If you are planning to sell your real estate property in the Philippines, you need to follow the correct procedures to avoid putting yourself into a nightmarish situation. While it does not take rocket science to sell a property, familiarizing yourself with the procedures is a must as there are some legal documents that you need to secure.
1. Sign A Contract of Agreement
The owner or broker will first discuss the terms of the sale, the commission and the fees. It is also necessary to scrutinize the documents to make sure that the land title meets the condition and free from encumbrances, liens and loans.
2. Issue an Authority to Sell
The purpose of the agreement or contract is to bind the broker as the agent of the owner providing the essential information and the amount of commission of the property that will be sold. The contract will also indicate if the owner will bestow upon the exclusive rights of the broker or a non-exclusive authorization to sell the property. The broker will secure the necessary documents before selling the property to ensure that there are no problems concerning the property. The broker will also check if the property is free from encumbrances. An encumbrance means that another person has interest in, right to, or legal liability on the property that either deter the process of transferring the title or diminish the value of the property.
3. Assessment of property by the broker
The broker will check the property as a way of assessing its current market value. It is important for the property to be appraised to determine its actual price. There are several factors that will be taken into account in determining the asset's value such as the area and location of the property.
4. Broker will offer and sell the property
Before a broker can market the property, it is important that the owner agrees on how to market the property. There are also some limitations that should be taken into consideration such as privacy when realising photos or disclosing the location online. Both parties must also decide on how to split the marketing costs such as communication and transportation expenses. Nowadays, the common practice is that the broker shoulders the expenses depend on the amount of the commission.
5. Viewing of the Property
Once the buyers get in touch with the broker or owner, they will proceed with viewing the property. The owner needs to make sure that the property is presentable to add value to the property.
6. Write a Letter of Intent or Offer to Buy
The buyer will also offer a Letter of Intent to the property owner declaring the intention to purchase. More often than not, the Letter of Intent is given at the first stage in documenting a sale of real property.
7. Acceptance of Owner
The owner accepts the Letter of Intent once signed. This indicates acceptance of the terms given by the buyer. Upon acceptance, the seller will be bound to promist not to offer the property to other buyers so long as the buyer does not breach the conditions in the letter.
8. Provide Earnest Money
The earnest money is provided as means of holding the property subject to the buyer's due diligence. It can be forfeited when there is default on the buyer's part. The money can also be used as refundable subject to deductions depending on the agreement that both parties made.
9. Preparation of Legal Documents
The legal documents must be secured in preparation of the transfer of ownership to the buyer.
These documents must be obtained from the Register of Deeds:
• Certified True Copy of Transfer Certificate of Title ( Land )
• Certified True Copy of Condominium Certificate of Title ( Unit )
• Certified True Copy of Condominium ( Parking – if applicable )
The owner or broker must procure these documents from the Assessor's Office:
• Certified True Copy of Tax Declaration ( Land )
• Certified True Copy of Tax Declaration ( Improvement / Building )
• Certified True Copy of Tax Declaration ( Condominium )
• Certified True Copy of Tax Declaration ( Condominium parking, if applicable )
• Real Estate Tax Clearance for Current Year
• Certificate of Non-Improvement if property is bare and without structures such as a house or a building
The Property Owner should also secure the following documents"
• Certificate Authorizing Registration from the Bureau of Internal Revenue (BIR)
• Original Real Estate Tax Receipts – Current Year
• Lot Plan / Subdivision Plan
A Deed of Absolute sale will be prepared and signed. The seller transfers ownerships of the property to the buyer. The Deed of Absolute Sale should be signed by both parties so it will be considered to be the absolute owner of the property. After which, both parties will proceed with the payment of expenses such as capital gains tax, documentary stamps tax, registration fees and transfer tax. Upon full payment of the purchase price and other expenses, the contact will be signed and ownership will be legally transferred to the buyer. It is important to notarize Deed of Absolute Sale so it will become a public document.
The seller will turn over the original copies of Transfer of Certificate, Condominium Certificate of Title, Tax Declaration, Tax Clearance for both land and improvement, Tax Clearance for condominium unit and parking. The buyer must also obtain a new tax declaration and when the new tax declaration has been released, the former owner's full obligation will be terminated.
