FREQUENTLY ASKED QUESTIONS:
Yes. You, together with a real estate broker, are welcome to visit any of our listed properties that match your requirements. We get in touch with the property owners on your behalf so that we can schedule a time for us to view the candidate properties.
A letter of intent (LOI) is a document that you present to the owner of the property that you want to buy or lease. It declares your intention to purchase or rent. An LOI contains details such as the price, your special and specific requests to the owner, payment arrangements, and schedule of payments. The property owner must sign and accept the LOI before moving onto the next steps. A signed LOI seals your agreement and entails that the seller accepts the general terms you have stipulated in the letter.
To ensure that the property you want to buy is reserved for you, you may choose to pay a down payment. The down payment is the initial upfront portion of the total sale amount of the property. Alternatively, you can also choose to pay option money. This is whereby you as a buyer reserve the property for a certain period so that it is not offered to other potential buyers. However, you must decide within that period whether or not you are to continue to buy that property. If you decide to buy the property, the option money that you paid becomes part of the total sale amount. If you do not wish to buy the property anymore, then the option money is forfeited.
It is recommended that you inspect the property you want to buy through the Register of Deeds of the city or municipality in which the property is located. This is to ensure that the property is legally documented and supported by authentic documents. The Register of Deeds will help you verify the authenticity of the property’s corresponding title and subsequently show you the names of the rightful current owners of the property as well as a summary of its legal history.
The owner must secure these necessary documents from the Registry of Deeds in preparation for the ownership transfer:
- Certified True Copy of Transfer Certificate of Title (TCT) or Original Certificate of Title (OCT)
- Certified True Copy of Condominium Certificate of Title (CCT, applicable only for condominium units)
- Certified True Copy of Condominium or Deed of Assignment (For Parking Slot units)
Documents to be procured by owners or brokers from the Assessor’s Office
- Certified True Copy of Tax Declaration (one each for every type of property such as land, improvement, condominium unit, etc.)
- Real Estate Tax Clearance for the Current Year
- Certificate of Non-Improvement if the property is bare and without structures such as a house or a building
The owner must also secure the following:
- Certificate Authorizing Registration from the Bureau of Internal Revenue (BIR)
- Original Real Estate Tax Receipts for the Current Year
- Lot Plan / Subdivision Plan
The deed of sale is an important piece of document which indicates that the transfer of property between the seller and the buyer has legally transpired. Apart from authenticating the document, the deed of sale should also include the seller and the homebuyer’s names, the number of the transfer certificate of title, the technical description of the property, and the sale price that both parties agreed upon. The document must also be notarized and should be then taken to the registry of deeds to be recorded.
Since the sale has not been fully realized until you have completed payment for your real estate property, developers and some sellers would often issue CTS to signify that the seller and buyer are bound to each other in an exclusive agreement. On the buyer’s side, there are instances wherein s/he can obtain the physical possession of the property from the seller and will gain full ownership and title upon completion of payment.
Generally speaking, the transfer fees and taxes must be paid for the transfer of the property to be fully effected. You, as the buyer, and the seller must pay the following expenses, agreeing to whom among you settles and pays each item:
- Capital Gains Tax / Creditable Withholding Tax (whichever applies)
- Documentary Stamps Tax
- Local Transfer Tax
- Registration Fees
Upon the legal transfer of the property to you, you can now recompense your real estate broker for his work. Although there are owners who wait until the Certificate Authorizing Registration (CAR) that is obtainable from the Bureau of Internal Revenue (BIR) before they pay their real estate brokers, it is still up to your discretion. In practice, the service fee or commission a real estate broker receives can range between 3 to 7% of the property value, usually depending on the circumstances and perceived value of the property.
Certificate Authorizing Registration (CAR) is a document that legalizes the transfer of title to a new owner. It serves as a clearance the seller paid all the right taxes.
After the release of the CAR, your broker must process the following:
- Transfer Tax payment to City/Municipal Treasurer’s Office (must be paid within 60 days of notarization of the Deed of Sale, otherwise, corresponding penalties would apply)
- Business Tax to the City/Municipal Treasurer’s Office – if applicable (be sure to check with the City/Municipal Treasurer where the property is located)
- Registration Fees Register of Deeds
- Entry Fees – Register of Deeds
- Notarial Fees – Register of Deeds
The broker must also submit the following requirements to the Registry of Deeds:
- Deed of Sale
- Certificate Authorizing Registration with four pages Tax Clearance
- Original Transfer Certificate of Title / Condominium Certificate of Title
- Original Tax Declaration
- Tax Clearance – Real Estate Tax
- Certificate of Management (if condominium unit)
- Certificate of Non-Improvement (if vacant lot)
To process the new Tax Declaration under your name, a certified true copy of the new title and a photo of the purchased property are needed upon the release of new Transfer Certificate of Title / Condominium Certificate of Title. It is the last step of ownership transfer. Finally, it terminates the obligation of the former owner to pay property taxes for the property that you purchased.
Prior to closing a deal with a developer, double check with your agent about all the charges in the transaction, especially those that might not be reflected in the price list and sample computation. Be sure to read all of the texts in these documents, including the fine print. These charges can include but not be limited to the following: processing fee, management fee, administrative fee, transfer tax, BIR registration, condominium corporation membership fee, water supply application fee, electricity application fee, installation charges, miscellaneous fees, etc.
It is best to plan well ahead when purchasing a property from the developer and buy a parking slot early on. Alternatively, you may choose to rent parking spaces from other owners in the building or go as far as to purchase one.
The law provides that only Filipino citizens are allowed to buy a landed property such as a vacat lot or a house. But this does not mean that owning a property for a foreign national is impossible. To some extent, foreign nationals and former Filipino citizens are allowed to purchase and have possession of properties in the Philippines, such as in the following instances.
- A foreign national is allowed to purchase condominium units as long as foreign ownership of condominium units in a single project does not exceed 40 percent.
- A foreign national can enter into a long-term leasehold agreement with a Filipino landowner of up to 50 years, with an option to renew of another 25 years. In addition, a corporation that is 60 percent Filipino-owned can enter into a leasehold agreement for an unlimited amount of time. The foreigners can then build and own the structure sitting on the leased property.
- A foreign national who is married to a Filipino citizen can purchase a land in the Philippines. However, the property can only be registered under the Filipino citizen’s name. In the event of death of the Filipino spouse, ownership of the land cannot be transferred to the foreigner, but he or she can either sell the property and keep the proceeds or pass it on to his or her legal heirs (e.g., children).
- Since corporations are considered legal entities under Philippine laws, a corporation duly registered in the Philippines can acquire real property for as long as the same corporation is 60 percent Filipino owned and has a minimum of five persons on its board. The corporation can also enter into contracts, acquire financing, and purchase and own land in the Philippines.
Applicable Law(s): Batas Pambansa Blg. 185 and the Foreign Investment Act of 1991 (Republic Act No. 7042, as amended by Republic Act No. 8179)
If you have paid at least two years’ worth of installment amounts on a property, you have the following rights in terms of default payment:
a.) Your developer should allow you to pay the unpaid installment amounts due without additional interest within the total grace period. Conditions are:
- Grace period is one month for every year-worth of installments.
- Can only be exercised once every five years of the contract’s life and its extensions, if there are any.
b.) Your developer should issue a refund if the contract was cancelled. Cancellation should take place 30 days after receipt of notice of cancellation or a demand of rescission of the contract by a notarial act from the developer and upon full payment of cash surrender value (CSV) to the buyer;
- Refund should be at the CSV of the payments of the property or equivalent to 50% of the total payments made to the developer;
- If you have made more than five years worth of installment payments, you are entitled to an additional refund worth 5% of total payments for every year of payments you made exceeding the five years, for as long as the total refund should not exceed 90% of total payments.
c.) If you do not have the capacity to make further payments to your property, you can sell your rights or assign the payment to another person. You can also ask for a reinstatement of your contract by updating your account within the grace period and before the actual cancellation of the contract. All must be done by notarial act.
If the total amount of installment payments is less than two years’ worth, your developer is obliged to give you no fewer than 60 days ahead of the installment date to perform your financial obligation. If you are unable to fulfill your financial obligation within the given grace period, your developer may cancel the sales contract after 30 days from the time you receive the notice or demand of cancellation of the contract.
Applicable Law(s): Republic Act No. 6552 – Realty Installment Buyer Protection Act
A Mortgage Redemption Insurance (MRI) is a form of protection for all parties, being you, the developer and financing provider, in case of the buyer’s death. This way, the life insurance covers the buyer’s mortgage obligation inspite of the insured’s death. If the buyer has an existing life insurance, the s/he may opt to assign that insurance as the MRI.
Applicable Law(s): Republic Act No. 9507 – Socialized and Low-Cost Housing Loan Restructuring Act of 2008
Except in the case if you are dealing with the property owner directly, the Real Estate Service Act requires that buyers purchase properties only through licensed real estate brokers. If dealing with a licensed estate salesperson, the agent would need to be registered with the Professional Regulatory Board of Real Estate Service and be assigned to a licensed real estate broker.
When dealing with an unlicensed real estate agent, there is no alternative except filing fraud-related charges against the posing agent or broker with the authorities the same way you would when filing a crime report. If, however, you have dealt with a licensed broker or a registered agent who has been unprofessional with his duties, you may report to the Professional Regulation Commission (PRC) as necessary.
The following rights of a homebuyer in a property sales agreement are:
- The right to demand the developer to deliver the title of the unit or property upon full payment;
- The right to get reimbursed with the amount you have paid in lieu of the agreement, including the amortization payments in case the developer fails to deliver the property in the agreed time. In this case, it is illegal for the developer to forfeit any installment payments in favor of the developer or owner.
Applicable Law(s): Presidential Decree No. 957 – Subdivision and Condominium Buyers Protective Decree
This law answers a homebuyer’s misconception about investing in a condominium unit or units once the building reaches past its 50th year. There is value for money in a condominium unit. Once your condominium building reaches past its 50th year, you, along with the rest of the unit owners, will have the right to decide on what to do with the entire building. This means that if majority of the unit owners of the condominium project decide to sell the property, being the building and land where applicable, you will get the appropriate share of the proceeds. You can also pass your right as a unit owner to your heirs.
Applicable Law(s): Republic Act 4726 – The Condominium Act of 1966
Address: Penthouse 3, Dacon Building,
2281 Chino Roces Ave. Ext., Brgy. Magallanes,
Makati City, Philippines 1231
Telephone: (+632) 744 1402 / 805 2302