Our last post from our Tropicasa Tips
series explained more about the potential availability of INAPAM cards for
foreigners living in Mexico. This week, we’re talking about the escrow process
in Mexico and how it may apply to your purchase of a property in Puerto
Vallarta.
The escrow process is an important step
that ensures a smooth and secure real estate transaction in Mexico. Simply
stated, escrow is the process of having a neutral third party hold the funds
from a real estate sale process until such time that all contractual
obligations have been completed, a system which protects the seller and the
buyer equally.
So, how does it work? When the terms of a
sale are negotiated and agreed upon by the buyer and seller, they will
generally sign a purchase agreement. Once that purchase agreement is in place
and once contingencies are removed, earnest money is deposited by the purchaser
into an escrow account as a way of proving their commitment to the purchase of
the home, while also holding the property for them while allowing time for the
purchase process to continue to move forward.
Generally, a specialized third-party escrow
company will usually act as the escrow agent, a role that may include offering title insurance to protect a buyer against certain faults in
title or potential claims against title in the future. This process adds a
level of protection and support for all purchasers but can be particularly
reassuring for foreign buyers who may be unfamiliar with local laws and
regulations.
Once all terms and contractual obligations
are satisfied and signed off between the parties with the notary, the buyer will
instruct escrow to transfer the purchase funds to the seller – and your new
home in Puerto Vallarta is yours to enjoy.
Check back with us next week when we’ll
provide an easy explanation of how capital gains are calculated when selling a
home in Puerto Vallarta.
