Here are tips a buyer must remember before buying any property in the
Philippines, specially if you are buying a single property from an
individual:
1. Make sure the “Transfer Certificate of Title” is
authentic. The easiest way to check if the title to the property you are
buying is authentic is by getting “Certified True Copy” of the title
from the Register of Deeds. This office is usually located at the city
or municipal hall where the property is located. Ask the seller of the
property for a photocopy of the title -you will need the title number
and the name of the owner to get a certified true copy of the title from
the Register of Deeds.
2. Verify that title is clean - meaning
the property is not mortgaged (no liens & encumbrances on the
property). You can see that at the back of the title with the heading
“Encumbrances”. This page must be empty if you are told that the title
is “clean”. But sometimes the space for the technical description of the
property on the front page of the title is not enough and the
description of the property is continued on the “Encumbrances” page,
this is of course all right.
3. Make sure that the land described
on the title is really the land that you are buying. You can validate
this at the Register of Deeds or by hiring a private land surveyor or a
geodetic engineer. Land titles don’t have any street name and number to
pin point a property, it is a must to confirm that the actual property
you are buying matches the technical description on the Transfer
Certificate of Title.
4. Make sure that the sellers are the real
owners. If you are buying from an individual property owner, ask for
identification papers like passport or driver’s license, it is also a
good idea to talk to the neighbors or the Barangay Captain to confirm
the identity of the sellers (you might as well ask some history of the
property).
5. Confirm that the yearly real estate taxes are paid.
Ask for certified true copies of the Tax Declaration and original Tax
Receipts to confirm that real estate tax payments are up to date.
If the above check list is in order, it is generally safe to proceed with the purchase of real estate in the Philippines.
Check out our properties for sale in Metro Manila at our real estate website, click here.
http://www.manilaresidence.sulit.com.ph
General Real Estate Information
As a rule,
only Filipino citizens and corporations or partnerships with least 60%
of the shares are owned by Filipinos are entitled to acquire land in the
Philippines.
Aliens can acquire land in the Philippines only on a
few exceptions: 1) Acquisition before the 1935 constitution. 2)
Acquisition thru hereditary succession -if the foreigner is a legal
heir. 4) Purchase of not more than 40% interest as a whole in a
condominium project. 4) Purchase by a former natural born Filipino
citizen who acquired foreign citizenship & has not applied and
granted dual citizenship can purchase up to 1,000 square meters of
residential land and 1 hectare of agricultural or farm land.
Modes of Acquiring Land:
Private Grant - voluntary transfer or conveyance of private property by a private owner, such as sale or donation.
Public Grant – acquisition of alienable lands of the public domain by
homestead patent, free patent, sales patent, or other government awards.
Involuntary Grant – acquisition of private party against the consent of
the former owner, such as foreclosure sale, execution sale, or tax
sale.
Inheritance – acquisition of private property through hereditary succession.
Reclamation – filling of submerged land, subject to existing laws and government regulations.
Accretion – acquisition of more lands adjoining the banks of rivers due
to the gradual deposit of soil as a result of the river current.
Prescription – acquisition of title by actual, open, continuous, and
uninterrupted possession in the concept of owner for the period required
by law.
A foreign national and or corporation may enter into a
lease agreement with Filipino landowners for an initial period of up to
50 years, and renewable for another 25 years. Or lease the property in
your Philippine Corporation name for an unlimited period of time.
Acquisition
is the act of procuring or getting a hold of real estate property.
Disposition is the manner of alienation, transfer of possession and
ownership thereof as prescribed by the Philippine law. The acquisition
and disposition of real estate is embodied in written agreements or
contracts voluntarily entered into and subscribed by the selling and
buying parties thereof, before a public officer designated as the Notary
Public of the City or Province where the subject property is located.
Thereafter, the instrument embodying the particular real estate
transaction is required by law to be recorded in the Registry of Deeds
in the City or Province where the real estate property is involved and
located. The Philippines uses the “Torrens” system of real estate
ownership.
The Bundle of Rights Theory
The bundle of
rights theory inherent to property ownership are the right to use
(Jus-Utendi), the right to enjoy the fruits of (Jus-Fruendi), the right
to dispose (Jus-Disponendi), the right to abuse (Jus-Abutendi), the
right to recover (Jus-Vindicandi), and the right to possess
(Jus-Possidendi). The rights incident to ownership are, the right:
to enjoy and dispose of a property without other limitations than those established by law;
to file action against third parties to recover ownership;
to use force as may be reasonably necessary to repeal or prevent an
actual or threatened unlawful invasion or usurpation of his property
(Art. 429, NCC, relate to Art. 312, RPC);
the right to enclose or
fence property - walls ditches, live or dead hedges - or by any other
means without detriment of servitudes constituted thereon;
to demand indemnity for damages caused to property;
the right to compensation in the event of expropriation;
the right to be restored to possession in case of unlawful dispossession;
the right to the surface and subsurface of the land, right to construct
thereon any works, plantation and excavation without detriment to
servitude and subject to special laws and without right to complain of
the reasonable requirements of aerial navigation;
the right to hidden treasure;
the right to accession and fruits of the property;
the right to “quiet title” to real property or any interest therein.
Limitations on right of property ownership:
CONSTITUTIONAL - such as police power, eminent domain or expropriation
of private property for public use, taxation and escheat when revision
of private property to state ownership in case of death of property
owner without an heir;
LEGAL - zoning ordinances, regulations on subdivision projects, building code, and other special laws and regulations; and
CONSENSUAL/VOLUNTARY - easements and servitudes, usufructs, lease
agreements, restrictions in subdivision and condominium deeds or
restriction.
The Regalian Doctrine of property ownership
A
principle in law which means that all natural wealth - agricultural,
forest or timber, and mineral lands of the public domain and all other
natural resources belong to the state. Thus, even if the private person
owns the property where minerals are discovered, his ownership for such
does not give him the right to extract or utilize said minerals without
permission from the state to which such minerals belong.
The Steward Concept of property ownership
The
Steward Concept is a legal doctrine which holds that property ownership
presupposes concomitant obligations to the state and the community and
that property is supposed to be held by the individual only as trustee
for people in general; and that as mere steward, the property owner must
exercise his rights to the property not just for his own exclusive and
selfish benefit or interest but for the good and general welfare of the
nation as a whole.
The National Housing Authority
Presidential
Decree No. 957, which regulates the sale of subdivision and condominium
developments, and providing penalties for violations thereof. The
National Housing Authority has exclusive jurisdiction to regulate real
estate trade and business, a function, which is presently exercised by
the Housing and Land Use Regulatory Board (HLURB). Certain conditions
are required before a license to sell condominium development units and
or subdivision development lots and homes is issued to a Filipino or
Foreign owned individual or corporation. The requirements include a
certificate of registration, a performance bond, and an approval of the
building plans and specifications. Violation of these rules could mean
fines, cancellation of license and or imprisonment.
Check out our properties for sale in Metro Manila at our real estate website, click here.
http://www.manilaresidence.sulit.com.ph
Taxes Guide when Buying real Estate in the Philippines
This is the standard sharing of expenses between the buyer and the
seller when transferring the real estate property title (TCT - Transfer
Certificate of Title or CCT - Condominium Certificate of Title) to a new
owner:
The SELLER pays for the:
- Capital Gains Tax equivalent to 6% of the selling price on the
Deed of Sale or the zonal value, whichever is higher. (Withholding Tax
if the seller is a corporation)
- Unpaid real estate taxes due (if any).
- Agent / Broker’s commission.
The BUYER pays for the cost of Registration:
- Documentary Stamp Tax - 1.5% of the selling price or zonal value or fair market value, which ever is higher.
- Transfer Tax - 0.5% of the selling price, or zonal value or fair market value, which ever is higher.
- Registration Fee - 0.25% of the selling price, or zonal value or fair market value, which ever is higher.
- Incidental and miscellaneous expenses incurred during the registration process.
The above sharing of expenses is the standard practice in the
Philippines. However, buyers and sellers can mutually agree on other
terms as long as it is done during the negotiation period (before the
signing of the “Deed of Sale”).
The “Deed of Sale” or “Deed of
Absolute Sale” is the document showing legal transfer of real estate
property ownership. The deed of sale is then taken to the Registry of
Deeds to be officially recorded after paying the documentary stamp,
transfer tax and registration fees. Always verify from the Registry of
Deeds the authenticity of a Transfer Certificate of Title before buying a
property. If the seller only has a tax declaration, be extra cautious
and check with neighbours, the Barangay captain or anyone in the know in
the community to verify the seller/owner’s true identity and the
property’s history.
Your Agent / Broker will usually do the
registration process (sometimes for a fee). However, all government
taxes, transfer fees and incidental or miscellaneous expenses will be
shouldered by the buyer.
Documents needed when transferring the title (TCT or CCT) to the new owner:
- Certified true copy of the title
- Notarized copies of the Deed of Sale
- Latest tax declaration of the property
- Certificate from the Bureau of Internal Revenue that the capital gains tax and documentary stamps have been paid
- Receipt of payment of the transfer tax and registration fees
An adapted form of the “Torrens” system of land registration is
used in the Philippines. The system was adapted to assure a buyer that
if he buys a land covered by an Original Certificate of Title (OCT) or
the Transfer Certificate of Title (TCT) issued by the Registry of Deeds,
the same will be absolute, indefeasible and imprescriptible.
Check out our properties for sale in Metro Manila at our real estate website, click here.
http://www.manilaresidence.sulit.com.ph
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