Why Escrow Isn't Optional in Mexico (Even When the Seller Doesn't Want It)

Why Escrow Isn't Optional in Cabo Real Estate (Even When the Seller Doesn't Want It)

Escrow comes up in almost every real estate conversation I have, but it's worth revisiting because of something real estate attorney Eduardo Tapia mentioned to me recently: not everyone in this market actually wants to use it — and that resistance can create real risk.

The Old-Style Closing

Before escrow became standard practice, closings in Mexico worked like this: has the money been deposited? Has a cashier's check been handed over? Only then does the seller sign the deed.

Eduardo pointed out the problem with that approach directly — it doesn't reflect how funds actually move. Wire transfers take time. Waiting for confirmation that money has physically hit an account before signing is often just a waste of time when a proper escrow structure could handle the same protection more efficiently.

Who Actually Resists Escrow

You'd assume everyone wants the security escrow provides. In Eduardo's experience, that's not the case — and the resistance skews toward Mexican national sellers more than foreign ones. It's simply not as embedded in their day-to-day transaction habits. Eduardo had a closing happening the following week where the seller, a Mexican national, didn't want to use escrow at all.

The Real Risk Without It

Here's the scenario that should worry any seller: you sign the deed, transferring title, and the money hasn't actually landed yet. Yes, there's legal recourse if the buyer doesn't pay — but recourse takes time, and in the meantime, you've already given up the one piece of leverage you had: the signed deed.

With escrow properly in place, that risk essentially disappears. Funds sit with a neutral third party, disbursement instructions specify exactly where money goes and when, and signing happens in a coordinated way that doesn't require either side to simply trust the other on timing.

The Takeaway

If you're selling property in Mexico and someone on the other side of the table pushes back on using escrow, that's not a minor process preference — it's a real financial exposure question. Escrow exists to solve exactly the problem of "I signed, but where's my money?" Don't let unfamiliarity with the process talk you out of the protection it provides.

For real estate help in Los Cabos or Baja California, reach out to Fletcher Wheaton at fletcher@remexico.com. For legal help from a real estate attorney in Los Cabos, reach out to Eduardo Tapia at info@jetzlaw.com.