Buying real estate in the Philippines. You have to be very careful when making real estate investments in the Philippines. Here are a few suggestions for doing your Philippine real estate due diligence.
- FORECLOSED PROPERTY. There are many complicated legal issues involved in buying foreclosed property. If the foreclosure was not handled properly you may lose the property and have no recourse to the seller. If you decided to buy foreclosed property, make sure you have a trusted, experienced attorney.
- TITLE. Make sure the seller is the owner of the property as shown on the title. Ask for ID. It’s not unknown for persons who don’t have full (or any) ownership to try to sell real estate. Get the seller to give you a copy of the title, a copy of the survey plan, and a copy of the latest tax declaration. Take the copy to the Register of Deeds and ask to see the master copy and make sure both agree. Make sure that the copy the the seller gives you has the same annotations on the back as the one at the register of deed. Verify that title is clean – meaning the property is not mortgaged (no liens & encumbrances on the property). You can see that at the back of the title with the heading “Encumbrances”. This page must be empty if you are told that the title is “clean”. But sometimes the space for the technical description of the property on the front page of the title is not enough and the description of the property is continued on the “Encumbrances” page, this is of course all right.
- TAX ASSESSOR. Check with the tax assessor to see if the tax files agree with the Registrar of Deed’s files. A property title with home or any permanent building improvement will have a counterpart pair of tax declarations, one for the land and the other for the improvement. Bring the photocopy of tax declaration to the Municipal Assessor (if property located in municipality) or City Assessor (if property located in city) and request a Certified True Copy of Tax Declaration. If the property is currently or long past mortgaged or encumbered, one will see that “stamped” in the Certified True Copy of Tax Declaration. If the property is clean, meaning not mortgaged or encumbered, compare the photocopy with the Certified True Copy of Tax Declaration. If the entries are not the same, ask the Assessor the reason for the discrepancy.
- TAX MAP OFFICE. Bring Certified True Copy of Title to the Tax Mapping Office. This is the office where archives of lot plans and vicinity maps of properties located in a province. Request copies of lot plan and vicinity map.
- SURVEY. Make sure that the land described on the title is really the land that you are buying. If there is any question about this, hire a private land surveyor or a geodetic engineer to mark the boundaries of the property you are buying.
- ACCESS. If the property does not front on a public road, make sure of the validity of any easement or right-of-way to the property.
- MUNICIPAL TREASURER/BACK TAXES. Bring the Certified True Copy of Tax Declaration to the Municipal Treasurer (if property located in municipality) or City Treasurer (if property located in city) and request a Real Property Tax Computation. This is to find out if the property owner is up to date with real property tax payments.
- PRESCRIPTIVE EASEMENTS. Check for any existing prescriptive easements or existing uses such as water lines, sewer lines, power lines, paths, trails or roads not noted on the title.
- NEIGHBORS, BARANGAY CAPTAIN. Talk to everyone around the property, neighbors, etc. Talk to the barangay captain. Talk your fool head off to anyone walking near the property and see if they have any claims or info.
- VACANCY. Check to make sure no one is living on the land. If they are, getting rid of them can be a major headache and/or expense. If anyone is living on the land make it the responsibility of the seller to deliver the land vacant. After closing, take steps to ensure that the property stays vacant.
- If in a subdivision, any underlying problems, encumbrances which could impact your property?
- IS PUBLIC WATER/SEWER AVAILABLE? If not, how will these be arranged. Is landline telephone service available? What about Internet access? Is DSL available? If too far from the nearest cell tower, wireless Internet may not work. If this is important to you (and it is to most foreigners) ask Smart or Globe to check the signal strength before buying.
- OUTSTANDING BILLS. Seller must provide proof of payment of outstanding electric, water, telephone, Internet bills. Otherwise, the utility company will require you to pay any outstanding bills before giving you, the new owner, service.
- IS DSL AVAILABLE? Check on PLDT. SmartBro as backup. (No Globelines. Checked that.)
- CAPITAL GAINS TAX. Legally, CGT is the responsibility of the seller but who pays the CGT is part of the purchase negotiations. The seller may get satisfaction out of getting the buyer to pay and may be willing to concede on other issues.
- TITLE. Property should be titled to both the Filipina wife and the foreign husband. Those who claim that land must or should be titled only in the name of the Filipina wife, should note that the courts in various cases have accepted the fact that land was titled in one name only, as being evidence of the separate nature of the land holding.
- REGISTRATION AND DELIVERY OF TITLE. Ask your attorney for a proposed closing statement. Make sure that your attorney handles title registration and that all fees and documentation needed for registration are in your attorney’s hands at closing.
- LEGAL REPRESENTATION. Hire an experienced real estate attorney to represent you. NEVER agree to use the seller’s attorney to represent you. Try for a 2% flat fee.
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