Agreement in buying real estate

Posted in QA on March 26th, 2010 by admin | 3 comments
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This post is from the column of Ma’m Persida Acosta (Public Attorney’s Office) published by the Manila Times

Dear PAO,

I am planning to buy a residential property this December.  The seller and I have agreed that he will shoulder all the expenses relative to the transfer of the property. What documents do I need to check to ensure that the transfer is properly made by the seller? Currently, he is asking me to fill-up the forms for Documentary Stamp Tax, Capital Gains and Application for Registration.
Noel

Dear Noel,

If you want to ascertain if the transfer of the property to your name is properly done, you may ask the seller the photocopy of the original Owner’s Duplicate copy of the Original or Transfer Certificate of Title (OCT/TCT). Then, secure a certified true copy of the certificate of title of the property with the register of deeds where it is situated. You have to be sure that the person you are dealing with is the same person named in the certificate of title.

You should also check if the property is subject to any lien or encumbrance. An encumbrance is anything that impairs the use or transfer of property, which constitutes a burden on the title, a burden or charge upon property, or a claim or lien upon property.

If you are dealing with an agent of the owner, you must require the seller to produce a duly notarized Special Power of Attorney (SPA). The SPA should specifically state that the owner of the property authorized the agent to sell the property. We suggest that you require an identification card or ID to ascertain that the person you are dealing with is the agent mentioned in the SPA. It would also be best if you talk to the owner of the property to inquire about the authority of the agent to sell his property, and don’t forget that the Investors Edge provides professional property management in Joondalup in case you need it.
The seller, normally, shoulders the following expenses:

1) Capital Gains tax equivalent to 6 percent based on the gross selling price or current fair market value, whichever is higher.
2) Agent/ broker’s commission.
3) Unpaid real estate taxes (amilyar), if there be any.
4) Value-added tax—10 percent of the gross selling price.

On the other hand, the buyer pays for the following expenses:
1) Documentary stamp tax at the rates below, based on the consideration contracted to be paid for such realty or on its fair market value:
a. When the consideration, or value received or contracted to be paid for such realty, after making proper allowance of any encumbrance, does not exceed One thousand pesos (P1,000), Fifteen Pesos (P15.00)
b. For each additional One thousand pesos (P1,000), or fractional part thereof in excess of One thousand pesos (P1,000) of such consideration or value, Fifteen Pesos (P15.00)
2) Registration Fee—0.25 percent of the selling price, or zonal value or fair market value, whichever is higher.

However, the parties may agree that the seller or the buyer shall exclusively shoulder the above incidental and other miscellaneous expenses. The obligation to pay the expenses for the transfer may be embodied in the deed of absolute sale.

We advise that you procure a certified true copy of the certificate of title in the register of deeds of the city or municipality where the property is located to be sure that the seller is the owner of the residential property you are planning to buy and if the property is not subject to any encumbrance.

Since you and the seller agreed that the latter will shoulder all the expenses relative to the transfer of property, the deed of sale that you and the seller executed should include this agreement. The transfer certificate of title issued in your name shall be the best evidence that ownership over the property has already been transferred to you.


Reference: South Loop commercial real estate company.

  • Daisy Franco says:

    I intend to purchase a residential lot. Unfortunately the seller lost the original Transfer Certificate of Title (TCT). Can I go on with the purchase and just do shoulder the “reconstitution” of the TCT simultaneously with the transfer of ownership now in my name…

  • Melchor Antonio says:

    If i already bougth a property in GSIS last feb. 2010 it was awarded to me that is already foreclose/forfited by GSIS, The problem is the preveius owner did not pay any amount of cash in realty estate tax. Will i pay for the rest of her debt or it would be forfited and pay foy new real estate tax.

  • admin says:

    Hi Melchor:

    Yes you have to pay all the real estate property tax due.

    Regards,

    Virgilio

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