Re-blogged with permission from Lamudi.
Real estate transactions can often become intimidating, not only because they involve large sums of money, but also because you’re faced with a lot of legal papers. In property titles alone, there’s plenty of complicated stuff to deal with. When you’re not familiar with the legalese, it’s hard to push deals with confidence, especially knowing that the legal repercussions can throw you into a money pit and a downward spiral of anxiety.
In these situations, however, there’s only one key solution: go to the experts. Knowledgeable and experienced, they can give you the best advice. With that, here are some of the frequently asked questions property seekers have on complicated title matters, answered by a conveyancing professional:
Q: Is it ok to do the notarization and transferring of title with a public attorney or should it be done with a private attorney?
Public attorneys usually administer oaths only in relation to their functions. Hence, they do not have the authority to notarize commercial documents outside of their official duties. For the notarization of deeds and instruments relating to sale of property, we recommend that you go to a notary public.
A notary public is a lawyer who has been duly commissioned and authorized by the Regional Trial Court to perform notarial acts, including Acknowledgments for deeds of sale or transfer of property.
One of the basic requirements for notarization of documents is personal appearance of the person/s executing the documents. Both parties should also be present and appear before the notary public for the notarization to be valid.
Q: How do I make sure a pasalo transaction is legitimate before I pay for the down payment and process the transfer of title?
One way to protect yourself in pasalo or assumed balance transactions is to execute a Deed of Assignment between you and the borrower. In this case, all the rights, title, and interest of the borrower will be automatically transferred to you. However, in some instances, this needs approval from the bank, developer, or creditor.
Also, there is a Capital Gains Tax that must be remitted to the BIR for the rights assignments, which is equivalent to 6% of the BIR zonal value of the property or fair market value of the property issued by the Municipal or City Assessor, whichever is higher. However, before you can execute a Deed of Absolute Sale and transfer the title under your name, the remaining outstanding loan balance must first be settled.
Q: How risky is it to use the land title as a collateral for a loan?
If the loan that is secured by the property is not fully paid, the lender can foreclose on the property. The property can then be sold at a public auction and the proceeds from which would be applied to the outstanding loan obligation. You might lose ownership over the property if the loan obligation will not be settled.
Q: What happens to my property if I fail to remove the real estate mortgage annotations attached to it despite the payment having been completed?
If the real estate mortgage (REM) is still annotated on the title it would appear that the property still has an existing encumbrance or claim by a third party. An encumbrance can affect the transferability of the property and restrict its free use. If an interested buyer does due diligence and sees the REM annotation, he might think twice or lose interest in buying the property because of the annotation.
Also, if you sell the property, the Registry of Deeds will not transfer the title of the property to the buyer unless the REM annotation is cancelled. The buyer might even sue you for legal damages if the title will not be transferred to his name.
Caution and discernment are necessary when navigating real estate transactions. You’ll be facing a lot of paperwork, most of which carry legal consequences that will cost you financially when you don’t do proper research or consult the right people.
If you have a specific concern on your property title, talk to conveyancing professionals at Conveyance Realty Services Inc. With their team of legal and technical experts, as well as liaison officers, you can rest assured that you’re getting the best advice and services. You’ll be able to handle property deals without any trouble.
This article was first published in Lamudi: Q&A: Common Land Title Concerns on Pasalo, Notarization, and Collaterals
About Hardy Lipana
Hardy is the President and CEO of Conveyance Realty Services, Inc., a company offering full range of services for land title transfer including title verification, advisory on modes of property transfer (sale, donation and inheritance), determination of transfer costs and securing new titles for the property transferred. A professional licensed real estate broker, Hardy has more than 15 years of experience in the land title transfer services business. He is well versed with the dynamics of government procedures and compliance requirements for registration of properties. Hardy has been featured on Philippine Realty TV and recently served as mentor on the show’s The Final Pitch aired by CNN Philippines. He is also a frequent resource speaker for Land Title topics in seminars and forums organized by various real estate organizations. Among his advocacies is to help educate property owners and real estate brokers on the different property laws and regulations.
Hardy completed his MBA at the Ateneo De Manila Graduate School of Business and obtained a diploma in Entrepreneurship at the Asian Institute of Management. He graduated with a bachelor’s degree in Business Administration major in Computer Applications from De La Salle University-College of Saint Benilde.
Image from Unsplash.