Buying a property in the Philippines can be quite an overwhelming process, especially for first-time homeowners or investors. Let’s make your home buying or real estate property investing easier through this article that will teach you about the necessary documents you’ll be needing when buying a property in the Philippines.
The Buying Process
“PM (Personal Message) is the key” In the Philippines, we frequently encounter this statement when we see something being sold on the internet. The vendor requests that the buyer send a personal message via their inbox in order for the seller to disclose the item’s pricing.
Communication between the two parties shall take place; while you’re at it, it is vital to remember that as purchasers, we must exercise additional caution in completing due diligence because fraudsters and fraudulent persons are common on social media. Meanwhile, if the vendor is shown to be legitimate, then bargaining between the buyer and seller usually results in success and a contract of sale follows. Furthermore, it is essential to understand the documents necessary when buying property before, during, and after the transaction.
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Entering into a contract of sale is now a lot easier and more accessible thanks to the internet’s convenience. On the other side, the buyer must devote time to the transaction because there are several paperworks to be processed and filed with various government organizations. Furthermore, because there are two sorts of properties to consider: real and personal, it is critical to distinguish between the two.
Real property consists of land as well as the structures and fixtures that are permanently linked to it (Agricultural, commercial, industrial, residential, and utility property are all subject to real property taxes). While, Personal property is defined as everything that is not permanently attached to the land, such as equipment, furniture, tools, and computers.
This article will provide the documents required when buying real estate property for your easy reference.
What are the Documents You Need for Buying a Property in the Philippines?
After exploring this website, you are now contemplating acquiring a real estate property. As a person who works hard for your family, we don’t have much time to waste, especially when it comes to arranging the things needed for purchasing a property. So, to spare you time searching for the necessary paperwork when purchasing a real estate property, we have compiled a list of them below:
1. Intent to Purchase or Letter of Intent
Nothing rivals the delight of receiving love letters from our loved ones, especially when they arrive in the mail. Letters of intent, like love letters, are designed to express our genuine interest in purchasing such assets. The letter of intent is the first document needed when buying a property. It is a non-binding document that the buyer delivers to the seller at first.
This is a handwritten document with the following contents: price, initial deposit amount, mode of payment, period of due diligence (when the buyer assesses the property prior to the actual sale), and deadline for the seller to sign in accordance with the conditions. In other words, the letter acts as the buyer’s preliminary terms in such negotiations.
If the seller approves the buyer’s letter of intent, the document should be signed by the seller and reserve the indicated property for the buyer. Meanwhile, the buyer must pay earnest money or a down payment to secure the property’s hold within a defined time frame.
2. Reservation Letter
A Reservation Letter is another document needed when buying a property. Because the adage “first come, first served” is frequently observed, a reservation letter will protect you from losing your rights if another client claims reservation rights. This letter guarantees that the property you want to buy is off the market and has been reserved for you, barring other possible buyers. As a result, the seller will need you to pay earnest money, also known as the reservation fee, as confirmation of your willingness to purchase such property. A receipt should also be provided to show payment of the reservation fee.
Furthermore, the reservation comes with a specified timeframe, and if you do not meet the conditions to acquire the property, the buyer will most likely open it to the public to make room for another possible buyer.
3. Contract to Sell
After the property has been reserved exclusively for you, the following step is to complete the purchase transaction through a deed of sale. But before that, the buyer and seller should enter into a contract to sell, which includes land technical specifications and agreed-upon agreements between the parties. This document is supplied to buyers who choose to acquire a property through financing or installment payment methods.
4. Letter of Guarantee
Another letter on this list is the Letter of Guarantee which guarantees that the buyer had been approved for a loan from a bank or any financial institutions.
Did you know? Loans through Pag-IBIG are one option for Filipinos looking to purchase a home in the Philippines. It is a government-owned and managed organization with the goal of making affordable home loans available to all Filipinos. Following the submission of the requirements at Pag-IBIG, they will also give a Letter of Guarantee to the buyer if they are deemed to be eligible, complete, and in conformity.
5. Deed of Absolute Sale
A Deed of Absolute Sale is a real estate document that serves as documentation of ownership transfer. This document is registered with the Registry of Deeds and issued to the buyer. The buyer and seller sign this agreement, which should be notarized by a notary public. This is granted when the buyer has paid the following: the purchase price of the property, documentary stamp taxes, registration fees, and other charges associated with registering the sale of the property.
6. Certificate of Title
Only once complete payment for the property is made will a certificate of title be issued. This real estate document will act as the new owner’s final evidence of ownership of the property. This document comes in two varieties, depending on whether you purchased a house and land or a condominium.
A Certificate of Title when purchasing a house or land is also known as a Transfer Certificate of Title (TCT).
The other document is known as a Condominium of Certificate of Title (CCT) for condominium purchasers, and it entitles the building developer’s name to ownership.
The Registry of Deeds issues both records, depending on the location of the property for its RDO. This procedure might take three to six months.
7. Tax Declaration
When it comes to buying a property in the Philippines, Tax declaration is the final real estate document you’ll need. It is your job as a now-official property owner to pay its annual taxes, commonly known as Amilyar. The new owner must submit the new title and property picture to the RDO’s assessor for processing.
This list of paperwork required when acquiring a property may be tiresome to look at, but these documents will also act as your legal security in the event of any land claims or litigations. Remember to do sufficient due diligence to avoid fraud and the bother of time-consuming document processing.
Having a home to call your own is a significant milestone in our lives, so utilize this knowledge to your advantage in accomplishing one of your life goals. Check out Bria Homes for your possible affordable home options.