The guidelines for the operation of an escrow company in Mexico are found in Articles 273 to 308 of the Mexican Commercial Code and Article 2569, Chapter II of the Civil Code for the Federal District. These rules provide for strict accounting of funds, strict compliance with buyer-seller instructions and full 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 to determine the level of professionalism, integrity and experience offered.
When used in the context of transfer of title, the escrow generally involves three parties: - the buyer, the seller and the escrow agent. 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 escrow agent is often called “the stakeholder”.
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 escrow agent to receive and disburse funds in accordance with the instructions.
When strangers are doing business together they often feel more comfortable doing business through an escrow agent which holds the funds until conditions are met. This is especially important 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
If only the buyer wishes to protect his funds or the seller wishes to be sure of obtaining his/her funds at closing, the Instructions prepared will be unilateral, one sided and the escrow agent will be ethically bound to protect, first and foremost, the interests of its one client; the buyer or seller who has contracted the escrow services but of course, must act ethically and honestly with both parties.
With wire transfers, e-mail and secure courier services each party may be in a different town, or even in a different country! Because the procedures and customs for transfer of title, whether fee simple title, or in a bank trust, are very similar throughout the entire country of Mexico, the escrow agent may be located anywhere in Mexico and may have trust accounts in the United States or in other countries.
Prudent buyers and sellers will insist upon maintaining funds in an escrow account during the transfer process.
This article is written by Linda Jones Neil, founder of The Settlement Company and Director of Linda Neil Properties, trusted real estate advisors for all your La Paz needs. .. The company frequently sponsors seminars on the various aspects of real estate ownership in Mexico and holds membership in AMPI, NAR and FIABCI and PROFECO Certificate 00063/96
Copyright, 2010 Consultores Phoenix, S.C. Reproduction prohibited without permission.
About the author:
LINDA NEIL has been designated as an Accredited Buyer’s Representative (ABR) by the National Association of Realtors® (USA). She is also the founder of The Settlement Company®, which specializes in real estate transfers and escrows, specializing in the Virtual Closing®. Licensed as a California real estate broker, Ms. Neil has pursued her profession in Mexico for over thirty 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 AMPI Coordinator for the state of Baja California Sur.