Buying a house is not an easy undertaking. Once you have the money and the Deed of Sale, the process of purchasing additional premises doesn't end there. One of the most important stages would be to transfer the land title from the seller's name to the buyer's name and that is you.
That is the only time that the ownership will be officially established whenever a new land title is granted. Nothing is really "yours" if you don't have the paperwork to prove that it is. In addition, don't take this process for granted as you may encounter technical, legal, and financial ramifications if the standards for the transfer of titles are not met in the Philippines.
Importance of Land Titles
You must have a land title to prove that you are the legal owner of a piece of property. In the Philippines, complete ownership requires the transfer of land title, whether you're purchasing a house or merely a plot of land.
Buyers of real estate are expected to have a thorough knowledge of this procedure as well. It's important for real estate brokers and sellers to understand the steps involved in transferring the title from the prior owner to the new one. In the event that you're a property buyer, be sure to communicate this to the property seller and to your broker or agent.
But in case you prefer to process it yourself, anybody who wants to handle the paperwork on their own must be aware of the subtleties involved and how to do so in accordance with the legislation.
Below are the steps that you need to follow in transferring a land title in the Philippines:
Step 1. Determine and prepare the needed requirements for a title transfer.
Have the original and at least two photocopies of the following requirements on hand:
1. Deed of Conveyance
Whether it is a Deed of Absolute Sale (DOAS), Extrajudicial Settlement of Estate with Sale (EJS with Sale), Deed of Donation, or the likes, make sure to prepare 8 copies.
Prepare an Acknowledgement Receipt of the amount received by the seller in sales transactions. Sellers that are in the business of developing or selling real estate regularly may be able to provide an Official Receipt.
It's important to check that the deed includes all of the parties' individual tax identification numbers (TINs). Names should be spelled exactly as they appear on the title deed, BIR TIN, and personal identity papers (IDs). Also, signatures should match exactly as they appear on both the title deed and the IDs.
It is necessary to notarize both the Deed of Conveyance and the Acknowledgement Receipt.
You need to prepare 8 copies because you have to submit them to the following:
- Notary Public
- Seller
- Seller’s Licensed Real Estate Broker
- Buyer
- Buyer’s Licensed Real Estate Broker
- Copy for submission to the various government agencies (Bureau of Internal Revenue, LGU Treasurer’s Office, Registry of Deeds, LGU Assessor’s Office)
- Copy for the Condominium Corporation or Homeowner’s Association Copy as Reserve
2. Photocopies of valid IDs of all signatories in the deed
All ID photocopies must contain three signatures from the ID holder. The IDs must be defined as current identification documents issued by an official agency displaying the picture and signature of the bearer.
3. The Notary Public's official receipt for the deed's notarization
4. Certified True Copy of the Title (3 copies)
The Registry of Deeds that has authority over the property will have this information for you.
5. Certified True Copy of the latest Tax Declaration
When requesting certified genuine copies of the most recent tax declaration, state that the records are requested for "BIR purposes". Please keep in mind that there are separate tax filings for the land and for the improvement such as house or building. The Tax Declaration is issued by the Assessor’s Office of the city or municipality where the property is located.
6. Tax Clearance
The city or municipality's Treasurer's Office issues these certificates. This confirms that the land and improvements to the property have been paid for in Real Property Taxes. Here are the requirements to get a Tax Clearance:
- Latest Official Receipts of Real Property Tax payments
- Previous Tax Clearance (if any)
- Notarized or Apostilled SPA and valid ID if the requesting party is not the registered owner
7. Clearance from the Homeowners Association (HOA) if the property, whether lot only, house and lot, lot with building, is located inside a subdivision or Management Certificate if the property is a condominium unit
HOA Clearance and Management Certificate confirm that the seller has paid all annual HOA/condominium fees. The certificate also reveals whether the property has been rented out or not. Please notarize this document.
8. Marriage certificate for married sellers and buyers
9. Birth certificate if applicable
In situations of Deeds of Donation or Extra-Judicial Settlements, this is necessary to verify the link between the donor and the recipient.
10. Certificate of No Marriage (Cenomar) if applicable
Needed if either the vendor or buyer is single. Note that the Cenomar is only valid for six (6) months after it is issued by the Philippine Statistics Authority (PSA).
11. For lots-only sale: Certificate of No Improvement
This may be obtained from the city or municipality's Assessor's Office.
12. 3” x 5” color photos of the property frontage or facade
For house and lots, the front of the home, with the house number, must be seen in the photograph.
For condominium units, the name of the building must be clearly evident in the photo. A picture of the front door of the apartment with the door number must also be visible.
13. Location map
You just need to print out a Google Map of the property.
14. Owner’s Duplicate Copy of the Title
For land-sale or house and lot, Transfer Certificate of Title (TCT) is needed. Meanwhile, for a residential condominium, office condominium, or parking unit, you must submit a Condominium Certificate of Title (CCT).
15. Special Power of Attorney to Process the Title Transfer
This is the case when you want someone else to handle the paperwork for you. The BIR, the LGU Treasurer's Office, the Registry of Deeds, and the LGU Assessor's Office will need this SPA. It's critical that the seller sign it.
Step 2. Submit all the necessary documents for tax computation.
The Deed of sale must be signed and notarized before it can be sent together with other needed papers for submission to the Bureau of Internal Revenue's Regional Office for your property's jurisdiction.
Your papers will be evaluated by a BIR official, who will then begin calculating the Capital Gains Tax (CGT-BIR Form 1706) or Creditable Withholding Tax (CWT-BIR FORM 1606).
To avoid penalties, be sure to pay your Capital Gains Tax and Documentary Stamp Tax (DST) within 30 days after the date of notarization, respectively. In order to prevent any fines or penalties, be sure to follow the rules in a timely manner.
Step 3. Pay the Required Taxes.
It's now time to go to the BIR-approved Authorized Agent Bank (AAB), where you'll pay the needed Documentary Stamp Tax, Value-added tax, and Capital Gains tax.
The following papers may also be required:
- The BIR's signed computation sheet.
- Deed of Conveyance which is a document indicating the transfer of ownership from the prior owner or seller to the buyer
- Three (3) copies of duly accomplished BIR Form 1706 for Capital Gains Tax signed by the seller
- Payment for Documentary Stamp: Three (3) copies of BIR Form 2000-OT filled out and signed by buyer
Step 4. Obtain a Certificate Authorizing Registration (CAR)
This document, called Certificate of Authorizing Registration or CAR is required under the National Internal Revenue Code. It is a documentation and proof confirming that all taxes associated with the sold property have been paid and settled accordingly.
In order to claim the CAR as scheduled, you must provide the following papers, each of which has already been stamped by the BIR:
- Deed of Sale – Original copy stamped received by the BIR
- Duplicate Copy of the CCT or TCT as received by the BIR
- Original copies of the Form 2000 (DST and the BIR Form 1706 CGT) stamped received by the BIR
- Tax Declaration for land and improvement
You'll get two (2) copies of the CAR when you claim it. While the brown copy is for you to keep, you'll need the blue copy for the transfer.
Step 5. You must turn in the CAR to your local treasurer's office.
This is the time when you need to submit your CAR to the Treasurer's Office to pay the Transfer Tax. After the conveyance deed is notarized, you have 60 days to pay the Transfer Tax. You will get a receipt from the Treasurer's Office as verification of payment of Transfer Tax after making the payment. Then you'll need to return to the BIR to get the Deed of Conveyance stamped.
The original Deed of Conveyance should be stamped, marked, and signed by the BIR and the Treasurer's Office after this step.
Step 6. To register your documents, take them to the Registry of Deeds.
Registering your property is now a must-do task. You may now send the following documents to the Registry of Deeds:
- Birth Certificate
- Certificate of No Marriage
- Certified True Copy of the Original Land Title
- Clearances from the Home Owners Association, if applicable
- Copies of IDs of all signatories
- Deed of Absolute Sale
- Deed of Conveyance
- Latest Tax Declaration
- Marriage Certificate
- Official Receipt of Notary Public used to notarize the Deed of Sale
- Tax Clearance
Once you've filed the necessary paperwork and paid the registration costs, you usually need to wait for two weeks before you can get the new land title under your name.
Step 7. Obtain a New Tax Declaration from the Office of the Local Assessor.
You may now apply for a New Tax Declaration Certificate from the Assessor's Office using the new title you received from the Registry of Deeds. According to the new tax statement, the new owner is responsible for paying all assessment costs.
You may be required to provide the following documents:
- A copy of the old title named under the previous owner
- Business Tax Receipt or Business Permit, if the previous owner is a corporation
- Certified True Copy of the New Tax Declaration
- Deed of Conveyance
- Duplicate copy and photocopy of the Certificate Authorizing Registration (CAR) from the BIR
- Original copy and photocopy of the new land title
- Photos of the property bought
- Tax Clearance
Things to keep in mind when you do the Transfer Land Titles process:
When doing the notarization
Notarized documents prove that both parties to a transaction appeared in front of a notary public and signed the document. As soon as the document is notarized, it becomes a publicly accessible record.
Contracts for the transfer of property must be Apostilled in the country where the signatory/signatories reside if one or more of the signatories are based abroad. A notarized Special Power of Attorney can be used to designate an Attorney-in-Fact to sign on behalf of the seller or buyer if they do not reside in the Philippines or are otherwise unable to attend the signing of the contract.
When obtaining SPAs or Special Power of Attorney
The most important things to keep in mind when obtaining SPA are:
- The Attorney-in-Fact should be explicitly defined in the SPA. Is it to be put up for sale? To rent? To take care of the seller's money? Or to deposit the money into the seller's account?
- When both the person awarding the SPA and the attorney-in-fact die, the SPA is null and void. In order to comply with these requirements, you may be asked to provide a "fresh" SPA - one that is less than a year old at the very least by the Bureau of Internal Revenue and the Registry of Deeds.
- There are certain organizations, such as financial institutions, that have a preferred format for the SPAs they accept.
Purchasing a land or a house and lot doesn't end with settling your payment for your home. You also need to accomplish a lot of things in order to absolutely transfer to you the property that you bought through a land title transfer process.
That is why it's crucial to have a property investment with the most trusted land providers or sellers.
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