Escrow or fideicomiso: which one protects a property purchase in El Salvador?
Both keep your money away from the seller until conditions are met. They differ in who can hold it, how formal it is, and what it costs.
The short answer
Both do the same job for a buyer: the money sits with a third party and moves only when conditions written in advance are met. A fideicomiso is a trust, and in El Salvador only a bank or an authorised credit institution can act as trustee. Escrow is a contract, and any independent third party can hold the funds: a bank, a law firm’s client account, or an independent escrow agent.
For a single purchase that closes in weeks, escrow is usually enough and quicker to set up. For a development, a pre-sale or an arrangement that runs for years, a fideicomiso gives more structure.
Side by side
| Escrow | Fideicomiso | |
|---|---|---|
| What it is | A contract, assimilated to the deposit contract of the Civil and Commercial Codes | A trust regulated by the Commercial Code (Articles 1233 to 1262) |
| Who can hold the money | Any independent third party: a bank, a law firm’s client account or an independent escrow agent | Only banks or credit institutions authorised for it (Commercial Code, Art. 1238); a bank needs the Superintendency’s authorisation to accept trusts (Banking Law, Art. 51) |
| Accounts | Set by the escrow agreement | Each trust keeps separate accounts at the bank, reported to the regulator (Banking Law, Arts. 67 and 68) |
| Property in trust | Not applicable: the property stays with the seller until the deed | A trust over Real Estate must be registered at the Property Registry (Art. 1249) |
| How long | Usually weeks, until the last condition | General maximum term of 25 years (Art. 1236) |
| Cost | The holder’s fee, plus structuring the conditions (ours starts at US$500*) | Every trust is paid (Art. 1251); banks do not publish their fees, so ask for a written quote |
| Best for | A single purchase that closes in weeks | Developments, pre-sales, staged construction payments, many parties |
Go further
How escrow works with us
We write the release conditions from the fifteen checks of your property file and verify each one. An independent escrow agent holds the funds, and the last release waits for the CNR to register the transfer in your name. We never hold your money. How our escrow works and the six steps.
When a fideicomiso makes more sense
- A development or pre-construction project with many buyers paying in stages.
- Construction paid against verified progress over months or years.
- A structure where several parties need a regulated trustee and separate accounts.
If a bank is financing your purchase, the bank runs the closing and sets its own terms.
Questions to ask either way
- Who holds the money, and are they independent of both buyer and seller?
- What exactly triggers each release, and which document proves it?
- What happens to the money if a condition fails or the parties disagree?
- What is the fee, in writing, and who pays it?
Frequently asked
Can a law firm act as fiduciary in El Salvador?
No. Only banks or credit institutions authorised for it can be fiduciaries under Article 1238 of the Commercial Code. A law firm can hold escrow funds in its client account under a written escrow agreement.
Is a fideicomiso safer than escrow?
Both protect a buyer when the holder is independent and the conditions are well written. A fideicomiso is more regulated and more formal; escrow is quicker to set up for a single purchase.
How much does a bank fideicomiso cost in El Salvador?
Banks do not publish their trust fees. The Commercial Code says every trust is paid, and if no fee is agreed the trustee may charge five percent of the net income. Ask for a written quote.
Sources
- Commercial Code (trusts, Arts. 1233 to 1262): www.jurisprudencia.gob.sv
- Banking Law (Arts. 51, 67 and 68): ssf.gob.sv
- LatinAlliance, the escrow account in El Salvador (2023): latinalliance.co
* Estimate, not a quotation: confirmed in writing before anything starts. General information, not legal advice.
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