A Philippine Legal Article

I. Introduction

Buying a condominium unit in the Philippines is already a document-heavy transaction. It becomes more complicated when the unit is not yet fully paid. This usually means the seller does not yet have a clean title, or the unit is still subject to unpaid obligations with the developer, a bank, Pag-IBIG, an in-house financing arrangement, or another creditor.

A buyer in this situation is not merely buying a physical unit. The buyer may also be assuming the seller’s contractual position, paying arrears, dealing with developer consent, settling loan balances, processing title transfer, removing mortgage annotations, or accepting risks tied to delayed turnover, unpaid taxes, association dues, and restrictions in the original contract.

The central rule is simple: do not pay substantial money for a condo that is not fully paid without knowing exactly who owns what, who must consent, what remains unpaid, whether the seller has the right to transfer, and how title will eventually be issued or transferred.

This article discusses the Philippine legal and practical issues involved in buying a condominium unit that is not fully paid.

II. What Does “Not Fully Paid” Mean?

A condo that is “not fully paid” may fall under several situations. The legal treatment depends on which situation applies.

A. The Unit Is Still Under Developer Financing

The seller bought the unit directly from the developer and is paying monthly amortizations or installment payments. The condominium certificate of title may not yet have been issued in the seller’s name. The seller may only have a Contract to Sell, not a Deed of Sale.

In many developer transactions, ownership does not transfer until full payment. Until then, the buyer may only have contractual rights.

B. The Unit Is Under Bank Financing

The seller may already have a title in their name, but the title is mortgaged to a bank. The bank holds the owner’s duplicate certificate of title, and the title has a mortgage annotation. The seller cannot deliver a clean title unless the loan is paid and the mortgage is cancelled.

C. The Unit Is Under Pag-IBIG Financing

The unit may be financed through Pag-IBIG. The seller has an outstanding housing loan, and the title is subject to a Pag-IBIG mortgage or other restrictions. Transfer may require compliance with Pag-IBIG rules.

D. The Unit Is Under In-House Financing

The developer may have financed the balance after the down payment. In-house financing often includes strict conditions on assignment or resale. The developer’s approval is usually necessary.

E. The Unit Has Unpaid Balance but Is Already Turned Over

The seller may already be occupying or leasing the unit even though the total contract price is not fully paid. The unit may have been turned over based on a payment threshold, but ownership may still not have transferred.

F. The Unit Is Pre-Selling and Not Yet Turned Over

The seller may be selling rights to a pre-selling unit before completion. In this case, the buyer is buying the seller’s rights under a contract, not a completed titled unit.

G. The Seller Is Delinquent

The seller may have missed payments to the developer, bank, Pag-IBIG, or condo association. The buyer must know whether the account is current or in default.

III. Key Legal Distinction: Sale of Unit vs. Sale or Assignment of Rights

The most important distinction is whether the seller is selling:

Ownership of the condominium unit; or
Rights under a contract to acquire the unit.

A. Sale of Ownership

If the seller has a Condominium Certificate of Title in their name and can transfer ownership, the transaction is usually a sale of real property. The buyer should receive a notarized Deed of Absolute Sale after payment, and title transfer should follow.

B. Assignment of Rights

If the seller has not fully paid the developer and no title has been issued in their name, the seller may not yet own the unit. The seller may only assign their rights under a Contract to Sell, Reservation Agreement, or similar contract.

In this case, the buyer usually needs the developer’s approval. Without consent, the assignment may be invalid, unenforceable, or not recognized by the developer.

C. Why This Matters

If the seller does not yet own the unit, the seller cannot transfer ownership. They can only transfer whatever rights they have, subject to the developer’s contract and approval.

A buyer who ignores this distinction may pay the seller but later discover that the developer refuses to recognize the buyer, the seller’s account is in default, or the unit has already been cancelled or resold.

IV. Documents to Request Before Paying

Before paying reservation money, earnest money, down payment, or assumption amounts, the buyer should request and review documents.

Important documents include:

Contract to Sell;
Deed of Sale, if any;
Condominium Certificate of Title, if issued;
Tax Declaration;
official receipts for all payments made;
statement of account from developer, bank, or Pag-IBIG;
loan documents;
mortgage documents;
authority to transfer or assign;
developer’s consent requirements;
condominium corporation clearance;
real property tax clearance;
association dues clearance;
turnover documents;
proof of seller’s identity and civil status;
special power of attorney, if seller is represented;
board or corporate authority, if seller is a corporation;
certificate authorizing registration or tax documents, if transfer is imminent;
proof that the unit is not subject to litigation or adverse claim;
latest utility bill status.

No single document is enough. The buyer should match all documents against one another.

V. Developer Consent Is Often Essential

For units not fully paid to the developer, consent is usually required before the seller can transfer or assign rights.

Developer contracts commonly prohibit assignment without prior written consent. The developer may require:

full payment of arrears;
payment of transfer or assignment fee;
updated buyer documents;
credit approval of the new buyer;
execution of deed of assignment;
cancellation of old contract and issuance of new contract;
payment of administrative fees;
settlement of penalties;
compliance with foreign ownership limits;
updated post-dated checks or payment arrangements.

A private agreement between seller and buyer is not always enough. The developer may continue to recognize the original buyer unless the assignment is approved.

VI. Risks of Buying Without Developer Approval

If the developer does not approve the transfer, the buyer may face serious risks:

The developer may refuse to accept payments from the buyer;
notices may continue to be sent to the seller;
the seller may cancel, modify, or assign the contract to another person;
the account may fall into default without the buyer knowing;
title may be issued in the seller’s name, not the buyer’s;
the buyer may be unable to occupy or lease the unit;
the developer may cancel the original contract;
the buyer may need to sue the seller to recover money;
the buyer may have no direct rights against the developer;
the unit may be resold to another buyer after cancellation.

Developer approval should be obtained in writing before or simultaneously with payment.

VII. Buying a Condo Under a Contract to Sell

Many Philippine condominium purchases from developers are documented through a Contract to Sell.

Under a Contract to Sell, the developer promises to sell the unit after the buyer fully pays the price and complies with conditions. Ownership usually remains with the developer until full payment.

If the original buyer sells before full payment, the transaction is usually an assignment of rights, not a direct sale of ownership.

A. What the Buyer Acquires

The buyer acquires the right to continue paying and eventually obtain title, subject to the developer’s approval and contract terms.

B. What Must Be Checked

The buyer should check:

total contract price;
amount already paid;
unpaid balance;
arrears;
penalties;
interest;
payment schedule;
financing status;
turnover date;
cancellation rights;
assignment restrictions;
Maceda Law implications;
developer charges;
title issuance conditions;
taxes and fees upon full payment.

C. Recommended Structure

The transaction should usually be documented by a Deed of Assignment of Rights or a developer-prescribed transfer document, with the developer’s written consent.

VIII. Buying a Condo Under Bank Financing

If the seller already has title but the title is mortgaged to a bank, the buyer must deal with the bank loan.

There are several possible structures.

A. Buyer Pays Seller, Seller Pays Bank

The buyer pays the seller, and the seller uses the money to pay the bank. This is risky if not controlled because the seller may fail to pay the loan.

B. Buyer Pays Bank Directly

The buyer pays the outstanding loan directly to the bank, and any excess goes to the seller. This is usually safer.

C. Loan Takeout or Loan Assumption

The buyer may apply to assume the seller’s loan or obtain a new loan to pay off the seller’s loan. This requires bank approval.

D. Simultaneous Closing

The safest structure is often a controlled closing where:

the bank issues a statement of full outstanding balance;
the buyer pays the bank directly;
the bank issues release documents after full payment;
the seller signs the deed of sale;
taxes are paid;
mortgage cancellation and title transfer are processed.

E. Bank Consent

If the title is mortgaged, the seller cannot simply deliver clean title. The bank must release or cancel the mortgage after payment.

IX. Buying a Condo Under Pag-IBIG Financing

For Pag-IBIG-financed units, transfer or assumption generally requires compliance with Pag-IBIG rules.

A buyer should not rely on a private “assume balance” agreement alone. Pag-IBIG may continue to treat the original borrower as liable unless the buyer is approved and substitution is processed.

Possible requirements may include:

updated loan statement;
buyer eligibility assessment;
loan assumption approval;
updated documents;
payment of fees;
title and mortgage review;
insurance updates;
execution of required Pag-IBIG documents.

A private arrangement where the buyer simply pays the seller’s Pag-IBIG amortization is risky. The title and loan remain under the original borrower unless formally transferred or assumed.

X. “Assume Balance” Transactions

“Assume balance” is a common informal term in Philippine real estate. It means the buyer pays the seller for the seller’s equity and assumes the remaining unpaid balance.

Example:

Total contract price: ₱5,000,000 Seller already paid: ₱1,500,000 Remaining balance: ₱3,500,000 Seller asks buyer to pay ₱1,200,000 for equity and continue paying the balance.

This may be legitimate if properly documented and approved by the developer, bank, or creditor. It is dangerous if done informally.

A. Common Problems

Seller has arrears;
buyer pays equity but developer refuses transfer;
seller remains borrower;
buyer pays monthly amortizations but title remains with seller;
seller dies, and heirs claim the unit;
seller later sells to another buyer;
buyer cannot get financing;
unpaid penalties are discovered later;
foreign ownership restrictions apply;
developer cancels the account.

B. Safer Approach

An assume balance transaction should include:

written statement of account;
creditor or developer consent;
notarized deed of assignment or sale;
clear allocation of payments;
escrow or controlled payment;
turnover of receipts and documents;
warranties against arrears and encumbrances;
authority to obtain account information;
remedies if approval is denied;
timeline for transfer and title issuance.

XI. Maceda Law and Unpaid Condo Purchases

The Realty Installment Buyer Protection Act, commonly called the Maceda Law, protects buyers of real estate on installment payments, including condominium units, subject to conditions.

It may become relevant when the seller is still paying the developer under installment terms.

A. Why It Matters

If the original buyer has paid at least a certain period of installments, they may have rights in case of cancellation, including refund rights depending on the length of payment. If the account is in default, the buyer should know whether the developer has already sent cancellation notices or whether the seller’s rights are at risk.

B. Buyer’s Practical Concern

A buyer acquiring rights from the original buyer should check:

how many years the seller has paid;
whether the seller is in default;
whether cancellation notices were issued;
whether grace periods have expired;
whether the contract has already been cancelled;
whether the developer will reinstate the account;
whether penalties must be paid;
whether any refund rights exist if the deal fails.

A seller cannot validly assign rights that have already been cancelled.

XII. Condominium Certificate of Title

A Condominium Certificate of Title, or CCT, is the title for a condominium unit. It represents ownership of the unit and the corresponding interest in common areas, subject to condominium law and restrictions.

A. If No CCT Is Yet Issued to Seller

The seller likely does not yet own the unit. The buyer is likely acquiring contractual rights.

B. If CCT Is Issued but Mortgaged

The seller owns the unit but the title is encumbered. The mortgage must be handled.

C. If CCT Is Clean

If the CCT is in the seller’s name and has no mortgage or adverse annotation, the transaction is simpler. But the buyer must still check taxes, dues, possession, and restrictions.

D. Annotations Matter

The buyer should review annotations on the CCT, such as:

mortgage;
notice of lis pendens;
adverse claim;
levy;
attachment;
restrictions;
encumbrances;
developer restrictions;
condominium corporation liens;
court orders.

An annotation can materially affect the buyer’s rights.

XIII. Due Diligence With the Registry of Deeds

If a CCT exists, the buyer should obtain a certified true copy from the Registry of Deeds, not merely rely on a photocopy from the seller.

The buyer should check:

name of registered owner;
technical description;
unit number;
floor;
project name;
encumbrances;
mortgage annotations;
adverse claims;
liens;
whether the title appears authentic.

For pre-selling or unpaid developer accounts where no title is yet issued to the seller, registry due diligence may be limited, but the buyer should still verify the mother title, condominium project, and developer documentation where appropriate.

XIV. Due Diligence With the Developer

For unpaid developer accounts, due diligence with the developer is crucial.

The buyer should ask the developer for:

confirmation that seller is the buyer of record;
statement of account;
remaining balance;
arrears and penalties;
assignment requirements;
transfer fees;
documents needed;
whether account is cancelled, active, or for cancellation;
whether unit is already turned over;
whether title is ready or pending;
whether there are restrictions on resale;
whether there are unpaid association dues or turnover charges;
whether buyer may continue under the same terms;
whether financing is approved or must be re-applied for;
written approval process.

A seller’s receipts are not enough. The developer’s current records should control.

XV. Due Diligence With the Bank or Creditor

If the unit is under loan, the buyer should verify the loan directly with the bank, through the seller’s authorization.

The buyer should request:

outstanding balance;
statement of account;
arrears;
interest and penalties;
prepayment charges;
mortgage release requirements;
timeline for release of title;
whether loan assumption is allowed;
insurance status;
title custody details.

The buyer should not rely only on the seller’s claimed balance.

XVI. Association Dues and Condominium Corporation Clearance

Even if the seller is current with the developer or bank, the unit may have unpaid condominium association dues.

Before buying, the buyer should request a condominium corporation or property management clearance covering:

association dues;
penalties;
utilities billed through admin;
special assessments;
parking dues;
move-in or move-out charges;
repair charges;
violations;
renovation deposits;
pending complaints.

Unpaid dues may become a serious problem for the new buyer, especially if the condominium corporation refuses clearance, access cards, parking access, or move-in approval.

XVII. Real Property Tax

Condominium units are subject to real property tax. In some cases, tax declarations may not yet be issued separately if the unit is new or title processing is pending. In other cases, the seller may have unpaid RPT.

The buyer should check:

tax declaration;
latest real property tax receipt;
tax clearance;
special assessments;
penalties;
whether RPT is still billed through the developer;
whether buyer must pay back taxes before title transfer.

RPT arrears can delay transfer and increase cost.

XVIII. Capital Gains Tax, Documentary Stamp Tax, and Transfer Expenses

When ownership is transferred through a sale of a titled condo, taxes and fees usually arise.

Common transfer costs include:

capital gains tax;
documentary stamp tax;
transfer tax;
registration fees;
notarial fees;
tax clearance fees;
condominium clearance fees;
mortgage cancellation fees;
broker’s commission;
developer transfer or administrative fees.

The parties should agree in writing who pays each expense.

In many Philippine transactions, the seller pays capital gains tax and broker’s commission, while the buyer pays documentary stamp tax, transfer tax, registration fees, and title transfer expenses. But parties may agree otherwise, subject to law.

For assignment of rights before title transfer, tax treatment and fees may differ. The buyer should ask for legal or tax advice because poorly structured transactions may create unexpected tax liabilities.

XIX. Deed of Assignment vs. Deed of Absolute Sale

The correct document depends on the seller’s rights.

A. Deed of Absolute Sale

Used when the seller owns the unit and can sell ownership.

Usually appropriate when:

CCT is in seller’s name;
seller can transfer title;
sale price is fully paid or payment is structured;
mortgage release is handled.

B. Deed of Assignment of Rights

Used when the seller does not yet own the unit but has rights under a contract.

Usually appropriate when:

seller has Contract to Sell;
developer still owns the unit;
buyer will assume payments;
developer approval is required.

C. Deed of Sale With Assumption of Mortgage

Used when seller owns the unit but buyer assumes or pays off a mortgage. Bank approval may be required.

D. Tripartite Agreement

Often safer where the developer, bank, or creditor must consent. The parties are:

seller or original buyer;
new buyer;
developer, bank, or creditor.

A tripartite agreement reduces uncertainty because the party controlling the account or title formally recognizes the transfer.

XX. Why a Notarized Private Agreement May Still Be Insufficient

Notarization helps prove authenticity and gives the document certain legal effects, but it does not automatically bind third parties who did not consent.

A notarized agreement between seller and buyer may not bind:

the developer;
the bank;
Pag-IBIG;
condominium corporation;
Registry of Deeds;
heirs of the seller in some disputes;
government agencies;
other claimants with better rights.

If the developer or creditor’s consent is contractually required, notarization alone is not enough.

XXI. Seller’s Civil Status Matters

The seller’s civil status affects validity of the sale.

The buyer should check whether the seller is:

single;
married;
separated in fact;
legally separated;
annulled;
widowed;
divorced abroad;
in a foreign marriage;
selling through attorney-in-fact;
corporation or partnership.

If the condo is conjugal or community property, the spouse’s consent may be required. A sale without required spousal consent may be void, voidable, or subject to challenge depending on the property regime and facts.

Even if the title appears in one spouse’s name, the property may still be conjugal or community property if acquired during marriage.

XXII. If the Seller Is Abroad

Many condo resale transactions involve OFWs or foreign-based sellers. If the seller is abroad, they may sign through a Special Power of Attorney.

A buyer should check:

whether the SPA is properly notarized or consularized/apostilled;
whether the SPA specifically authorizes sale or assignment;
whether the attorney-in-fact is properly identified;
whether the SPA covers the correct unit;
whether the price and authority to receive payment are clear;
whether the seller is alive and has not revoked the SPA;
whether spouse’s consent is included if needed.

Payment should not be made to a representative unless authority to receive payment is clear.

XXIII. If the Seller Is a Corporation

If the seller is a corporation, the buyer should request:

secretary’s certificate authorizing the sale;
board resolution;
articles of incorporation and latest general information sheet, if needed;
authorized signatory’s ID;
tax documents;
proof that sale is within corporate authority;
condominium title or contract documents;
proof of no corporate dispute affecting the property.

A corporate officer’s signature alone may not be enough without authority.

XXIV. If the Seller Has Died

If the original buyer or registered owner has died, the buyer must be careful. The heirs may need to settle the estate before valid transfer.

Possible requirements include:

extrajudicial settlement of estate;
estate taxes;
authority of heirs;
court settlement if there is dispute;
developer approval of heirs’ substitution;
title transfer from estate;
signatures of all heirs;
guardianship authority for minor heirs;
proof of death and relationships;
settlement of outstanding loan or balance.

Buying from only one heir without authority from all heirs is risky.

XXV. Foreign Buyers and Condominium Ownership Limits

Foreign nationals may generally own condominium units in the Philippines, subject to the constitutional and statutory limit that foreign ownership in a condominium project must not exceed the allowable percentage.

Before buying, a foreign buyer should confirm:

whether the project still has available foreign ownership allocation;
whether the developer or condo corporation will approve transfer;
whether the buyer may own the unit directly;
whether parking slots have different ownership rules;
whether financing is available to foreign buyers;
whether visa status affects documentation;
tax identification requirements;
remittance and source of funds documentation.

A sale may be delayed or refused if the foreign ownership cap has already been reached.

XXVI. Parking Slots

Parking slots in condominium projects may be separately titled, assigned, leased, or contractually allocated. A buyer should not assume the parking slot automatically comes with the unit.

Check:

whether the parking slot has a separate title;
whether it is included in the seller’s contract;
whether it is fully paid;
whether it can be transferred separately;
whether foreign ownership restrictions apply;
whether association dues are separate;
whether it is merely a leased slot;
whether it is subject to developer approval;
whether taxes are paid;
whether there are restrictions on resale.

If the parking slot is included, it must be clearly described in the sale or assignment documents.

XXVII. Turnover Status

The buyer should know whether the unit has been turned over.

A. Not Yet Turned Over

Risks include:

construction delay;
changes in turnover date;
pending punch list;
developer default;
buyer cannot inspect actual unit;
financing may not yet be finalized;
title may not yet be processed;
additional turnover charges.

B. Turned Over but Not Fully Paid

Risks include:

seller occupying or leasing without full ownership;
unpaid association dues;
unpaid utilities;
defects in unit condition;
unauthorized renovations;
turnover documents under seller’s name;
incomplete keys, access cards, or warranties;
penalties for late payments.

A buyer should inspect the actual unit whenever possible.

XXVIII. Occupancy and Possession

The buyer should confirm who currently possesses the unit.

Possible situations:

seller occupies the unit;
tenant occupies the unit;
unit is vacant;
developer has not turned over possession;
unit is used for short-term rentals;
unit is locked due to dues or violations;
possession is disputed.

If there is a tenant, the buyer should review the lease contract, security deposit, rent payments, and whether the tenant will vacate or continue.

A buyer should not assume that payment automatically gives immediate possession.

XXIX. Existing Lease or Tenant

If the unit is leased, important questions include:

When does the lease expire?
Who holds the security deposit?
Is the lease registered or notarized?
Are rent payments current?
Is the tenant aware of the sale?
Will rent be assigned to the buyer?
Are there unpaid utilities?
Is the tenant willing to vacate?
Does the lease allow pre-termination?
Are there short-term rental platform bookings?

These matters should be addressed in the sale documents.

XXX. Unpaid Utilities

The buyer should check electricity, water, internet, cable, and other utility accounts.

Unpaid utilities may prevent transfer of accounts or reconnection. The buyer should request:

latest Meralco or electric bill;
water bill;
admin billing statement;
internet account status;
proof of payment;
clearance from property management.

The sale agreement should state that all utilities up to turnover are for the seller’s account.

XXXI. Unit Defects and Inspection

For a completed unit, the buyer should inspect:

leaks;
cracks;
electrical outlets;
plumbing;
air-conditioning provisions;
windows;
balcony drains;
flooring;
cabinets;
fixtures;
water pressure;
fire safety devices;
unauthorized alterations;
pest issues;
compliance with condo rules.

If the unit is sold “as is,” the buyer should understand what that means. Hidden defects may still create disputes if the seller concealed them.

XXXII. Developer Restrictions on Resale

Some developer contracts restrict resale before full payment, turnover, or title issuance.

Restrictions may include:

prohibition on assignment without consent;
payment of transfer fee;
right of first refusal;
prohibition on advertising resale;
limits on foreign buyers;
requirement that account be current;
prohibition on transfer during lock-in period;
requirement to use developer forms;
payment of VAT or taxes;
forfeiture or cancellation provisions.

The buyer should read the original contract, not just the seller’s advertisement.

XXXIII. Broker and Agent Issues

A broker may facilitate the transaction, but the buyer should still verify documents independently.

Check:

broker’s license;
authority to sell;
commission arrangement;
whether broker represents seller or buyer;
whether information came from official records;
whether earnest money will be held in escrow;
whether receipts will be issued;
whether the broker is authorized to receive payment.

Never pay large sums to an unverified agent without written authority and official documentation.

XXXIV. Reservation Fee and Earnest Money

Buyers are often asked to pay reservation money to hold the unit.

Before paying, the buyer should know:

Is it refundable?
Under what conditions?
Who receives it?
Is there an official receipt?
Is developer or bank approval required?
What happens if approval is denied?
Is the amount applied to purchase price?
Is there a deadline for due diligence?
Is the unit taken off the market?
Are terms written?

A buyer should avoid paying non-refundable money before verifying that the seller can legally transfer the unit.

XXXV. Escrow Arrangements

Escrow is useful in unpaid condo transactions. It allows money to be held by a neutral party until conditions are met.

Escrow conditions may include:

developer approval;
bank mortgage release;
signing of deed;
delivery of title;
tax payment;
turnover of possession;
release of clearance;
cancellation of annotations;
issuance of new contract;
registration of transfer.

Escrow reduces the risk that the seller receives money but fails to complete the transfer.

XXXVI. Payment Structure

The payment structure should match the legal risk.

A. Full Payment to Seller Is Risky

Full payment to the seller before developer approval, bank release, or title transfer is risky.

B. Staggered Payment Is Safer

Payments may be divided:

reservation deposit after initial document review;
equity payment upon developer approval;
loan balance paid directly to creditor;
final seller payment upon execution of documents;
retention until title transfer or turnover.

C. Direct Payment to Creditor

If there is an outstanding loan or balance, the buyer may pay the bank or developer directly, with proper acknowledgment.

D. Retention Amount

The buyer may retain a portion of the price until taxes, clearances, and transfer documents are completed.

XXXVII. Warranties the Buyer Should Require

The seller should warrant that:

they are the lawful buyer or owner;
documents are genuine;
payments disclosed are accurate;
there are no undisclosed arrears;
there are no other buyers;
the contract has not been cancelled;
the unit is not subject to litigation;
there are no undisclosed liens;
association dues and taxes are paid up to agreed date;
spouse or co-owner consent is secured;
no lease exists except disclosed;
no unauthorized renovation exists;
seller will cooperate in transfer;
seller will sign all required documents;
seller will indemnify buyer for false representations.

Warranties should be written, not merely verbal.

XXXVIII. Remedies if the Seller Fails to Transfer

If the seller receives payment but fails to transfer the unit or rights, possible remedies include:

demand letter;
rescission of contract;
refund;
damages;
specific performance;
annotation of adverse claim, if legally available;
civil action;
criminal complaint for estafa, if fraud exists;
complaint against broker, if involved;
notice to developer or bank.

The appropriate remedy depends on whether the failure was simple breach, inability to obtain approval, concealment, double sale, or fraud.

XXXIX. Double Sale Risk

Double sale occurs when the seller sells the same unit or rights to more than one buyer.

Risk is higher when:

no title has been transferred;
developer has not approved assignment;
transaction is private;
seller retains original documents;
buyer does not notify developer;
buyer does not annotate rights where possible;
seller is financially distressed.

To reduce risk:

verify with developer;
sign documents with developer acknowledgment;
use escrow;
obtain original documents;
notify relevant parties;
register or annotate where legally possible;
avoid delayed transfer.

XL. Adverse Claim and Annotations

If a CCT exists, certain claims may be annotated under appropriate circumstances. An adverse claim may protect a buyer’s interest where registration of a deed is not yet possible.

However, annotation rules are technical. Not all rights under an unpaid contract may be annotatable, and improper annotation may be challenged.

A buyer should seek legal advice before relying on adverse claim annotation as protection.

XLI. Tax and Registration Timeline for Titled Units

For a titled condo sale, the usual sequence is:

notarization of deed of sale;
payment of capital gains tax;
payment of documentary stamp tax;
issuance of certificate authorizing registration;
payment of local transfer tax;
securing tax clearance;
registration with Registry of Deeds;
issuance of new CCT;
transfer of tax declaration;
update with condominium corporation.

Delays in tax payment may result in penalties.

XLII. Buying From a Seller With Only Receipts

A seller may show only official receipts and claim ownership. Receipts alone are not enough.

The buyer must ask:

What contract supports the receipts?
Who issued them?
Are they complete?
Is the account active?
Are there arrears?
Is the contract assignable?
Has the developer approved transfer?
Is there a title?
Is the unit already allocated?
Has the seller pledged or assigned rights to someone else?

Receipts prove payment, not necessarily transferable ownership.

XLIII. Buying From a Delinquent Seller

A delinquent seller may be trying to recover equity before cancellation. This can be an opportunity or a risk.

The buyer should determine:

total arrears;
penalties;
deadline for reinstatement;
whether cancellation notice was issued;
whether grace period remains;
amount needed to bring account current;
whether developer will approve buyer;
whether seller has refund rights;
whether unit has been reallocated;
whether urgent payment is needed.

Do not pay the seller first if the developer account may already be cancelled.

XLIV. Buying a Pre-Selling Condo From the Original Buyer

Pre-selling resale or “pasalo” transactions are common. The buyer should be extra cautious because there is no completed unit to inspect and usually no title yet.

Check:

developer license to sell;
project completion status;
construction progress;
original contract;
payment status;
turnover schedule;
assignment restrictions;
developer consent;
foreign ownership availability;
taxes and transfer fees;
financing requirements;
risk of project delay;
buyer’s remedies if project is delayed;
cancellation provisions;
whether the seller’s price includes premium over paid equity.

The buyer should understand that they may be assuming construction and developer performance risk.

XLV. Buying a Ready-for-Occupancy But Unpaid Unit

A ready-for-occupancy unit may seem safer because the buyer can inspect it, but unpaid balances still matter.

Check:

whether title has been issued;
whether turnover was completed;
whether there are punch list defects;
whether occupancy fees are paid;
whether association dues are current;
whether utilities are connected;
whether the seller has authority to transfer;
whether developer consent is required;
whether balance is under financing;
whether title transfer will be delayed.

Possession is not the same as ownership.

XLVI. Buying a Foreclosed or Near-Foreclosure Condo

If the seller is behind on bank payments, the unit may be at risk of foreclosure.

The buyer should verify:

whether foreclosure proceedings have started;
whether notice of sale was issued;
redemption rights;
exact payoff amount;
penalties and attorney’s fees;
whether bank will accept payoff;
whether the seller still has authority to sell;
whether title is already consolidated;
whether there are occupants;
whether taxes and dues are unpaid.

A near-foreclosure transaction should be handled carefully, ideally with direct bank coordination.

XLVII. Sale Below Market Value

A not-fully-paid condo may be sold below market value because the seller needs urgent cash or cannot continue payments. A low price is not automatically suspicious, but it should trigger deeper due diligence.

Possible reasons include:

arrears;
loan default;
urgent migration;
project delay;
hidden defects;
title problems;
association dues;
family dispute;
double sale risk;
pending litigation.

A bargain price is not a bargain if the buyer later cannot obtain title.

XLVIII. Misleading “Equity” Computations

Sellers often advertise “equity paid” as if every peso paid increases value. The buyer should verify what the seller has actually paid.

Seller’s payments may include:

reservation fee;
down payment;
monthly installments;
interest;
penalties;
transfer charges;
taxes;
association dues;
renovation costs;
broker commissions.

Not all these amounts are recoverable or part of property value. A buyer should focus on market value, remaining balance, transferability, and risk, not merely seller’s claimed equity.

XLIX. Contract Price vs. Market Price

The buyer should compare:

original contract price;
total amount already paid;
remaining balance;
seller’s asking equity;
current market value;
developer’s current selling price;
resale prices in same building;
taxes and transfer costs;
cost of financing;
risk premium.

Sometimes a “pasalo” unit is more expensive than buying directly from the developer or from a fully paid resale seller.

L. Financing the Purchase

The buyer may need financing to pay the seller’s equity and remaining balance.

Possible sources:

cash;
bank home loan;
Pag-IBIG loan;
developer financing;
loan assumption;
personal loan;
seller financing.

The buyer must confirm that financing is available before committing. Developers and banks may require credit approval. If the buyer cannot qualify, the assignment may fail.

The contract should state what happens if financing is not approved.

LI. VAT and Developer Charges

Some condominium transactions may include VAT or developer charges depending on the nature and price of the unit, the seller, and whether the transaction is primary sale or resale.

When buying an unpaid unit from an original buyer, the developer may still impose charges under the original sale. The buyer should ask:

whether VAT is included in the original contract price;
whether additional VAT applies;
whether assignment fees are VAT-inclusive;
whether price escalation applies;
whether miscellaneous fees are due;
whether title processing fees are already paid.

Tax treatment should be clarified before signing.

LII. Miscellaneous Fees

Developers often charge miscellaneous fees near turnover or title transfer. These may include:

water and electric meter deposits;
connection fees;
move-in fees;
title processing fees;
documentation fees;
real property tax share;
association dues advance;
insurance;
registration expenses;
administrative fees.

The buyer and seller should agree who pays these amounts.

LIII. Condominium Corporation Rules

The buyer should review condominium rules because they affect use of the unit.

Important rules may include:

residential use only;
restrictions on short-term rentals;
pet rules;
renovation rules;
move-in requirements;
occupancy limits;
parking rules;
noise rules;
commercial use restrictions;
penalties for violations.

A buyer planning Airbnb, staff housing, office use, or rental business should verify if allowed.

LIV. Risk of Developer Delay or Non-Completion

If the unit is pre-selling or not yet fully completed, the buyer assumes risk of delay or non-completion.

The buyer should check:

developer reputation;
project construction status;
license to sell;
target turnover date;
grace period for delay;
buyer remedies under contract;
financing consequences of delay;
market conditions;
whether similar projects were delayed;
whether the original buyer has pending complaints.

Buying rights from another buyer does not eliminate developer risk.

LV. License to Sell and Project Registration

For pre-selling projects, the developer should have proper authority to sell. The buyer should verify project registration, license to sell, and unit details.

If the project lacks required approvals, the buyer may face serious risks, including delayed completion, invalid sales, or regulatory problems.

LVI. Using a Lawyer

A lawyer is especially useful when:

the unit is not fully paid;
seller has no title yet;
assignment needs developer consent;
title is mortgaged;
seller is abroad;
seller is married and spouse consent is unclear;
buyer is foreign;
there are arrears;
transaction is high-value;
documents are inconsistent;
buyer will assume a loan;
seller is represented by an attorney-in-fact;
unit has tenants;
seller is a corporation;
there is urgency due to default.

Legal fees are small compared to the risk of paying millions for rights that cannot be transferred.

LVII. Red Flags

A buyer should be cautious if:

seller refuses developer verification;
seller refuses to show original contract;
seller has only screenshots of receipts;
account has arrears;
seller demands full cash immediately;
price is unusually low;
developer says account is cancelled;
title has adverse annotations;
seller’s spouse refuses to sign;
broker cannot show authority;
seller is abroad but SPA is vague;
unit is occupied by someone else;
there is no association dues clearance;
seller gives inconsistent balance figures;
buyer is asked to continue paying under seller’s name indefinitely;
developer transfer fee is undisclosed;
seller says “no need to inform developer”;
title cannot be produced;
bank payoff amount is unverified;
documents have different unit numbers or names.

Any one red flag deserves investigation. Several red flags may justify walking away.

LVIII. Practical Step-by-Step Guide

Step 1: Identify the Seller’s Legal Status

Is the seller the registered owner, original buyer under a Contract to Sell, borrower under a bank loan, or merely an occupant?

Step 2: Identify the Property

Confirm project name, tower, floor, unit number, area, parking slot, title number if any, and tax declaration.

Step 3: Verify Payment Status

Get official statement from developer, bank, Pag-IBIG, or creditor.

Step 4: Check Transferability

Ask whether assignment, sale, or assumption is allowed and what approvals are required.

Step 5: Review Title or Contract

If titled, review CCT. If not titled, review Contract to Sell and developer records.

Step 6: Check Arrears

Verify unpaid amortizations, penalties, taxes, association dues, utilities, and special assessments.

Step 7: Structure Payment Safely

Use escrow, direct payment to creditor, staggered release, and written conditions.

Step 8: Sign Correct Documents

Use deed of assignment, deed of sale, loan assumption agreement, or tripartite agreement as appropriate.

Step 9: Obtain Required Consents

Secure written approval from developer, bank, Pag-IBIG, spouse, co-owner, or condominium corporation if needed.

Step 10: Complete Transfer

Process taxes, registration, title transfer, contract substitution, account update, possession turnover, and condominium records.

LIX. Sample Transaction Structures

A. Assignment of Rights for Unpaid Developer Unit

Documents:

developer-approved deed of assignment;
seller’s original Contract to Sell;
statement of account;
buyer’s new payment documents;
developer consent;
receipts;
turnover documents if applicable.

Payment:

buyer pays arrears directly to developer;
buyer pays seller’s agreed equity through escrow;
seller receives balance after developer recognizes buyer.

B. Sale of Mortgaged Condo

Documents:

CCT;
bank statement of account;
deed of sale;
mortgage release documents;
tax documents;
condominium clearance.

Payment:

buyer pays bank payoff amount directly;
bank releases title and cancellation documents;
buyer pays seller net proceeds;
parties process title transfer.

C. Loan Assumption

Documents:

creditor approval;
loan assumption agreement;
deed of sale or assignment;
updated mortgage documents;
title documents.

Payment:

buyer pays seller equity;
buyer assumes remaining loan after creditor approval;
seller is released only if creditor formally releases them.

D. Seller Financing

Documents:

deed of conditional sale or contract to sell;
promissory note;
mortgage or security;
payment schedule;
default provisions.

This is less common for unpaid developer units and should be carefully drafted.

LX. Buyer’s Checklist

Before signing, confirm:

Seller is the true owner or buyer of record;
unit details are correct;
contract or title is authentic;
outstanding balance is verified;
arrears are identified;
developer or creditor approval is available;
assignment or sale is allowed;
spouse or co-owner consent is secured;
association dues are paid;
real property taxes are updated;
parking slot status is clear;
tenant status is known;
possession turnover is agreed;
taxes and fees are allocated;
payment will be controlled or escrowed;
remedies are written;
documents are notarized where required;
transfer timeline is realistic;
title issuance or transfer process is understood;
buyer has copies of all signed documents and receipts.

LXI. Seller’s Checklist

A seller should prepare:

original contract or title;
official receipts;
updated statement of account;
valid IDs;
proof of civil status;
spouse consent, if required;
developer transfer requirements;
bank or Pag-IBIG loan statement;
condo dues clearance;
tax receipts;
utility clearances;
authority to sell, if through broker;
SPA, if abroad;
tenant documents, if leased;
turnover documents and keys.

A seller who prepares complete documents usually gets a smoother transaction and better buyer confidence.

LXII. Common Mistakes by Buyers

Buyers commonly make the following mistakes:

paying seller before developer approval;
relying on receipts without checking contract;
assuming “pasalo” is automatically allowed;
paying monthly amortizations under seller’s name;
ignoring spouse consent;
not checking association dues;
not verifying bank balance;
not inspecting title annotations;
trusting screenshots from agents;
failing to allocate taxes and fees;
ignoring foreign ownership limits;
not checking parking slot documentation;
accepting vague SPA;
not using escrow;
failing to document possession turnover.

LXIII. Common Mistakes by Sellers

Sellers also make mistakes, such as:

advertising rights they cannot assign;
hiding arrears;
failing to obtain developer consent;
misrepresenting loan balance;
accepting money before confirming approval;
failing to secure spouse signature;
promising immediate title when title is years away;
ignoring taxes on transfer;
failing to disclose tenants or dues;
using generic deeds unsuitable for the transaction.

These mistakes can lead to refund claims, damages, or criminal complaints if fraud is involved.

LXIV. Conclusion

Buying a condominium in the Philippines that is not fully paid can be lawful and commercially sensible, but it is riskier than buying a fully paid unit with a clean title. The buyer must first determine whether the seller owns the unit or merely holds contractual rights. If the seller is still paying the developer, the transaction is usually an assignment of rights requiring developer consent. If the unit is financed by a bank or Pag-IBIG, the creditor’s role must be addressed. If the account has arrears, the risk of cancellation or foreclosure must be examined.

The safest transaction is one where the buyer verifies the account directly, obtains written consent from the developer or creditor, uses the correct legal document, controls payment through escrow or direct creditor payment, checks taxes and association dues, secures spousal or co-owner consent, and ensures a clear path to title or contract substitution.

A low price or attractive “assume balance” offer should never replace legal due diligence. In Philippine condominium transactions, possession, receipts, and verbal promises are not enough. What matters is the enforceable right to acquire or own the unit, the consent of parties who control that right, and the buyer’s ability to complete the transfer without hidden debt, title problems, or legal disputes.