Escrow

Thinking of using an escrow service? 7 questions to ask before trusting your money

✍️ Introduction

In countries like the U.S., Canada, or the U.K., using an escrow service is standard practice when buying real estate.

But in Mexico, escrow is not yet widely regulated or commonly used—especially in local transactions.

However, that’s rapidly changing.

With more and more foreign buyers investing in Mexican real estate, escrow services are becoming an essential tool to ensure secure, transparent, and neutral handling of funds.

The good news?

Even though escrow isn’t formally regulated in Mexico, you can still use it legally and safely—through a properly structured international escrow agreement, often governed by U.S. law and protected by financial safeguards.

This article will help you understand what makes a real escrow service trustworthy, and the key questions to ask before trusting anyone with your money in a cross-border transaction.

⚠️ What’s happening in the market?

Many so-called “escrow” services:

• Hold client money in standard business bank accounts.
• Operate with no regulatory oversight.
• Offer no professional liability insurance or financial guarantees.
• Skip AML/KYC compliance entirely.
• Use the term “escrow” as a sales pitch—but don’t follow international standards.

This puts buyers, sellers, and brokers at serious legal and financial risk.

✅ 7 questions to ask before using an escrow service

1. Are they registered or licensed as an escrow agent?
   Ideally in a regulated U.S. jurisdiction such as New York or Florida.
2. Where is the money held?
   It must be in a segregated escrow account, not in a company’s general account.
3. Do they carry errors & omissions insurance or a fidelity bond?
   This protects clients in the event of mishandling or negligence.
4. Do they comply with AML/KYC standards?
   A legitimate provider will ask for ID, source of funds, and basic documentation.
5. Who controls the escrow account?
   There should be internal controls—not just one person with full access.
6. Are release conditions clearly stated in the contract?
   Funds must be disbursed based on written instructions—not on verbal requests.
7. Which law governs the agreement in case of dispute?
   You should have clear jurisdiction—preferably one with strict escrow regulation.

💡 Final Thought

Escrow is not just about holding funds—it’s about protecting all parties in a high-value transaction.
A poorly structured escrow arrangement can lead to frozen funds, legal disputes, or financial loss.

Before choosing an escrow provider, ask these 7 questions and demand transparency.

Still unsure? Feel free to contact me—I’ll be happy to help you assess your options or review your draft agreement.