What Is Escrow and Why It’s Important When Buying Property in Mexico
If you’re planning to buy real estate in Mexico — especially as a foreigner — you may hear the word escrow come up during the process. But what does it really mean, and how does it protect your investment?
In this article, we explain how escrow works in Mexico, why it’s essential for a safe transaction, and how it fits into your property purchase in La Paz, B.C.S.
What is Escrow?
Escrow is a secure, third-party account that holds funds during a real estate transaction until all conditions of the purchase agreement have been fulfilled.
In Mexico, escrow services are typically provided by internationally recognized companies or specialized law firms. The funds are held securely — and only released once all legal, financial, and contractual obligations are met by both buyer and seller.
Why is Escrow Important?
Buying property in another country can feel unfamiliar or risky. That’s where escrow becomes crucial. It ensures:
✅ Security – Your funds are not released until the title is clean and the seller meets all obligations.
✅ Transparency – Both parties agree in writing when and how the funds are to be released.
✅ Confidence – Escrow minimizes the chances of fraud or misunderstandings during the transaction.
How Does the Escrow Process Work?
Escrow Account is Opened
Once the offer is accepted, an escrow agreement is signed, and the buyer deposits the funds into the secure account.
Due Diligence Begins
The legal team verifies the property’s title, permits, and status with the public registry, ensuring no liens, debts, or irregularities.
Conditions Are Met
Once all conditions (legal, contractual, and financial) are satisfied, and the parties are ready to close, the notary gives final approval.
Funds Are Released
Only after the deed is signed before a notario público and registered with the proper authorities are the funds released to the seller.
Is Escrow Mandatory in Mexico?
No — escrow is not legally required in Mexican real estate transactions. However, it is highly recommended, especially for foreign buyers, large transactions, or when the parties do not know each other personally.
At Global Real Estate, we strongly encourage using escrow for all international transactions to provide peace of mind and ensure professional handling of funds.
Who Pays for Escrow?
The cost of escrow is typically paid by the buyer, and fees range from $500 to $1,200 USD, depending on the escrow provider and transaction size. This is a small price to pay for the security it offers in return.
Final Thoughts
Escrow is a key part of a safe and secure real estate transaction in Mexico. It protects both the buyer and seller by ensuring that funds are only released when everything is in order.
If you’re buying property in La Paz, B.C.S., working with an experienced team and a trusted escrow company is one of the best decisions you can make.
Have questions about how escrow works in Mexico?
Contact Global Real Estate — we’ll walk you through the process and connect you with trusted escrow partners.