9.10.2019

Buying Land In The Philippines Part 2: Deed of Absolute Sale

Buying Land In The Philippines Part 2: Deed of Absolute Sale



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Disclaimer


This is the second part in the series about buying land in the Philippines. As always, nothing you read here is to be taken as legal advice or professional guidance. This is our personal experience that we are sharing with you. So caveat lectorum.

Preparations Before Creating A DoAS 


First, I need to be certain that the person(s) selling the land actually has/have the full and legal right to do so. Are they the owner? Do they have legitimate Special Power of Attorney (SPoA) to act on behalf of the owner(s)? Are they one owner among many with the other owners being clueless about our pending deal? You better know before you find out the hard way.

As stated in Part 1, you may obtain a copy of the approved survey map from the Land Management Bureau (LMB) and a copy of the land title from the Land Registration Authority (LRA). Obtain and study these documents before you agree to or sign anything.


Second, I need to know if there are any right-of-way (RoW) issues with the land. These can usually be found drawn on the map and annotated on the title. Sometimes they only appear as a title annotation. Sometimes they exist only as an understanding between the landowner and those who believe that they have the RoW. In such cases, you as the new land owner might find yourself in a touchy situation with people who believe that they have a right to cross or otherwise occupy some part of your land and they just might have a case. So be careful in this respect.

Third, I need to know if there are any liens or encumbrances on the title. These should be noted on the title itself.

Fourth, I really need to know if there are any future road widening or other public works projects that might impact the land I am interested in buying. You could end up buying a property with a house on it that gets demolished for the road widening. It happens. 

Fifth, before I sign on the dotted line I want to know if the property has delinquent municipal taxes. You can discover delinquent taxes by checking with the Municipal Assessor's Office. You will also discover the name of the person who has been paying the taxes.

There are probably a lot of other things that I cannot think of at the moment, but the last thing that I would check up on is whether or not the land has an agricultural tenant. This caveat pertains to agricultural land of course. In the course of buying the land you are required to file an Affidavit of Non-Tenancy with the Department of Agrarian Reform (DAR) in order to obtain a DAR certificate that is required by the LRA for titling. This affidavit is obtained from the local Barangay Captain. 

If you get to that point and find out that there is a tenant the bad news is that you have probably already spent a lot of time and money. 

To be certain that there is no tenant there are steps that can be taken. First, just ask the seller. In addition, it is imperative to make a personal inspection of the property and I have to say this because some people do in fact buy site unseen. The tenant will be living on the property in their own house and tending the land.  

Drafting The DoAS


If no survey was necessary, then the land buying process begins with the Deed of Absolute Sale (DoAS). If a survey is necessary or if the buyer wants to do a relocation survey as a precaution/precondition, then the DoAS might be prepared before, during or after survey completion - depending upon individual circumstances. The buyer or seller may prepare their own DoAS and have it notarized or they can pay an additional fee to their attorney who can prepare the document and notarize it.  You can check our earlier post on Notaries in the Philippines for suggestions on finding an attorney to notarize your documents and I have also provided a example Deed of Absolute Sale.

The fact that the lot is untenanted should be noted on the DoAS, as it is on the sample I provided a link to above. I also have a sample of the Affidavit of Non-Tenancy.

When we drafted our DoAS we placed my name as "married to" my spouse who is listed as the buyer. This is done even though I, as a foreigner, cannot buy the property. When the title is created by LRA the owner will be listed exactly as buyer is noted upon the DoAS complete with my name as "married to" the buyer. This is important for compulsory heirship purposes briefly mentioned in Part 1 and which will be mentioned again in the future.

Within the first line of the fourth paragraph of the sample DoAS you may notice the "Psd-xx-xxxxxx" item. This is the Subdivision Plan number that is assigned by LMB when the plan is approved at the end of the survey process. You can make a deed of sale before the survey is totally complete but your deed of sale will not contain a perfect and complete description of what you are buying without the Psd# and also the Technical Description that is also produced in the latter end of the process. You may be able to get the Technical Description earlier from your surveyor, but the PSD# will not be available until final approval of LMB. It would be best to wait until everything is finished and final just to be sure that nothing will change. Again, this is just our experience and your mileage may vary.

Note that all concerns I mentioned previously such as liens, encumbrances, tenancy are disavowed (or affirmed as the case may be) within the text of the example Deed of Absolute Sale. It would be nice if this was a 100% guarantee that nothing unexpected can crop up, but nothing is guaranteed 100%?

Special Power Of Attorney And Taxation


At some point in the process you might find yourself in need of obtaining or assigning power of attorney. We used Special Power of Attorney (SPoA) when my wife processed land as the buyer on behalf of a relative. I have included an example of the Special Power of Attorney document that we used. 

One final item that I want to mention before closing this post is taxation. This can bite you. The next step in this process will be a trip to the Bureau of Internal Revenue (BIR) where you will pay taxes due. You must act quickly to get these taxes paid because you may have as little as five days to do so or you may have to re-execute your DoAS. Taxation and more will be detailed in Part 3.

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