Do you intend to transfer one of your properties to a family member? Or is a family member giving you their property? How are properties transferred between relatives? In the Philippines, it is customary for parents to pass down property to their children during their lifetime as a form of either a gift or an inheritance from a previous generation. They sometimes do this so that the properties are transferred before they pass away. For the purpose of this write-up, when we mention ‘property’ we are referring to real estate property or real estate in the Philippines. There are different ways to donate your properties. Understanding deed of donation could be quite challenging. Just remember to read over all the details carefully. If you want a detailed guide on how both documents work, how they differ, and what to watch out for if you decide to use one or the other, this article got you covered.
Defining Deed of Donation or Contract of Donation
To understand the contract and deed in relation to donating properties, let us take a look at their definitions.
What is a Deed of Donation?
A Deed of Donation is a document that transfers the title of ownership of a property from one person (donor) to another (donee). This type of transfer does not require any consideration, meaning it is usually done free of charge. In most cases, donations between family members and close friends are made this way.
Read Also: How to transfer Land Titles in the Philippines?
In certain cases, Philippine legislation requires that donations of (a) immovable property (e.g., land, house) and (b) movable property (e.g., jewelry, car) worth as much as ₱50,000.00 be in writing and notarized. As a result, certain donations cannot be made orally because they are not legally binding. A Deed of Donation in the Philippines can be used to fulfill the legal requirement for a written document.
What is a Contract of Donation?
In the Philippines, the Contract of Donation is a formal legal document that needs to be signed by both parties involved in the transaction. This document will act as an agreement between the donor and the donee. It should be noted that both parties will be asked to provide personal information such as their names, addresses, and contact details. A contract of donation can also be used if you want to donate some property or other item to someone else without any monetary value involved in exchange for something else.
Is there a Difference Between the Deed of Donation and Contract of Donation?
Both the Deed of Donation and Contract of Donation are legal documents in the Philippines that enable the transfer of ownership of property from one person or entity to another. However, there are still many differences between a Deed of Donation and a Contract of Donation.
First, a Deed of Donation is a public instrument, while the contract is a private instrument. This means that the former can be found in the registry or office which had jurisdiction over it and is open to public inspection. A private document on the other hand cannot be inspected by anyone except by those who were involved in it.
One important difference between these two documents is that a Deed of Donation only concerns real property such as land, estate, building structures, and all properties related to realty like trees, plants, animals, and all accessories attached to them. On the other hand, a Contract of Donation can either refer to real or personal properties such as jewelry collections, furniture sets, or cash including stocks and bonds among others.
In terms of flexibility when deciding how much possession period before transferring ownership, a Contract of Donation has an advantage because it allows you to choose when you want your property transferred from your name or entity’s name into another person or entity’s name or if you would want your ownership transferred immediately after signing this document without any conditions whatsoever unlike with Deed of Donation where you have no choice but for your ownership to be transferred immediately after signing unless otherwise stated with prior agreement from both parties involved in this deed.
Advantages and Disadvantages of a Deed of Donation
A Deed of Donation is a contract given as a gift to a recipient. This document is used for the transfer of a real estate or other personal properties. It’s typically not applicable if the donor wishes to give money since this requires the donation to be made by check or cash. Like other legal documents, a Deed of Donation must be written in a formal language and signed by both parties in front of two witnesses, which can be anyone except the donor and donee. A lawyer may be consulted if there are any additional questions regarding the requirements for this type of contract. A Deed of Donation is then delivered to the registrar’s office, where it should be registered within 90 days after signing it by both parties and their witnesses. Once registered, no one can contest your donation anymore, even if you try to revoke it later on with another legal document called Deed of Revocation. Since it’s a public document, anyone has access to its information about who donated what property and who received them as donations.
Advantages and Disadvantages of Contract of Donation
The first disadvantage of a Contract of Donation is that it might not be allowed depending on the amount of donation. If the donation exceeds ₱50,000.00, then you are required to execute a Deed of Donation. In this case, this type of contract would not be applicable.
The second disadvantage of a Contract of Donation is that the donation might be revoked if you commit any kind of fraud or if your heirs are prejudiced in any way. This means that your heirs might not receive the thing that you donated should there be any issue regarding your property and its ownership.
The third disadvantage is that even though it has been stated in the contract, one cannot guarantee if the transfer of ownership actually happened with regard to the property being owned by the donor or donee. It will depend on whether or not a transfer certificate was executed.
While both documents can be used to convey an interest in real property, it is important to choose the correct document when you transfer properties in the Philippines. You should keep in mind that a Deed of Donation is usually permanent and that a Contract of Donation can be revoked or modified, with or without an additional contract of revocation or modification.
Additionally, you should remember that the donor has no duty to inform the donee about any defects in the donated property. Lastly, if you are still unsure about whether you should use a Deed of Donation or a Contract of Donation in the Philippines, it is best to seek legal advice from an experienced lawyer.
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Written by MC Sanchez