Guide to Buying a House in the Philippines
In real estate, buying a home can be dreadful for those who do not know the procedure. No one wants to go through a process that has indefinite steps and every phase has requirements that can make buying even more overwhelming. A real estate broker can spare you from the hassle of buying a property. If you already have a broker, follow this guide to make your property purchase trouble-free.
You, together with your real estate broker, will visit properties that match your requirements. Your broker gets in touch with property owners to schedule viewings. These properties may come from his own database, the listings of his co-brokers, and property portals.
Letter of intent
A letter of intent (LOI) is a document that you offer to the owner of the property that you want to buy. It declares your intention to purchase. Your real estate broker will help you draft the letter to assure that the terms and conditions are beneficial to you and the owner. An LOI contains details like the price, your special and specific requests to the owner, payment schemes, and schedule of payments.
Seller accepts the conditions
The property owner must sign the LOI to move onto the next process. A signed LOI seals your agreement and entails that the seller accepts the terms you have stipulated in the letter. Ultimately, the seller should no longer put the property on the market.
Pay for the down payment
Before you buy a house, ensure that you have the money for down payment and your broker knows the payment scheme the owner requires. Down payment is the initial upfront portion of the total amount of the property. Your broker must document every financial transaction and ensure that you know all the details about future payments.
Collect the legal documents
The owner must secure these necessary documents from the Registry of Deeds in preparation for the ownership transfer:
Certified True Copy of Transfer
Certificate of Title (Land)
Certified True Copy of Condominium
Certificate of Title (Unit)Certified True Copy of Condominium (Parking – if applicable)
Documents to be procured by owners or brokers from the Assessor’s Office
Certified True Copy of Tax Declaration (Land)
Certified True Copy of Tax Declaration (Improvement / Building)
Certified True Copy of Tax Declaration (Condominium)
Certified True Copy of Tax Declaration (Condominium parking, if applicable)
Real Estate Tax Clearance for Current Year
Certificate of Non-Improvement if property is bare and without structures such as a house or a building
The owner must also secure the following:
Certificate Authorizing Registration from the Bureau of Internal Revenue (BIR)
Original Real Estate Tax Receipts – Current Year
Lot Plan / Subdivision Plan
Sign and secure the Deed of Absolute Sale
You and the owner must sign the Dead of Absolute Sale once the property is paid in full. It legally transfers the ownership of the property to you; you are now the absolute owner of the property.
Settle fees and taxes
After the transfer, you and the seller must pay the following expenses:
Capital Gains Tax / Creditable Withholding Tax (whichever applies)
Documentary Stamps Tax
Notarize the Dead of Absolute Sale
To protect the contract from fraud, you must have it notarized. It makes the document public. More so, it can protect your property from third persons who might claim it in the future.
Seller turns over the original copies of the following:
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)
Pay broker’s professional fee
Upon the legal transfer of the property to you, you can now reward your real estate broker for his hard work. Although there are owners who wait until the Certificate Authorizing Registration (CAR) that is obtainable from the Bureau of Internal Revenue (BIR) before they pay their real estate brokers, it is still up to your discretion.
The service fee or commission a real estate broker receives is around 3 to 5% of the property value.
Certificate Authorizing Registration (CAR) is a document that legalizes the transfer of title to a new owner. It serves as a clearance the seller paid all the right taxes.
Broker processes the documents
Upon the release of CAR, your broker must handle the payment and processing of the following:
Transfer Tax payment to City Treasurer’s Office (must be paid within 60 days of notary otherwise, the corresponding penalty applies)
Business Tax to City Treasurer’s Office – if applicable (be sure to check with the City Treasurer where the property is located)
Registration Fees to Register of Deeds
Entry Fees – Register of Deeds
Notarial Fees – Register of Deeds
The broker must also submit the following requirements to the Registry of Deeds:
Deed of Sale
Certificate Authorizing Registration with four pages Tax Clearance
Original Transfer Certificate of Title / Condominium Certificate of Title
Original Tax Declaration
Tax Clearance – Real Estate Tax
Certificate of Management (condominium)Certificate of Non-Improvement (vacant lot)
Issuance of New Tax Declaration
To process the new Tax Declaration under your name, a certified true copy of the new title and a photo of the purchased property are needed upon the release of new Transfer Certificate of Title / Condominium Certificate of Title. It is the last step of ownership transfer. Finally, it terminates the obligation of the former owner to pay property taxes for the house you purchased.
Real estate brokers can answer real estate questions that you deem important, spare you from tedious paperwork, and help fast-track the buying process.