ESCROW

The transfer of title in a Mexican real estate transaction can be confusing for foreign buyers, especially if their understanding of the Spanish language is less than perfect. Prior to the establishment of escrow companies in Mexico, buyers hired attorneys, did the work themselves or, in many cases, just didn’t worry about receiving a title!

The guidelines for the operation of an escrow company in Mexico are found in Articles 273 to 308 of the Mexican Commercial Code and provide for strict accounting of funds, strict compliance with buyer-seller instructions and full ethical responsibility by the parties handling the escrow.

As of this date there are no provisions for the licensing of escrow companies or their agents, however. It is therefore important that persons dealing with companies offering these services check out company references and inquire as to their standing with PROFECO, the Mexican consumer protection agency.

When used in the context of transfer of title, the escrow generally involves three parties - the buyer, the seller and a neutral 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 neutral third party is often called “the stakeholder”.

The Buyer/Seller 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 neutral 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.