How Escrow Works When Buying Property in Los Cabos

Karla & Erick | Cabo Realty | Century 21 Paradise Properties

How does escrow work when you buy in Los Cabos? A neutral escrow company holds your deposit and the rest of your money until closing, and releases it to the seller only when the title is clear and the deed is signed before the notary. Escrow is not required by law in Mexico, and both buyer and seller have to agree to use it, but for U.S. buyers it is the simplest way to make sure your money never goes straight to the seller before you own the home. This guide explains how it works, what it costs and how to choose an escrow company, for buyers from California, Texas and Arizona.

📊 Escrow at a Glance

🔄 How Escrow Works, Step by Step

1. Offer and purchase agreement: you and the seller agree on the price and terms, including that escrow will be used.
2. Deposit into escrow: your deposit goes to a separate escrow account, not to the seller.
3. Due diligence: the title, liens and no-debt certificates are checked while your money stays protected.
4. Fideicomiso and notary: the bank trust is set up and the notary prepares the deed.
5. Closing: once the deed is signed and the title is clear, the escrow company pays the seller and the closing costs, following the written instructions both sides signed.

If the deal is cancelled, the money stays in escrow until the escrow company receives instructions under the escrow agreement. See the full buying process in Step-by-Step Guide to Buying Property in Los Cabos and the timeline in How Long Does It Take to Close on a Property in Cabo?

⚖️ With Escrow vs. Without Escrow

💵 What Escrow Costs

The escrow fee is usually paid by the buyer as part of closing costs. It varies by company and by the price of the home, so ask for a written quote before you sign the purchase agreement. See every buyer cost in Understanding Closing Costs When Buying in Mexico.

Many escrow accounts are held in U.S. dollars, while some closing payments, like the acquisition tax and notary fees, are paid in pesos. Ask if the escrow company handles the currency exchange at closing.

✅ How to Choose an Escrow Company

• Track record: choose a company with years in the Los Cabos market and ask for references.
• Insurance: ask for proof of errors and omissions, crime and cyber fraud insurance, and confirm it with the insurer.
• Segregated account: your money should sit in a dedicated escrow account, never in an agent’s, developer’s or lawyer’s personal account. Ask which bank holds it.
• Written instructions: expect identity checks (KYC) for both sides and signed instructions on when and how funds are released.
• Local office: a company with an office in Los Cabos can coordinate directly with the notary and the bank trustee.

Escrow companies with offices in Los Cabos include The Settlement Company, which has offered escrow and closings in Mexico since 1991, and TLA Financial Services, a U.S.-regulated escrow service that holds funds in a segregated account at a U.S. bank.

💡 Our tip: before you wire any money, call the escrow company at a phone number you already know and confirm the wire instructions. Never trust account details that arrive only by email.

Escrow protects your money; the title check protects the property. See Verifying Property Ownership in Cabo San Lucas and Risks of Buying Real Estate in Mexico.

❓ FAQ – Escrow in Los Cabos

Is escrow required when buying property in Mexico?

No. Escrow is not required by Mexican law, but buyer and seller can agree to use it, and most U.S. buyers should.

Who pays for escrow in Los Cabos?

The buyer usually pays the escrow fee as part of the closing costs. Ask for a written quote before you sign.

When does the seller get the money?

At closing, once the deed is signed before the notary and the title is clear, following the written instructions both sides signed.

What happens if the deal falls through?

The money stays in escrow until the escrow company receives instructions under the escrow agreement. The escrow company does not renegotiate the contract; if buyer and seller cannot agree, the matter can go to court.

Are there escrow companies in Los Cabos?

Yes. Companies such as The Settlement Company and TLA Financial Services have offices in Los Cabos.

Sources: Connell & Associates, “Escrow in Mexico – A General Overview and Common Questions”; Mexico Relocation Guide, “Do You Need Escrow in Mexico?” (Apr 2025); The Settlement Company and TLA Financial Services, company websites. Information verified October 2026.

Disclaimer: This is general information, not legal advice. Escrow terms and fees vary by company; confirm them in writing before you sign. Karla & Erick are MLS members with Century 21 Paradise Properties and are not affiliated with the escrow companies mentioned.

Karla & Erick | Cabo Realty | Century 21 Paradise Properties