What document should you execute?
1. Contract to Sell - if payment is a mere down payment and if there are other conditions to be imposed for the transfer of ownership.
2. Deed of Absolute Sale - if payment has been made in full and the other conditions in the Contract to Sell have been met.
Make sure that the agreement is duly notarized for your protection. Both parties should personally appear before a notary public. A little effort will save you much of possible trouble in the future.
What is the consent required if the seller is married?
If the property to be sold is community or conjugal, the consent of both spouses must be obtained. You may need a lawyer to determine whether the property is community or conjugal. As a conservative approach, if the seller is married, just assume that the property is community or conjugal. As such, make sure that both spouses signify their consent by signing in the agreement.
Please note that the sale of community or conjugal property without the consent of the other spouse is void. However, it shall be construed as a continuing offer on the part of the consenting spouse and may be perfected as a binding contract upon acceptance by the other spouse (Articles 96 & 124 of the Family Code)
What if the seller is a widow or widower?
Check if the properties of the former spouses have been liquidated within 6 months from the death of the deceased spouse. Otherwise, the sale is void.
Please note that upon the termination of a marriage by death, the surviving spouse shall liquidate the community or conjugal property either judicially or extra-judicially within six months from the death of the deceased spouse. If upon the lapse of the six-month period no liquidation is made, any disposition or encumbrance involving the community or conjugal partnership of the terminated marriage shall be void. (Articles 103 & 130 of the Family Code).
What if the Seller is a corporation?
Please note that the corporation referred herein is an ordinary corporation selling its real property asset, and not a corporation engaged in property development selling house and lot, or condominium units.
1. Ask for a copy of the board resolution authorizing the sale of the property and appointment of a representative.
2. Do not just rely on the corporate papers presented to you. Request for a certified true copy of it with the Securities & Exchange Commission (SEC).
3. Verify with the SEC the status of the corporation.
4. Verify and confirm the authority of the representative.
5. Determine if the declared corporate address is valid and existing.
Other things you should do and consider:
1. Require the seller to present the original owner’s duplicate certificate of title.
2. Request with the Registry of Deeds for a certified true copy of the Title to determine if there are existing encumbrances and adverse claims. It is advisable to request for a copy of at least two Titles prior to the existing Title to know the ownership history of the property.
3. Request for a copy of the latest Tax Clearance to make sure there are no deficiency real property tax.
4. Conduct ocular inspection to determine if there are apparent issues over the property. If there is an occupant other than the seller, talk to him/her to determine if there is an ownership or possession issues over the property. This is normally applicable when buying a foreclosed property.
5. Discuss who will shoulder the taxes and transfer fees for the Transfer of Title as follows:
Capital Gains Tax:
6% of the selling price or zonal value whichever is higher.
Documentary Stamp Tax;
1.5% of the selling price or zonal value whichever is higher.
You may click through this link to determine the BIR assigned zonal value for a property located in a particular area.
Transfer's Tax payable at the Local Treasurer's Office:
0.5% of the selling price, fair market value, or zonal value whichever is the highest.
You may click through this link for the Land Registration Authority (LRA) table of registration fee.
See related post: Guide on how to transfer Title of real property in the Philippines.