land in Mexico often want to incorporate the US escrow process into their Mexican real estate transaction. This is easier to do in areas where foreigners have a strong presence, and in “restricted zones” where the closing process requires a Bank Trust or Mexican Cooperation. An escrow is common and offered by escrow agencies in places such as Los Cabos and the Riviera Maya where most of the buyers are foreigners but escrow agency can be found in other areas of Mexico.
In the USA and Canada buyers purchase property by making an initial deposit once the purchase agreement is signed. More funds are transferred after certain conditions are met. An example of this could be waiting until parts of the house are complete or when title insurance is issued. After the home is completed and delivered the final deposit is made. All the funds are deposited into the escrow agent´s account in accordance with the provisions of the agreement signed by the parties. This escrow agreement dictates the timing and conditions required for each payment to be released. There is a fee for this process, usually $500-700 USD, which covers the opening, administering, and releasing of the funds according to the agreed-upon terms.
Top Mexico Real Estate encourages our clients to use a certified third party escrow agency when wanting to include an escrow into your Mexico purchasing process. Your real estate agent should be able to recommend several certified third party escrow agencies. As with all companies involved with your Mexico real estate transaction it is best to do your homework… look at their credentials, testimonials from past clients and shop around. Using an escrow when purchasing Mexico real estate can add an extra sense of security.
By Thomas Lloyd for TYT
Thomas Lloyd founded TOP Mexico Real Estate, a leading real estate broker in Playa del Carmen and the Riviera Maya, to help non-Mexicans have an enjoyable and safe experience as they purchase and invest in real estate in Mexico.