5 Frequently Asked Questions About the Deed of Absolute Sale

The buying and selling process of real estate could be overwhelmingly tough especially at first glance. With the number of legal documents that you need to prepare and understand, it’s normal to feel intimidated.

Familiarizing yourself with the necessary legal documents when purchasing or selling a property will protect you from fraudulent and malicious acts done by those who intend to transact in bad faith. It is important to know all these documents in order to ensure safe and smooth transactions in buying or selling properties. Knowing them one by one is essential in protecting you either as a buyer or a seller in transferring or paying for a certain property.

Among the most important legal documents in a real estate transaction is the deed of absolute sale of land. This document serves as proof of the sale of the property. (Get the downloadable PDF sample form here). To help you learn more about this legal document, we outlined here the most common questions about the deed of absolute sale:

Deed of Absolute Sale Sample Form

1. What Is the Deed of Absolute Sale?

If you want to know the deed of sale meaning, it is an essential legal document that proves that both parties have fulfilled their obligations and the transaction can already be considered closed. It’s commonly used on transactions involving pure obligations. 

Pure obligations pertain to debts not subject to any conditions and are demandable at once. They are common on direct real estate transactions wherein the buyer pays in full through cash or cheque. For instance, when the buyer has delivered the payment on a certain piece of land, the seller is obliged to issue a deed of absolute sale of land as proof that the buyer paid what is due and is granted the ownership and legal rights to the said property.

A deed of absolute sale of land states that one party is transferring his land rights to another. This means that all the seller’s rights to the property have now been passed on to the buyer. The buyer has now the full right to use the property they purchased.

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Keep in mind that the deed of sale of land is a legal document that proves and records the sale of the property. It is written proof that both the buyer and the seller have reached an agreement regarding the sale or purchase. With a deed of absolute sale of land, both the buyer and the seller are protected in case disagreements or problems about the lot arise in the future.

2. When Can You Expect the Deed of Absolute Sale?

The deed of absolute sale should be prepared as soon as the payment is made. The seller must first settle taxes due, such as the capital gains tax (if applicable), before executing the legal document.

On the buyer’s side, the deed of absolute sale of land is prepared when you pay the full purchase price of the lot, which includes all the underlying taxes such as the transfer tax, documentary stamp tax and all other fees related to the registration process. 

3. What Does the Absolute Deed of Sale Contain?

The deed of absolute sale is signed by both parties in front of a notary public. To be valid, the absolute sale deed must indicate the date and location of the filing, proper identification of the property, and the name and address of the buyer and the seller.

How do you ensure the validity of a deed of absolute sale in the Philippines? The legal document must contain the property’s identifying features, such as the complete address or detailed description of the property. Identifying features are crucial, especially when the subject is the land. The land is prone to disputes as sometimes there are no clear borders, which is why it is imperative that the deed of absolute sale of land includes a detailed description of the lot area or floor area to prevent legal issues. 

The document states that “the SELLER is willing to sell and the BUYER is willing to buy the above-described real estate property” and “acknowledged by the SELLER to her satisfaction, the SELLER SELLS, CEDES, TRANSFERS and CONVEYS in a manner that is absolute and irrevocable the above real property unto the BUYER, his heirs, assigns and successors-in-interest”. With this clause in the deed of absolute sale of land, the seller is essentially transferring the lot to the buyer.

The deed of absolute sale should also include a statement of assurance that the property has no pending transaction in the Registry of Deeds: “The SELLER warrants that she can transfer the title and possession of the aforesaid real estate property to the BUYER and that there are no other transactions pending registration with the Registry of Deeds.”

In addition, it must specify that the buyer will shoulder several taxes associated with the sale such as the Transfer Tax and Documentary stamp tax. The seller, meanwhile, will be the one responsible for the capital gains tax. 

And finally, this document must be fully notarized by a Notary Public in order to become a public document and would be binding to third persons. 

4. What If the Seller or Buyer Couldn’t Sign the Deed of Sale in Person?

If either the seller or the buyer couldn’t be present to sign the document, as in the case of Overseas Filipino Workers (OFWs), an “AIF” or Attorney-in-Fact, must be appointed as a representative in the signing of the deed. The AIF must be legally appointed through a notarized Special Power of Attorney.

In cases of schedule conflicts, the seller or buyer may appear at different times before the same notary public before the deed of sale Philippines is notarized. In the alternative, the seller can appear before a notary public and have the deed of sale notarized and sent to the buyer, who then appears before a different notary public to sign the same deed to be notarized separately.

Aside from SPA, a General Power of Attorney bearing the current name of the representative is also acceptable. For married couples, the General Power of Attorney must contain the married name of the wife. Otherwise, the General Power of Attorney will not be honored. The bottom line is, there must be an appointed representative for signing the deed of absolute sale of land.

5. What Is the Significance of the Deed of Absolute Sale?

Aside from being proof of the purchase, a notarized Deed of Absolute Sale is among the required documents by the Bureau of Internal Revenue (BIR) in order to transfer the land title documents in the name of the seller to the buyer. Without a notarized Deed of Sale, the taxes cannot be paid and the transfer of title cannot take effect.

It is important for property seekers to be familiar with the differences between an absolute deed of sale and a conditional deed of sale. Unlike the conditional deed of sale, the absolute deed of sale immediately transfers all the rights to the new owner upon payment, which is recorded in the Registry of Deeds. A conditional deed of sale states various conditions before the property title will be transferred. Conditional deed of sale is common on short-term installment plans. 

The deed of absolute sale is necessary to confirm the validity of the transaction. There are various cases where malicious petitioners failed to secure their claim to the property after presenting an invalid or forged deed of absolute sale.

The absolute deed of sale of land is also a strong document that protects owners from unfair land borders. Since it contains a detailed description of the property, owners can assert their right to the property, protecting their interest. 

Understanding the documents in real estate processing is a vital step in preparing to buy or sell a property. It is important to fully comprehend these documents before signing in order to execute the transactions correctly and avoid costly mistakes in the future.

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