When you decide to purchase real estate in Mexico, there is a purchasing processes you need to follow. This process – even in Mexico – is very similar to most countries. It includes an Offer and Acceptance Contract, Sales Agreement, Financial and Closing Contract, and the possible addendums attached to each of them. There is one very important agreement, however. That is the funding of an escrow. An escrow is funded by both parties involved (seller and buyer). It proves that the buyer is committed to purchasing the property and that the seller has accepted the terms. Here are a few basic reasons why an escrow account is important to insure both the seller and the buyer.
The Escrow Agreement
This agreement comes after the buyer and seller come to terms with an Offer and Acceptance Agreement. Both parties must sign a sales contract. Then, the buyer releases an agreed amount of money to fund the escrow account. This assures their intent to purchase the seller’s property. In turn, the seller commits their property to the same escrow account to show their commitment to the buyer. A financial institution or title company, neutral to both parties’ interests, becomes the overseer of the funds for future distribution. The funds will remain in this account until both the buyer and seller come to full terms mandated in the Sales Contract.
Assigning an Escrow Agent
The financial institution with which the escrow account is created will assign an escrow agent to make sure that all terms of the Sales Contract are met. While the funds are in escrow, the buyer cannot occupy the property as the seller has terms they need to abide by, as well. The terms of the Sales Contract might require the seller to make repairs inside and/or outside of the home or property. If the property is being held as collateral for a mortgage or private investor or investment company, it will most likely have to appraise at a certain value before the sale can be closed. The buyer must secure financing, if applicable, before the property can be released.
Releasing the Escrow Funds
The financial institution will release the escrow funds when all terms of the Sales Contract are met and an approved Notary has closed all the necessary paperwork. If will then be the responsibility of the escrow agent to distribute the held assets after closing. If the closers cannot come to terms, a recession or cancellation takes place. Both parties will have to abide on certain terms set forth in the event of a problem occurring with the closing to regain their assets being held in the escrow account.
An escrow account is not a must when purchasing property in Mexico. However, it will protect your real estate investment. Both the seller and buyer will have a commitment by creating an escrow account. When you decide to open an escrow account, make sure you find a trustworthy attorney. You want one that specializes in real estate transactions and has experience working with Americans and Canadians.
Find Your Dream Home
Whether you want to use an escrow account or not will be up to you. However, today is the time to invest in Mexico’s Riviera Maya. Whether you’re looking for a rental property in Tulum’s ever-growing green communities or prefer to find a Playa del Carmen condo just a few steps from the pristine white beaches, we’ve got plenty to offer you. Make sure you contact one of our expert Buyer’s Representatives. They will find your dream property based on your wants, needs and budget.
And remember, at Top Mexico Real Estate…we make it happen!