Legal documents are essential contracts that allow the buyer and the seller to have safety measures in purchasing a property. Because large amounts of money are usually involved, it is crucial to have these documents ready.
There might be some particular legal documents you might need depending on your region. However, when purchasing a property in the Philippines, you generally need to have the following papers:
Letter of Intent
The real estate buyer must submit this non-binding letter to declare their intent to purchase the property. All critical details must be included in the contract. This includes the price, quantity of the initial deposit, term of due diligence (a specified period during which the buyer assesses the property to see if it is fit to purchase), and form of payment.
An LOI should be kept basic, and the seller should be given a fair deadline to sign and agree to the terms. In some instances, the buyer should handwrite the LOI. However, some developers provide templates that buyers can copy and sign. Sometimes, you are the second person to give an LOI. When this happens, you can only purchase the property when the first bidder chooses to back out.
If you wish to reserve a specific property, you would need to write a reservation letter. Once signed, the seller agrees to the terms and will not sell the property to anyone else. They must also remove the property from the market.
However, buyers must note the end date of the reservation and the validity of the reservation fee. The down payment and other required documents are usually submitted after 30 days of paying the reservation fee. If a buyer fails to do so, the property will become available to other possible buyers.
Contract to Sell
This document contains all of the sale’ssale’s final terms and conditions. After leaving the down payment, the seller issues a contract to the buyer. The seller, however, retains the title of the property until the buyer pays the balance of the purchase price. When both parties have signed the sale contract, it must be notarized before it becomes legally binding.
Letter of Guarantee
This document is usually issued by a bank or financial organization. A consumer must apply for a letter of guarantee in the same way they would for a loan. If the bank is okay with the risk, they will provide the letter to the consumer in exchange for an annual charge.
The letter of guarantee verifies that the buyer took a loan to fund the purchase of the property. It also ensures that if the buyer defaults, the bank will cover all charges. In the Philippines, an email LOG suffices for the bank loan take-out. Therefore, the seller will release the loan take-out even if there is no physical or written LOG.
Deed of Absolute Sale
A Deed of Absolute Sale is given when the buyer has completely purchased the price of the property. It is also issued when you have acquired stamp taxes, registration fees, and other related expenditures. This document states that the seller entirely ceded all rights and interests in the property and has transferred them to the buyer. Both the buyer and the seller must also sign it. The Deed of Absolute Sale, like the Contract to Sell, must be notarized.
The Certificate Title is issued by the municipalities’Registry of Deeds. This document certifies an owner’s exclusive rights to a property. If the property is in a subdivision, a transfer of certificate title is provided. Meanwhile, if the property is a condominium, then a Condominium Certificate of Title is issued.
Also read: Benefits of Owning a Rental Property
The new owner will now have to get a tax declaration document from the City/Municipality Assessor’sAssessor’s Office. This document proves that the property’s tax liabilities have been transferred to the new owner.
Finally, whether you’re a buyer or a seller, always have due diligence before entering any deal. Make sure to perform a background check on the buyer or seller of the property. Read all of the information and provisions, including the fine print, carefully; they must all be consistent throughout all applicable documents. Then double-check that all documents are genuine, signed and/or notarized, and filed correctly for future reference.
Aside from these documents, you may also check out Thing to Remember When Selling Your Home.