Tuesday, June 23, 2009


Real property sold whether held by one or more owners in the Philippines undergoes a process required by law & payment of taxes & fees in order for sale to be valid as well as properly registering the property to the new owner or the buyer.


To ensure smooth sale of the property, it is advisable that following important documents be prepared:

1.) Transfer Certificate of Title (TCT)/Original Certificate of Title(TCT) also known as the Torrens Title must have no liens (legal attachments or impediments), lis pendens (title is subject of an going legal proceedings) and claims. If there are liens and claim, this should be settled first as the buyer would question this and would hesitate in getting involved in such cases.

It is also advisable to secure a Certified True Copy of the title from the Registry of Deeds or ROD (at the Hall of Justice or Courthouse) so that potential buyers can also verify the Original ROD Copy.

2.) Real property taxes to the city – it is advisable that these should be updated and all receipts & tax clearances secured before consummating a sale. Payment and securing of taxes and clearances can be done at the City Treasurer’s Office in City Hall.

3.) Updated Tax Declaration – A Tax Declaration is document issued by the City or Local Government stating the existence of the property, it’s primary use/zoning and underlying assessed vale for taxation purposes. Updating of Tax Declaration for both the lot and the house (if any) can be done at the City Assessors office in City Hall.

4.) A lot plan signed (with seal) by a geodetic engineer or surveyor.

5.) If there’s no house or improvement on the lot, a Certification of No Improvement has to be secured from the Assessor’s Office in City Hall.

6.) For co-ownerships, for ease of transactions, appointment of an Attorney-In-Fact (AIF) one of the owners by virtue of a Special Power of Attorney (SPA) will be issued by the other selling co-owners, authorizing the AIF to negotiate, transact, sell receive payments & monies as well as sign all pertinent documents, contracts and other papers related to the sale of their shares or portions of property. If there are specific conditions on this authority to limit or expand such an authority, this can also be written on the SPA.

The SPA can be prepared by a lawyer or there are proforma SPA forms which can be used for such a purpose. However, the document should be notarized by a notary public or a lawyer. Each co-owner can issue separate SPAs appointing the same person as the AIF or a joint-SPA can be prepared wherein all the co-owners can sign on a single document.

If any of the co-owners are located abroad or outside of the Philippines, the selling co-owner may go to the nearest Philippine Consulate and have the SPA prepared by the consular officer who will notarize the said document.

In some cases, a local notary of the home country and authorized by the Philippine Consulate can notarize the Special Power of Attorney but the same document will have to be authenticated by the Philippine Consular Officer in that country.

Sale of Property with consent of all co-owners

Once a meeting of mind between the selling property co-owners or the AIF and the prospective buyer on the price, terms and other details, the sale is considered. Payment of the property can be done either direct payment to the AIF or separate checks issued to the names of each owner and to be received by the AIF if the SPA authorizes him or her to do so. Once full payment for the property is issued, co-owner sellers or the AIF are obliged to sign the Deed of Absolute Sale and turn over all pertinent documents to the buyer including but not limited to: the Original Owner’s copy of the TCT, the Tax Declaration, Tax Receipts and Clearances.

Closing costs are usually shared among the seller and the buyer. Breakdown of closing costs are as follows:

Seller pays: Capital Gains Tax (6% of the Total Selling Price in the Deed of Sale or the Zonal Value, whichever is higher) & Documentary Stamp Tax (1.5% of the Total Selling Price or the Zonal Vale, whichever is higher). If the seller’s hired a broker for the sale, licensed brokers are entitled to a commission or broker’s fee of 5% of the Total Selling Price. The Capital Gains tax & Documentary Stamp Tax are payable to the BIR and should be paid within 30 days from date of notarization of the Deed of Sale.

Buyer pays: Transfer Tax, Registration, Notarization of the Deed of Sale, and other fees related to the transfer and registration of the property to the new owner’s name.

Once the Deed of Sale is signed, full payment of the property received and all the taxes and other obligations of the seller are settled, the sale is no considered final and closed.

Sale of Property without consent of all co-owners-OPTION A, Subdividing the Property

First step is to inform all the co-owners on the planned partition of the property. This can be through a legal counsel or even in writing by the AIF of the selling co-owners to all the co-owners especially the non-selling co-owners. However, it is advisable that a lawyer be employed to execute this.

Once all the co-owners are informed including the non-selling co-owners, a geodetic engineer or surveyor is contracted to conduct the survey, partition and taking down of the necessary technical descriptions. However, it is also during this stage that inputs from the non-selling co-owners must be taken into account so that the positioning and the allocation of lots and the question of who gets what is resolved. These inputs will be incorporated in the subdivision plan to be prepared by the geodetic engineer.

The subdivision plan is then presented by the geodetic engineer to all the co-owners, including the non-selling co-owners who will sign and approve the plan. An application for subdividing the property is then sent to Bureau of Lands for the approval. This could take several weeks. Some fees also will have to be paid out to the Bureau.

Upon approval of the technical descriptions & bearings as well as the entire subdivision plan, then the original title & other documents (tax declaration, tax receipts, etc.) will then be submitted to the Registry of Deeds along with the approved subdivision plan issued by the Bureau alone with legal documentation proving that all co-owners approve the partition. The Registry of Deed then cancels the old title & issues new titles for the subdivided lots.

Selling co-owners may now proceed to sell the property to other parties once a new title is issued for the new lots & the process is similar to that as described earlier for selling co-owned properties with all the co-owners consenting to the sale.

Sale of Property without consent of all co-owners-OPTION B, Co-owners selling their share on the common property without subdividing the lot

For this option to work, a legal counsel is highly recommended.

Selling the property directly to the open market with the other co-owners not giving consent may discourage potential buyers since there is an element of risk on the part of the buyer as he or she will not get to have absolute ownership of the whole common/undivided property required for whatever purpose they see fit (residential, commercial or industrial).

One option worth exploring would be to go to court and invoke the provisions of the Civil Code (Article 491) wherein the minority shareowners are withholding consent and have their lack of consent has been prejudicial to the interests of the vast majority.

Since the decision on the issue of selling without consent of the others is best suited to the courts, again, a lawyer is needed in this case.

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