Earnest Money & Escrow
Earnest money in Mexican real estate, refers to a deposit made by a potential buyer to show their commitment and serious intent to purchase a property. This deposit is typically made in the form of cash, typically 1-5% of the purchase price, and is held in an account, usually that of the seller’s agent or attorney, until the transaction is completed. Since most real estate transactions in Mexico are paid in full, in cash, earnest money is often not needed.
Holding real estate transaction money via a traditional escrow is not as commonly done as it is in the US or Canada. But there are escrow options available in Mexico now similar to those in other countries where a bank or title company holds the money until the deal is complete. Ask your agent or lawyer in Mexico for escrow options!
The amount is typically agreed upon during the initial offer and purchase agreement process, and is included as a contingency in the agreement. If the transaction is successful, the earnest money deposit is applied towards the purchase price of the property. However, if the buyer backs out of the deal for any reason not stipulated in the agreement, or if the seller fails to meet the agreed-upon conditions, the earnest money may be forfeited. This is why it is important to have a thorough understanding of the purchase agreement and any contingencies or conditions that may apply.
Have your agent and lawyer in Mexico review all documents and represent you in the overall deal to make sure your earnest money is safe. Contact us below and we’ll connect you with an experienced local agent.