Did you think that you only needed a Transfer Certificate of Title to finalize your property purchase? This will list the documents you need to carry out your transaction.
Whatever the land area, property transactions are always a big deal. Due to the significant values at stake, the proper documents must be prepared to protect the interests of both the buyer and the seller.
Keep these documents in mind; you will encounter these should you be in the market to buy or sell a house or a condominium unit in the future.
Letter of Intent
What it is: This is a non-binding letter submitted by the buyer to express his or her intent to buy the property. This document must indicate the key transaction details such as the price, amount of initial deposit, period for due diligence (a specified length of time wherein the buyer evaluates the property to see if it is fit to purchase), and mode of payment, among others.
A Letter of Intent must be kept simple, and must have a reasonable deadline for the seller to sign and agree to the terms set.
What it is: This document, once signed, means the seller agrees to the terms and cannot offer the property to someone else; it will have to be taken off the market.
Note, however, that the Reservation Letter will also indicate the end date of the reservation of the property, as well as the validity of the reservation fee. Usually, the down payment and relevant documents must be submitted within 30 days after the reservation fee is paid. Failure to do so will make the property available to other potential buyers.
Contract to Sell
What it is: This document has all the final terms and conditions of the sale. This will be issued to the buyer by the seller after the down payment has been made. Note, though, that ownership of the property remains with the seller until the full purchase price has been completed. The Contract to Sell must also be notarized.
Letter of Guarantee
What it is: This document is issued by a bank or a financial institution on behalf of the buyer to inform the seller that the latter has taken out a loan to finance the property purchase. This document guarantees that the bank will shoulder any costs should the buyer default.
Deed of Absolute Sale
What it is: A Deed of Absolute Sale must be prepared once the buyer has paid the full purchase price of the property, documentary stamp taxes, registration fees, and other incidental expenses related to the registration process. This document, which must be mutually signed by the buyer and owner, indicates that the owner has completely relinquished all rights and interests to the property and has transferred these to the buyer. Like the Contract to Sell, the Deed of Absolute Sale must be notarized.
What it is: Issued by the city or municipality, this proves an ownerâ€™s exclusive rights to a particular property.
A Transfer Certificate of Title is a proof of ownership of a subdivision lot; a Condominium Certificate of Title is a proof of ownership of a condominium. Both are issued by the Registry of Deeds in the relevant city or municipality.
The Registry of Deeds should be able to provide a certified true copy of this document to confirm its authenticity. The Certificate Title must then be issued in duplicate; one copy goes to the new owner while the other is kept in the Registry of Deeds.
Did you know that many properties in the Philippines do not have a title? For hassle-free transactions, only deal with titled property; do not just rely on a Tax Declaration.
What it is: With the sale finalized, the new owner must now request for a Tax Declaration from the Assessor’s office; the new title and a photo of the property must be submitted for processing. Once obtained, all tax obligations will now be under the new owner’s name.
At the end of the day, do your due diligence prior to engaging in any transaction to protect your investment, whether you’re a buyer or a seller. Do a background check on the property buyer or seller. Read all the details and clauses carefully, including the fine print; all of these must be consistent across the relevant documents. Then make sure all documents are authentic, duly signed and/or notarized, and properly filed for future reference.
Read our previous journal to know more about home ownership.