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By Juan Luis Santiago Law student, Junior Lawyer in the Legal Department, and currently part of the Real Estate Legal Research Center. 

Given the current boom in the real estate sector, it has become necessary to contemplate different protection alternatives or to guarantee transactions concerning property rights, such as the sale and acquisition of real estate.

This is where the “Escrow Contract” comes in as one of the most efficient means of guarantee in the real estate world.

Who is involved in the escrow contract, at the moment of carrying out a real estate transaction? 

The parties in this type of contract are:

    • The Seller. – Holder of the property, with the necessary legal capacity to dispose of the real estate object of the operation.
    • The Buyer. – A person with sufficient legal and economic capacity to acquire the real estate object of the transaction.
    • The Escrow Agent. – Natural or Moral Person (through the representative), that will act as an intermediary concerning the economic resources within the real estate operation.

What is the Escrow Contract?

To conceptualize and give a function to this type of contract, we must start from the premise that the “Escrow” within the Mexican legislation is not contemplated, that is to say, it is an atypical contract, not regulated, which does not require any formality of structure, so that different jurists within the field of contract law, have defined this, as the agreement of wills made expressly, by which the parties (Seller and Buyer) entrust to an intermediary “Escrow Agent” each one of the economic resources coming from the real estate, to act as an impartial guarantor, who will retain such resources until the contractual obligations of the purchase and sale expressed by the parties are fulfilled.

And, if it is not regulated, what legal certainty does it offer?

Although it is considered an atypical contract, this does not mean that it is somehow illegal or inefficient (regarding its legal validity), on the contrary, it means that it does not require any formality more than those of any other type of contract regulated by law, so the will of the parties will prevail before any instance, and doing it expressly will be enough to give it its certainty.

That is why SILMÉXICO offers this type of contract to its buyers and sellers belonging to its portfolio of collaborators so that each one of their transactions is carried out most efficiently without at any time harming or jeopardizing the property rights of the parties. 

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