Due to the substantial sum required, purchasing property is traditionally seen as one of the major milestones a person can make in life. Yet unlike other purchases, real estate is typically not something you can buy by making a single swift transaction.
Further costs related to the purchase are in addition to the property’s price. The price to transfer the land title is possibly the most significant factor in this regard. In this article, we’ll be discussing not only how much does transfer of title costs but also how the seller and the buyer are greatly involved in processing the transfer of land title here in the Philippines.
Paying Fees During A House and Lot Purchase
Both the seller and the buyer must pay fees in order to transfer the land title. The following are typical costs that buyers and sellers incur when transferring a land title:
SELLER PAYS FOR:
- Unpaid property taxes.
- 6% of the selling price on the deed of sale or the zone value, whichever is larger, in capital gains tax.
BUYER PAYS FOR:
- Registration Fee is 0.25% of the selling price, the zonal value, or the fair market value, whichever is larger.
- Transfer tax is calculated as 0.5% of the selling price, zone value, or fair market value, whichever is larger, in the provinces and as 0.75% in Metro Manila.
- 1.5% of the selling price, the zonal value, or the fair market value, whichever is larger, is the documentary stamp tax.
- Other costs incurred throughout the registration process.
How much does transferring a land title cost in the Philippines?
The cost of transferring a land title is the sum of all these charges and levies. The typical title transfer service fee for properties within Metro Manila is 20,000, while the fee outside of Metro Manila is 30,000. Often, the rate includes the expense of the transfer agent’s food and gas.
Brokerages, brokers, and title transfer companies all have different rates. As you can see, all of these taxes and fees may mount up very rapidly.
This arrangement is seen as commonplace. Although the Deed of Sale (also known as the Deed of Absolute Sale) has not yet been completed, in some situations the buyer and seller can nevertheless mutually agree on who pays for what during the negotiation stage. After the buyer has paid the Documentation stamps, transfer tax, and registration fees for the aforementioned Land Title Transfer, this document demonstrates the legal transfer of ownership of real estate property and is sent to the Registry of Deeds for filing.
Working with professionals
As you can see, both the buyer and the seller may find the entire procedure and everything associated to be extremely burdensome. Since most purchasers are ready to spend millions on real estate, it might occasionally be worthwhile to work with a business that specializes in land title transfers to relieve the buyer and seller of some of the strain.
Also, this guarantees that the transfer is carried out correctly and entirely.
And since we are on the topic of transferring land titles, let us have a quick overview of how we can make sure that the title is clean. Buying land is an expensive investment, and you don’t want to waste your money by dealing with a counterfeit land title or choosing a property that can result in legal action. As a result, you want to confirm that the land you bought has a clear title.
7 Tips For Guaranteeing The Integrity Of Your Title
Here are several tried-and-true methods for guaranteeing the integrity of your title:
1. VISIT THE DEEDS REGISTRY
The best way to confirm a title’s legality is to check for its existence with the Registrar of Deeds (RD) where the land is located. In the Philippines, each city or province has its own RD, which is where all of the registered lands’ original titles are kept. On the other hand, owners of registered lands are given an Owner’s Duplicate Certificate that corresponds to the original title on record with the RD. As a result, a buyer may quickly confirm the validity of the title by contrasting it with the RD’s only original title on record.
2. VERIFY THE PAPER
The sole printer of property title forms is the Bangko Sentral ng Philippines. The paper used in the judicial form has many security features and is 50% cotton and 50% chemical wood pulp with colored fibers. The paper has a texture similar to that of a bank check. Fake title forms are frequently produced of inferior paper or materials that resemble cartolina.
3. VISIT THE LAND REGISTRATION AUTHORITY
Another government agency where you may confirm a title’s legality is the Land Registration Authority (LRA). Land registration certificates and registration decrees are issued by the LRA, a national government agency.
5. SPEAK WITH A LAWYER
Consult with a qualified attorney and pay him or her to carry out due diligence research before closing the sale to make sure the land you’re buying is problem-free.
6. VERIFY THE LAND TITLE DOCUMENT’S DESCRIPTION OF THE PROPERTY ONCE MORE
Even if the title is genuine, you should be sure that nobody else has any claims to the property. For instance, the property can already have a mortgage on it or be the focus of a legal dispute. Be that there are no entries below “Memorandum of Encumbrances” on the back or following pages of the title, or if there are, the encumbrances have already been canceled.
7. VERIFY WHETHER THE REAL ESTATE TAX IS CURRENT
Visit the Assessor’s Office in the municipality where the property is located to make that the seller’s property taxes are current.
Read Also: Tax Declaration to Land Title: A Simple Guide
Things to keep in mind when buying a property
Keep these tips in mind as there is nothing more important when buying real estate holdings in the Philippines than verifying the legality of the title or making sure there are no restrictions or legal claims on the property. This is because bogus land titles and fraudulent land transactions are on the rise in the country.
Bria Homes also suggests the following reminders:
- Keep in mind that your land title is evidence of your ownership. You cannot own the land if there is no land title. Thus, always verify that the seller has a valid land title before making a purchase.
- As soon as you can, digitize your land title. This will not only secure all of your upcoming transactions but also speed up any transactions involving the real estate covered by the digital land title. The Land Registration Authority will simply convert your documents into a digital version, making the digitization procedure rather simple.
- Complete the necessary paperwork. Since these will be your main tool to protect you from potential legal or tax issues.
As you can see the process of transferring titles is laborious. Title transfers from the buyer to the seller and real estate closings are technical processes that call for close coordination with the necessary governmental agencies. Legal issues related to ownership and tax compliance could arise if these procedures are not followed. That is why you should seek the advice of professionals, such as qualified real estate brokers and attorneys, to make sure their real estate transactions are handled correctly and swiftly.
Written by Noelyn Kate O. Cabrera