When buying Mexico real estate, escrow is used to hold funds, have them in custody and disburse the same in accordance with the previous instructions provided by Purchaser and Seller. This way both parties are fully protected.
The following are some points to remember about escrow:
- Some experts advise that NO funds are given directly to any seller until the property has been legally checked and a purchase and sales agreement is drafted by a real estate attorney and executed by all parties.
- The case of pre-construction Mexico condos for sale, or new development properties, many developers receive the deposit and following payments directly and most do not use escrow services. In this case it is important to really do your due diligence and, better yet, contract an attorney to represent you for the purchase transaction, before giving any deposit monies.
- Your Mexico broker can also advise you of the reputation of the developer in question.
- In the case of a resale property, once an offer has been agreed upon by all parties, an earnest money deposit is placed in escrow with a reputable title company, such as Stewart Title or The Settlement Company.
- These companies will hold the escrow funds (which are 10% of the purchase price for the earnest money deposit and the subsequent 90% funds for the balance of the purchase) until the closing.
- At closing the escrow company will disburse these funds according to a mutually agreed upon letter of disbursement signed by both the buyer and the seller.
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When beginning the search and purchasing processes, be sure to discuss the issue of escrow with your broker. Be sure to ask:
- If the seller you are considering will accept escrow
- If the developer is of reliable reputation if they will not except escrow
- What company offers professional escrow services
Escrow is an important tool in the purchase process protecting both buyer and seller. Be sure to be informed about your options and make decisions based on sound advice and experience.
Thomas Lloyd graduated from Purdue University Krannert School of Management with a degree in Management/Financial Option Investments. He has been living, investing, and working professionally in Mexico for over 15 years. In the summer of 2009, he received the first federally applied Mexico Real Estate Degree and Mexico Professional Real Estate License S.E.P. #5978657. He is the current president of TOPmexicorealestate, you can contact him at (512) 879-6546
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