Soft Closings in Mexican Real Estate

A soft closing is when a buyer takes possession of a property and releases funds before the final deed is ready. It can seem like a convenient shortcut, but it carries both risks and benefits.

When to Consider a Soft Closing

Soft closings should only be used when there is a legitimate delay in the deed process, such as:

Assignments of rights: Some banks take 6–8 months (instead of the usual 3 months) to process these.

Condo regimes not yet registered: Developers may allow buyers to move in while paperwork is finalized.

Seller liquidity needs: When a seller urgently needs funds, a soft closing may be negotiated with terms more favorable to the buyer.

In these cases, if the buyer wants to move in, start renovations, or begin renting, a soft closing can be a practical option.

How to Protect Yourself

Do a full due diligence first to ensure title and permits are in order.

Negotiate terms carefully: For example, instead of releasing 80% of funds (a common practice), negotiate a smaller release until the deed is finalized.  The remaining funds may be held in escrow until the public notary finalizes the title transfer.

Use a punch list: Document any unfinished items so the developer/seller remains obligated to complete them.

Have a clear contract: Spell out who bears responsibility if damage or problems arise before the deed is transferred.

Risks and Who Bears Them

For Buyers: The main risk is moving in without legal title. If something goes wrong, enforcing rights may take time. However, with a strong contract, buyers are generally well protected.

For Sellers: The greater risk lies with them. Once funds are released and possession is given, they still bear liability until the deed is signed. If anything happens to the property before that, the risk often falls on the seller.

In most scenarios, the new buyer is responsible for all obligations related to the property, including Homeowners’ Association (HOA) dues, property taxes, and fideicomiso fees.

Soft closings should never be used just to speed up commissions or “check a box.” They are a useful tool only when necessary and when both parties agree to clear, fair terms. Otherwise, the safest path is always to wait for a proper closing with a recorded deed.

Mariana Plowes Hernández – Attorney in Cabo - mph@bajalegalgroup.com