Category Archives: ESCROW IN MEXICO

Escrow in Mexico



by Linda Jones Neil.


What is an “escrow”?


When used in the context of transfer of title, the escrow generally involves three parties – the buyer, the seller and an independent third party.  It often involves the deposit of monies from the buyer and documents from the seller, to be exchanged and delivered upon the execution of the instructions.  The independent third party is often called “the stakeholder”.


The Buyer/Seller disbursement instructions are prepared by the escrow company in compliance with the terms of the purchase/sale contract.  They are then signed by the buyer and the seller and authorize the independent third party to handle the details of the transfer.  The escrow company must comply with Articles 273 to 308 of the Mexican Commercial Code in its dealings with its clients.


Some questions and answers about escrow and related services:


Why is escrow important?   Why can’t the buyer just pay the seller directly?


Funds can be transferred directly from buyer to seller and, sometimes, they are.  When strangers are doing business, however, they often feel more comfortable doing business through an independent third party.  This is especially true when the completion of a transaction involves a lapse of time from beginning to end; such as when taxes and/or liens are to be paid from proceeds, title is to be searched and permits are to be obtained.


What is meant by “independent third party”?


The company holding the funds, the documents, executing the instructions, does not have a financial interest in the property involved in the transaction.  It is not directly affected by the potential profits or losses or consequences of the purchase/sale and therefore can be more objective, more impartial, and follow more strictly the buyer-seller instructions.


What are the buyer/seller instructions?  (also known as the settlement or disbursement contract)


It is a contract for the performance of services.  What services and how and when they are performed are drawn from the terms established by the buyer and seller in their purchase/sale negotiations.  It is a contract in which each party authorizes the release of funds and/or documents upon the occurrence of certain events or the completion of certain duties and tasks.  It outlines the general conditions under which these instructions will be carried out.


Who are the parties to a transaction?


The Buyer, the Seller, and the independent third party.  Sometimes a mortgage lender is involved.  These are the principals, the main parties to the transaction and are the ONLY persons who may amend the Instructions.  As far as the handling or disbursement of funds, an Escrow Company can ONLY disburse when the Buyer and Seller direct the Escrow Company through a written, signed instruction. The Escrow Company cannot do so without consent of the principal parties. If real estate agents represent the parties they may obtain copies of documents to the transaction, but all matters are treated as highly confidential with respect to outsiders seeking information.



What if the buyer wants the sale handled through an independent third party but the seller does not?


Then the Instructions prepared will be “uni-lateral”, one sided, and the escrow agent will be ethically bound to protect, first and foremost, the interests of the client, buyer or seller, who has contracted for the services.


Can the escrow procedure be handled by long-distance or is it necessary that the parties be present?


With email and efficient courier services each party may be in a different town, or even in a different country!  Because the procedures and customs for transfer title, whether fee simple title, or in a bank trust, are very similar throughout the entire country of Mexico, the independent third party may be located anywhere in Mexico and the buyer and seller do not usually need to appear before a Notary Public if they have authorized others to act in their behalf.


Where are funds held when they are “in escrow”?


Buyer seller funds must be held in a separate bank account, apart from any business operating funds..    Generally they will be held in a dollar based US account with FDIC insurance available up to the maximum of 250,000. USD per depositor.   Separate US and pesos funds may be held in a Mexican bank to permit ease of transfer for payment of Mexico based fees.

Copyright, 2014, Consultores Phoenix, S.C. Reproduction prohibited without permission.

about the author:

LINDA JONES  NEIL is the founder of The Settlement Company®, which specializes in real estate transfers and escrows. Licensed as a California real estate broker, she has pursued her profession in Mexico for over forty years. Her skills in negotiating contracts between parties from three distinct cultures have placed her services in demand as a consultant and for speaking engagements on Mexican law and customs in Mexico, the United States and Canada. She has been widely published on the subject of real property in Mexico. Memberships; FIABCI, AMPI and NAR.  Linda  is a former  member of the National Advisory Council of AMPI and has served as NAR Presidential Liaison to Mexico..E-mail,        website:

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by Linda Jones Neil


Once you have selected that great property in Mexico, and you and your agent have negotiated a successful offer……………what is next?


How can you be sure that you are going to have a title to the property, and that it will be done properly?


In any country a real estate closing requires a thorough review of the title documents, the property tax payments, the liens on the property.  If there are liens, if property taxes have not been paid, these must be taken care of and paid prior to transfer of title.


If the property is residential and is located in the “restricted” zone, a permit for a Mexican bank trust must be obtained, or arrangements made for assignment of the existing trust.   A thorough review of the trust document is required in order to determine which is best in each case.


A major benefit of buying property through the Mexican bank trust is that you can name beneficiaries to succeed you upon your death.   Naturally this selection needs to be done carefully so your instructions are clear and not subject to misinterpretation.   Another important item:  is property to be taken in joint tenancy or tenancy in common?  The words have to be correct and understanding complete in your deed.


All of these matters can and should be handled by an independent third party closing company with attorneys on its staff and experience in the field.   The real estate agents representing buyer and seller can oversee the closing process but, generally, their efforts are better spent in promoting and selling properties, not spending time in detail activities.


A real estate closing on Mexican properties has similarities to a closing in the United States and Canada.   There are the same two main parties:   the buyer and the seller.   There are however, two additional parties to a Mexican closing; one is the Notary Public who is legally responsible for drafting the deed and calculating the taxes on the transaction and, if the property is located in the “restricted zone” (along the coastline or near the borders), the bank trustee who must approve the terms of the trust (fideicomiso) contract and sign before the notary public.


Trying to arrange a time and a place for all four parties to come together to sign the deed of transfer can be a challenge.   The buyer may live in New York state, the seller in Alberta, Ontario, the bank trustee may have his main office in Mexico City, Monterrey or Guadalajara and the Notary Public may have his office almost anywhere!


With internet, e-mail, courier service and bank wire transfer services around the globe, there is absolutely no need for the parties to congregate in one location on a specific day, at a specific time and in a specific place.


The Virtual Closing is the solution!


Instructions can be signed by both buyer and seller authorizing the completion of necessary tasks such as the appraisal, the lien certificates, the title investigation, the request for the foreign relations  permit, and so forth.  Funds for the purchase can be deposited in escrow accounts and paid out per specific instructions.   Funds for the closing costs can also be deposited in escrow and paid out pursuant to instructions.

The deed, be it fideicomiso or fee simple, when drafted, can be sent to the parties for review and approval.  Rather than trying to coordinate a simultaneous signing, the trustee bank can sign when convenient without making a special (and possibly expensive) trip to the notary office.   Buyer and Seller, if their signatures are required, can provide powers of attorney to the closing company supervising the transfer.


This keeps buyers happy, and on the beach or doing their thing at home and accomplishes the goal of the operation……….a deed to the property purchased!

copyright, 2004– 2014 Consultores Phoenix, S.C., reproduction prohibited without permission


Author Linda Jones Neil is the founder of The Settlement Company®.  It is the original escrow company in Mexico, and is dedicated to processing the trusts and title transfers of Mexican real estate for foreign buyers and sellers for properties located ANYWHERE in Mexico. Ms. Neil is also licensed as a Real Estate Broker in California, is an Accredited Buyer Representative through NAR, and has over thirty five years of hands on experience in all aspects of Mexican real estate.  She holds membership in AMPI, NAR and FIABCI and PROFECO Certificate 00063/96.

E-Mail;  and website: Web Site:

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