Requirements for Transfer of Land Title in the Philippines| TAXGURO

If you are looking to buy or transfer property in the Philippines, it is essential to ensure you understand the requirements for transfer of title. Aside from basic legal knowledge of real estate laws, other conditions must be fulfilled for a seamless transitory process. To help guide you through this intricate system, we have compiled a comprehensive piece outlining all the steps to transfer a land title in the Philippines.

In the Philippines, changes in ownership of real estate or land property happen regularly. For instance, the original owner of a tract of land agrees to sell the property to a buyer at an agreed price. The land buyer probably needs it to build a house, for agricultural purposes, or set up a business. The buyer can be an individual or a corporation. Once the seller cedes ownership to the buyer, the land title needs to be updated so the name of the new rightful owner will appear on the title. This article serves as a guide on the procedures and requirements for the transfer of title.

What is a Land Title?

A land title is a legal document issued by the Land Registration Authority in the Philippines. The paper represents a person’s or corporation’s ownership of a piece of land as described. The land title is the legal proof of real estate ownership, giving the owner full authority over the property, and can be used to evict illegal settlers from the property. It is also required to prove ownership if the owner wants to build a house or construct a building within the defined premises.

A land title is essential to establish proof of legal boundaries between properties. The owner can also use it to obtain loans or other financial transactions using the land title as collateral. Once a land title is registered under the name of its owner, it becomes a binding, conclusive document. It cannot be defeated by any adverse or notorious means since it is absolute proof of ownership of the property whose name appears on the land title document.

Thus, even when a person or group claims ownership of a piece of land by occupying the property for many years, said person or persons cannot be legally considered as owner without a land title under the individual’s or group’s name.

What is the Difference Between a Deed of Sale and a Land Title?

Although both deal with property ownership, they are both different. A deed of sale is a preliminary requirement and proof that a transaction has occurred between the property seller and the buyer, eventually leading to the issuance of a land title. Once the sale deed is signed and notarized, it becomes legal proof that both parties have fulfilled the sale requirements. The act of sale not only becomes one of the requirements for the transfer of title, but it is also a requirement for the Bureau of Internal Revenue (BIR) to review and process tax payments before the land title is given transfer of ownership.

In short, before any land transfer process or land title transfer can be done, the buyer and seller must first work on the sale deed.

What Are the Steps and Requirements for Transfer of Title?

Once the deed of sale is signed and notarized, the seller should start making arrangements with the buyer to facilitate the transfer of title process.

1. Prepare the requirements for the transfer of the title

Make sure to prepare the original copy and two photocopies of the following:
Notarized deed of sale.
Tax Identification Number (TIN) and ID of the buyer and seller.
Transfer certificate of title for a house or a lot.
Tax clearance.
Tax declaration.
Real property tax for the current year.
Photo of the property for sale.
Sworn Declaration of No Improvements to show that the sold property did not incur any improvements.
Special Power of Attorney (SPA) if the person signing is not the owner indicated in the Deed of Sale.
Certificate of the Philippine Consulate if the SPA was executed abroad.
Marriage certificate, birth certificate, or certificate of no marriage.
Vicinity or location map of the property.
Other documents that may be required by the Register of Deeds such as consolidation of ownership or mortgage settlement.
(For condos) Condominium certificate of title.
Management certificate from the condominium administration.
Certificate of non-tenancy from the condominium administration.

2. Submit all required documents for tax computation

As soon as the deed of sale is done, the buyer must submit it to the Regional Office of the Bureau of Internal Revenue (BIR), which has jurisdiction over the newly acquired property and other required documents. The BIR will then evaluate all documents and compute for the Capital Gains Tax (CGT-BIR Form 1706) or a Creditable Withholding Tax (CWT-BIR Form 1606). Remember that the Capital Gains Tax needs to be paid within 30 days from the date of notarization. The Deed of Sale Tax (DST) must be paid on the nearest 5th day of the month after the notarization date. These should be complied with to avoid penalties and fines.

3. Pay the required taxes

From here, proceed to the Authorized Agent Bank duly accredited by the BIR and pay the required Documentary Stamp Tax, Value Added Tax, and Capital Gains Tax. You need to prepare the following documents:

Signed computation sheet from the BIR.
The deed of Conveyance document indicates the ownership transfer from the previous owner to the buyer.
Three copies of the duly filled out BIR Form 1706 for Capital Gains Tax signed by the seller.
Three copies of filled out BIR Form 2000-OT to pay for the Documentary Stamp signed by the buyer.

4. Obtain a Certificate Authorizing Registration (CAR)

The National Internal Revenue Code mandates the Certificate Authorizing Registration (CAR) as a tax clearance and proof that all taxes and the sold property have been settled accordingly. To claim the CAR, prepare the following documents that have been received and stamped by the BIR:

Original copy of Deed of Sale.
Duplicate copy of the CCT or TCT.
Original copies of Form 2000 (DST) and Form 1706 (CGT).
Tax declaration for land and improvement.

Two copies of the CAR will be provided: The blue copy is for the transfer use, and the brown copy is the personal copy for the new owner.

5. Submit CAR to the Local Treasurer’s Office

At this stage of the transfer of title requirements, possession of the CAR means you’re almost at the finish line. Submit the CAR to the local Treasurer’s Office for the Transfer Tax. This Transfer Tax should be paid within 60 days after the Deed of Conveyance has been notarized. After payment, a receipt will be provided by the Treasurer’s Office as proof of payment. Bring the Deed of Conveyance to the BIR to be received and stamped. Thus, the Deed of Conveyance should be received and stamped by the Treasurer’s Office and BIR to make it legal and binding.

6. Submit all documents to the Registry of Deeds for registration

This is now the main registration stage for the property at the Registry of Deeds, so you will be submitting the following from what you previously prepared:

Deed of Conveyance
Deed of Absolute Sale
Copies of IDs of all signatories
Official receipt of Notary Public used to notarize the Deed of Sale
Certified True Copy of the Original Land Title
Tax Clearance
Latest Tax Declaration
Clearances from the Homeowners Association (If applicable)
Birth certificate
Certificate of No Marriage or Marriage Certificate (Where applicable)

After submitting the documents mentioned above and paying the registration fees, the waiting period is usually two weeks or 14 working days before the new land title is released.

7. Secure a New Tax Declaration from the Local Assessor’s Office

After securing the new land title, secure a New Tax Declaration Certificate from the Assessor’s Office. The new owner must pay all assessment fees under the new tax declaration. You will also need to submit the following:

Original copy and photocopy of the new land title.
A copy of the old slip under the name of the previous owner.
Deed of Conveyance.
Certified True Copy of the New Tax Declaration.
Business Tax Receipt or Business Permit if the previous owner is a corporation.
Duplicate copy and photocopy of the Certificate Authorizing Registration (CAR) from the BIR.
Tax Clearance.
Photos of the newly acquired property.

Property ownership in the Philippines is complicated, especially regarding transferring land titles to new owners. However, each document should cover a specific legal aspect of selling and acquiring real estate property.

Conclusion

Purchasing and transferring property in the Philippines can be exhausting and time-consuming, but it does not have to be. You can confidently navigate the process by familiarizing yourself with the legal regulations involving land titles and understanding your responsibilities as a buyer or seller. As our blog post outlines, many hidden fees associated with such transactions must be accounted for before initiating an agreement. The more research you do upfront, the better prepared you will be to handle any unexpected related costs or surprises. Hopefully, this blog post has provided some helpful insight into how best to proceed with a legal real estate transaction in the Philippines. If you heed our advice, we hope your experience turns out to be smooth sailing!