When buying a new home, two different types of property title exist, which will denote your property ownership on completion of the sale – the Transfer Certificate of Title (TCT) or the Condominium Certificate of Title (CCT).
In most cases, when Filipinos wish to buy a new home, they will need to access homebuyer loans in the Philippines.
Sometimes, to make buying the property more affordable or to buy a larger home, Filipinos purchase a property in partnership with another party.
Deciding whether to buy as an individual or in partnership with another is a difficult choice. Do you wish to maximize your buying potential in a partnership or maintain sole ownership of a smaller property?
In both cases, buying the property will require different modes of holding the title deeds of the property in question. There are three main modes of holding the title deeds that refer to the buying options – the sole ownership and tenancy in common (TIC) or the joint tenancy with right of survivorship (JTWROS).
1. Sole ownership
When buying a home by yourself and in your name alone, the licensed notary transfers the TCT or CCT into your name. If you access additional finance to buy the property, there are two options for the transfer of the title deed.
Depending on your bank or provider of loans in the Philippines, they will make a choice on how to allocate the title deed to you. Sometimes, the transfer of ownership will pass from seller to the bank. In other cases, the title deed will transfer into your name with annotations . The latter option is the most usual method.
When dealing with loans in the Philippines to buy your new home, it is standard practice for the lender to keep possession of the title deed until you have paid the loan in full; at which point, they will remove any annotations and the title deed will transfer into your possession or to that of your legal representation. When buying as an individual, there is no potential for future issues with the ownership and rights to sell.
2. Joint Ownership
On the other hand, joint ownership is a type of ownership wherein property rights do not necessarily depend on who will live there. Nevertheless, the matter of who lives in the property may have bearing on the transfer of the title deeds. The different types of dual tenancy will affect the rights you have to sell, rent, or bequeath your property in the future.
a. Joint Tenancy With Right Of Survivorship
This mode of title ownership is traditionally an equal division of property rights. However, in this instance, you cannot bequeath your percentage of the property to an heir on your death. The ownership of the property will revert to the partner on the death of a tenant.
If you wish to leave your share of the property to children or a spouse, this is not the option for you. Your investment in the property will revert to your partner’s interest and leave nothing for dispersal between heirs on your death. This may be a viable option if you are buying in partnership with parents or other older relatives, as it negates inheritance and capital gains tax.
b. Tenancy in Common
Tenancy in common is not necessarily a direct division of ownership; the ownership is not always divided by the proportion of investment by each party. The main difference in title ownership is that when either party dies, the share of the property is theirs to will to whomever they choose. This could result in several members of the two families sharing title rights to the property and this can only end happily through the sale of the property and division of the proceeds.
A partnership contract is essential for the success of any joint tenancy arrangement, so you need to think about the legal repercussions of buying with joint/common tenancy in mind. Neither your potential partner wants the other selling nor their share in the property to someone else without your permission.
So, how do you want to hold the title to the property you wish to buy? Are you eligible for the home loans in the Philippines on your own or will you need a partner to qualify? It is a very tough choice to decide how to hold the title to a property when purchasing a new home. If you cannot afford the repayments as a solitary buyer, do you have the option of buying with a partner or a family member?
In joint title ownership, trust in your partner is a vital ingredient to a successful partnership. Creation of a partnership contract will ensure that you can make alternative arrangements in the event that either of you need to sell in order to maintain your finances.
The way to choose the appropriate manner by which to hold title on a property when buying a new home is to ensure that you understand the ramifications of all the options. It is also to balance the pros and cons of each option to find the mode of title ownership suitable to you. Nevertheless, the variables in the decision-making process rely entirely on your personal circumstances. Choose your options or your partners carefully to ensure you’re able to enjoy your new home.