Buying a home is every Filipino’s big dream and achieving it requires equally big efforts. This a good reason why you should know your obligations and understand the important things that you need to do in acquiring a house and lot. The ultimate goal is to secure your ownership and protect the property as well.
Here is a quick guide on how to buy a house and lot in the Philippines.
Before proceeding to the article,
note that there are differences in the process and steps when buying from a
private owner compared to buying from a home developer. The steps below
pertain to acquiring a house and lot from a private owner. Advantages in buying
from a home developer are discussed separately below.
1. Set the specific criteria of the house and lot that you desire.
Determine the size of the area that you want, your ideal location, and set a budget. When you want value at a reasonable price based on your budget, you may look for an affordable house and lot listing and compare properties. There are also townhouses for sale that are strategically situated in preferable locations. It is similarly important to decide how you are going to get the funds to buy the property.
2. Verify the authenticity of the Owner’s Duplicate Certificate
If you are interested in a property that met your criteria, the next thing that you need to do is to verify the authenticity of the Owner’s Duplicate Certificate that the seller presented. This proof of ownership can either be an Original Certificate of Title, which is the first title that is issued on the land, or the Transfer Certificate of Title which is issued subsequently. You just need to secure a photocopy of this document to verify its authenticity in the Registry of Deeds (ROD). You will be able to know if the title is clean and free from limitations and legal claims on the property. You wouldn’t want to unknowingly acquire a property with an existing mortgage or under litigation. Thus, you are protecting yourself from fraudulent activities such as selling proliferated or fake land titles.
3. Hire professionals
Getting assistance from the list of experts below can help you with all the roundabouts in buying a property plus you can get things done efficiently. The next time you will make a purchase, you will know the basics on buying a house and lot in the Philippines from these experts.
- If you are not proficient with the entire process of buying a house and lot or you simply don’t have the time, hiring a licensed broker will be beneficial for you. They will facilitate appointment scheduling to securing the legal documents needed for the acquisition. They can also recommend more property options to choose from based on your criteria. They know a wide selection of properties such as house and lots and townhouses for sale. They can also negotiate specific charges and fees on your behalf.
- It is very important to conduct a land survey first before you purchase land. This is done by a land surveyor or a geodetic engineer. They will determine the exact boundary measurements to see to it that the land plot matches with what the seller is presenting to you. They can also determine if anyone else’s buildings or structures lie on the property. This is to make sure that the actual property will not have any complications in the future.
- You will also need the help of a Real Estate Attorney. As a buyer, you need to fully understand what the acquisition of the property would entail. Also, the lawyer’s office will assist you by preparing and filing legal documents needed in the purchase, and to make sure that the transaction that you and the seller have undertaken is legally binding. They will also ensure that all the proper and necessary procedures were followed during the acquisition of the property. Their presence is needed during the closing, where the payment is made by the buyer and the ownership is transferred.
4. Execute the Deed of Sale.
When you are convinced that the title is clean and it meets your criteria, you may now execute the Deed of Sale. This is signed by both seller and buyer to signify the transfer of the ownership of the property to the buyer when he completes the payment of the purchase price. This contract shall be drafted by the seller and will include all the details of the transaction undertaken. This document should be notarized to have the power when presented in a court of the authorities.
5. Pay fees and taxes.
Aside from the selling price of the property, you will also need to pay fees and obligations that arise from the transaction. Fees include Deed of Sale registration fees and notarial fees. The following are the taxes that you will pay during and after the transfer of ownership to your name:
- Documentary Stamp Tax (DST) – This type of tax is charged on the agreements and documents needed in the sale of the property. This is computed as 1.5% of whichever is highest among the selling price, fair market value, and zonal value of the property. For example, you acquired an affordable house and lot with a selling price of 1.2M, a fair market value of 1.25M, and a zonal value of 1.1M. You will use the fair market value of 1.25M as the base amount multiplied to 1.5%, you will pay Php18,750 for the DST.
- Transfer Tax – This tax is implemented on any method to transfer the ownership of a real estate property. The rate may vary from 0.5% - 0.75% of either the total selling price of the property or its zonal value, whichever is higher.
- Real Property Tax – After the ownership of the property has been transferred to you, you will assume its obligations as well. RPT is paid every year. The rates vary based on the property’s location. If it’s situated in Metro Manila area, the RPT is 2% of the property’s assessed value while it is 1% in provinces. You can pay at the City or Municipal Treasurer’s Office where the property is located.
6. Transfer of Ownership
After the buyer paid the Capital Gain Tax and all other obligations are paid, the Bureau of Internal Revenue will issue the Certificate of Authority to Register which will be submitted to the Registry of Deeds. They will now process the transfer of ownership to your name.
As mentioned earlier, the above steps apply when you are buying from a private owner or seller. When acquiring a property, you may also buy directly from a home developer. Doing so presents many advantages, like not having to hire professionals mentioned above and not having to worry and process the taxes related to the purchase by yourself. The Transfer of Title is also processed by the Developer. Buying your property directly from a house and lot developer, like Lessandra Homes, lessens what could be a tedious process.
To know the process on how to buy and lot in the Philippines from a house and lot developer, read the Buyers Guide.
Investing in a property is not an overnight decision - it takes preparation but, it will be worth it. Always see to it that you are protected from fraud and legal claims. Be observant and prudent. Do not rush and review all the details of the transaction. Once you got through all of this, congratulations! You are now the owner of, once, only a dream home.
Lessandra is an affordable house and lot developer. For an array of affordable house and lots for sale in the Philippines, check out Lessandra Project Listing. For more information on how to own a house and lot in the Philippines, visit the Lessandra Guides and FAQs section!
Sources:
https://filipinolawgroup.com/land-title-issues-philippines/
https://www.ykclaw.ph/real-estate-lawyer-manila-philippines/
