🇲🇽 What is a real estate escrow and how does it works in Mexico?

 

Real estate escrow in Mexico is different from what you might be familiar with in the US or Canada. Here's a breakdown:

What is it?

Escrow is a process where a neutral third party holds onto funds during a real estate transaction. This ensures a safe exchange between buyer and seller. In Mexico, escrow is not as common as in North America, but it's gaining traction.

How it works:

• Buyer deposits their funds into an escrow account held by a licensed escrow company.
• The company holds the money until all agreed-upon conditions are met (e.g., clean title, inspections).
• Once everything is in order, the escrow company distributes the funds to the seller and the property title is transferred to the buyer.

 

The purpose of the Fideicomiso (Trust) is only residential, it is necessary in order to buy your property. The Trust will be established in the same document as your Title; therefore you will always have the name of the trustee bank in your hands. The Fideicomiso fee has to be paid every year. In 2020, the cost to set up a deicomiso is around $2,000.00 usd, such amount is divided as follows:
• $450.00 plus taxes (16%) = $522.00 usd for the rst year in advance of the trustee bank fee (it could cost more or less depending on the bank that you choose).
• $450.00 plus taxes (16%) = $522.00 for the execution of the title (it could cost more or less depending on the bank that you choose).
• $15,530.00 Pesos for the permit of the Ministry of Foreign Affairs (“SRE”) (it could have an extra cost for the person who does all the work in Mexico City).

 

 

Why use it?

• Security: Protects both buyer and seller. Buyer ensures their money is safe until they get the property, and the seller has assurance the buyer has the funds.
• Smooth transaction: Motivates both parties to complete tasks efficiently to avoid delays in accessing the funds or property.

 

Stay tuned as we share insightful tips, and provide you with valuable information to make informed decisions in this vibrant region. At Playa Realtors, we're here to be your trusted partner throughout your real estate journey.

Thank you

KARINA SAYED
CEO  |  Broker  | Owner