Real Estate Transaction Responsibilities

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What type of payment must be made using Manager’s Checks?

Payments to both the Seller and Government Entities for applicable taxes (correct)

Payment to Government Entities for applicable taxes only

Payment to the Seller only

Any payment related to the property transfer

Which document primarily certifies that all required taxes have been paid by the Seller?

Tax Declaration

Certificate Authorizing Registration (CAR) (correct)

Deed of Sale

Transfer Certificate of Title

What penalty applies if the Transfer Tax payment is not made within 60 days of notarization?

Corresponding penalty applies (correct)

Loss of title rights

Increased Registration Fees

Cancellation of Deed of Sale

Who typically handles the payment of Capital Gains Tax and Documentary Stamps Tax?

Selling Broker Signup and view all the answers

Which document must be submitted to the Register of Deeds to process the new Tax Declaration?

Photo of the property Signup and view all the answers

Which of the following is NOT typically required to be turned over to the Buyer’s Broker for processing?

Certificate of Ownership Signup and view all the answers

What needs to be verified with the City Treasurer regarding Business Tax?

Whether it must be paid at all Signup and view all the answers

Which document signifies the original ownership of land in a sale?

Transfer Certificate of Title Signup and view all the answers

What happens upon request regarding the memorandum of sale for the seller's title?

It serves as notice to third parties until plan approval. Signup and view all the answers

What is the seller's obligation if no new certificate has been issued yet?

The seller must still deliver the land as required by law. Signup and view all the answers

Under the new rule (RA 93), when can a new owner register additional transactions regarding a portion of land?

After the subdivision plan is approved and new title is issued. Signup and view all the answers

What must happen if there is a discrepancy between the subdivision plan and the original plan?

The Director of Lands must report the issue to the Regional Trial Court. Signup and view all the answers

What must be noted on a new certificate of title when transferring property?

Any existing encumbrances or claims at the time of transfer. Signup and view all the answers

Which statement is true regarding cancelled encumbrances?

They do not need to be included in the new title. Signup and view all the answers

What continues to bind future purchasers of land in regards to restrictions?

Any restrictions annotated on the title. Signup and view all the answers

Why can a buyer not be forced to pay until the subdivision plan is approved?

The exact area and ownership of the lot are uncertain. Signup and view all the answers

What is the main right retained by the vendor in a 'pacto de retro' sale?

The right to redeem or repurchase the property Signup and view all the answers

In a 'pacto de retro' sale, what happens to the legal title of the property?

It transfers to the vendee at the time of the sale Signup and view all the answers

What must the vendee do regarding existing lease agreements made by the vendor?

Respect the lease agreements made in good faith Signup and view all the answers

What is the default period for redemption in a 'pacto de retro' sale if not otherwise specified?

Four years from the date of the contract Signup and view all the answers

How is the seller's right of redemption documented in a 'pacto de retro' sale?

It is recorded in the memorandum of encumbrances on the certificate of title Signup and view all the answers

If Maria sells the land she purchased from Juan to Pedro, what must Pedro do?

Respect Juan's right to reclaim the land Signup and view all the answers

What type of title does the seller hold in a 'pacto de retro' sale after the transaction?

Equitable title allowing reclamation Signup and view all the answers

What does the vendor's right of redemption entail after a 'pacto de retro' sale?

Reclamation of the property free of any charges Signup and view all the answers

What is the general default period for redemption in a pacto de retro sale if no specific agreement is made?

Four years Signup and view all the answers

If the explicit agreement states the vendor can repurchase 'at any time they have money', what is the maximum allowable duration for this agreement?

Ten years Signup and view all the answers

How long does a vendor have to initiate an action to recover title or possession after the right to repurchase has lapsed?

22 years Signup and view all the answers

What happens if the agreed period for repurchase expires while a civil case regarding the sale is pending?

The vendor may still repurchase within 30 days of the court's judgment Signup and view all the answers

When does the period for the vendor's right to repurchase begin?

From the execution of the sale Signup and view all the answers

What is required for a period of repurchase to be legally considered as an express stipulation?

Specific mention of the duration Signup and view all the answers

In a pacto de retro sale, what must happen if the original period for repurchase lapsed during litigation?

The vendor can still repurchase after litigation ends within 30 days Signup and view all the answers

What happens if no period is explicitly agreed upon for a pacto de retro sale?

The period defaults to four years Signup and view all the answers

What is required when selling a condominium unit to ensure compliance with foreign ownership regulations?

A certificate of management from the condominium corporation Signup and view all the answers

What is the minimum period during which lands covered by the Comprehensive Agrarian Reform Act cannot be sold?

10 years Signup and view all the answers

Before issuing a new Transfer Certificate of Title (TCT), which document must the Bureau of Internal Revenue issue?

Certificate Authorizing Registration Signup and view all the answers

What is the capital gains tax rate levied on the sale of real estate classified as a capital asset?

6% Signup and view all the answers

If a real estate sale transaction is executed outside the Philippines, what is required for it to be formally recognized?

Authentication by a Philippine embassy Signup and view all the answers

What additional expense is levied at 1.5% of the sale price during a real estate transaction?

Documentary stamp tax Signup and view all the answers

Which of the following legal considerations is related to the transfer of encumbered or mortgaged property?

Consent from the bank or creditor Signup and view all the answers

What requirement must be fulfilled when dealing with conjugal property in the Philippines?

Both spouses must consent Signup and view all the answers

Study Notes

Payment Process

Payment for both the seller and government entities should be made with manager's checks.

Seller Responsibilities

Seller provides original copies of the following documents:
- Transfer of Certificate of Title (land) - Owner Copy
- Condominium Certificate of Title (condominium)
- Tax Declaration (Declaration of Real Property)
- Tax Clearance (both land and improvement)
- Tax Clearance (condominium unit and parking if applicable)
Seller is responsible for paying the broker's fees.

Broker Responsibilities

Selling broker handles payment of capital gains tax, documentary stamp tax, and filing documents with the Bureau of Internal Revenue (BIR) until the Certificate Authorizing Registration (CAR) is released.

CAR

The CAR authorizes the transfer of title to the new buyer.
It serves as clearance that all applicable taxes have been paid.

Buyer Responsibilities

Buyer's broker handles payment and processing of the following:
- Transfer tax to City Treasurer's Office
- Business Tax to City Treasurer's Office
- Registration Fees to Register of Deeds
- Entry Fees - Register of Deeds
- Notarial Fees - Register of Deeds
Buyer's broker submits all required documents to the Register of Deeds.

Subdivision Plans

A memorandum for notice can be added to the seller's title upon request, serving as notice to third parties.
Once approved, a new title is issued for the sold portion, and the seller's title remains effective for the unsold part.
The seller must still deliver the land per the Civil Code, even if a new certificate has not been issued.
The buyer cannot be forced to pay until the subdivision plan is approved.

Discrepancies

If there is a discrepancy between the subdivision plan and the original plan that may affect adjoining landowners, the Director of Lands must report the issue to the Regional Trial Court (RTC).
The court resolves the dispute and addresses all related questions regarding the subdivision plan.

Ownership Limitations

Previously, a new owner could deal with an undivided portion of land (e.g., selling or mortgaging) even before a subdivision plan was approved.
Now, after a sale is annotated on the former owner’s title, no further transactions regarding the portion can be registered or annotated until the subdivision plan and technical descriptions are approved and a new certificate of title is issued.

Encumbrances

Any existing encumbrances or claims on the property at the time of transfer must be noted on the new certificate of title unless they have been discharged.
Cancelled encumbrances do not need to be included in the new title.
Restrictive covenants continue to bind future purchasers.

Contract to Sell

The vendee may mortgage the property or impose other charges on it.
The vendor (seller) retains the right to redeem the property within the stipulated time.
Upon redemption, the vendor is entitled to receive the property free of any charge or mortgage imposed by the vendee after the sale.
The vendee must respect any lease agreements entered into by the vendor.

"Pacto de Retro" Sale

The "pacto de retro" allows the seller to sell their property but retains the right to redeem or repurchase the property within a specified period and for a specific price.
The legal title transfers from the seller to the buyer, but the seller holds an "equitable title."
The seller's right to redeem is noted in the memorandum of encumbrances on the certificate of title.

Redemption Period (General Rule)

In the absence of a specific agreement, the period for redemption is automatically set at four years from the date of the contract.
If there is an explicit agreement, the period cannot exceed ten years.

Redemption Period (Limitations)

Any action to recover the title or possession of the property after the right to repurchase has lapsed must be initiated within 22 years.
This period is significant enough not only to bar the action but also to grant the possessor ownership through prescription.

When Redemption Period Starts

The period for the vendor’s right to repurchase begins from the date of execution of the sale, not from its registration.

Other Considerations

The sale of condominium units must come with a certificate of management from the condominium corporation.
Lands previously covered by the Comprehensive Agrarian Reform Act cannot be sold for a period of 10 years after the issuance of the Certificate of Land Ownership Award (CLOA).

Documenting the Transaction

The Deed of Absolute Sale must be executed as a public instrument, which means it must be notarized.

Taxes and Fees

A capital gains tax of 6% is levied on the sale of real estate classified as a capital asset.
A 12% value-added tax (VAT) applies to the sale of ordinary assets.

Additional Expenses

Documentary stamp tax: 1.5% of the sale price.
Local transfer tax: 0.5% of the sale price.
Registration fee: 0.25% of the sale price for the issuance of a new title.

Legal Considerations

Real estate titles include annotations of all registered encumbrances.
Some restrictions may be found in the tax declaration.
Owners may also be bound by contractual restrictions.
Other restrictions, such as building height and use, are usually reflected in the title’s technical description.

Special Requirements for Land Transfers

Philippine law requires the consent of both spouses when dealing with conjugal property.
If one spouse fails to consent, the sale or encumbrance is considered void.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers the responsibilities of sellers, brokers, and buyers in a real estate transaction. Understand the necessary documentation and payment processes required for smooth transactions. Test your knowledge on the roles of each party involved and the significance of the Certificate Authorizing Registration (CAR).