Can Heirs Sell Inherited Property Before Extrajudicial Settlement in the Philippines?

Updated for the Philippine Civil Code, Rules of Court, and common administrative practice. This is general information, not a substitute for advice on your specific facts.

Short answer

Yes—but only their undivided hereditary rights, not a specific asset, and the buyer takes the risk (and waits) until the estate is settled and partitioned. As a rule, a clean transfer of a titled real property to a buyer requires prior settlement (extrajudicial or judicial) and estate‐tax clearance.

Why this question matters

Death triggers succession, but titles, tax clearances, and third-party rights don’t update themselves. Buyers, brokers, and heirs often want to “move” on a sale immediately. Doing so without understanding what can—and cannot—be sold invites void or unregistrable transfers, tax problems, or future litigation.

Core legal framework

1) Succession opens at death; rights pass immediately—but undivided

Under Civil Code Art. 777, succession is transmitted at the moment of death. Until partition, the estate is a co-owned mass among the heirs (Arts. 1078 et seq.). Each heir owns an ideal/undivided share, not any specific object yet.

2) Extrajudicial settlement (EJS) vs. court settlement

Under Rule 74, Sec. 1, Rules of Court, if (a) there is no will, (b) the decedent left no debts (or debts have been paid/settled), and (c) all heirs are of legal age (or duly represented), the heirs may settle by public instrument (a notarized deed) and publish notice once a week for 3 consecutive weeks in a newspaper of general circulation. A bond is required for personal property distributed. The EJS is then filed with the Register of Deeds and, where applicable, with the Registry of Deeds for issuance/annotation on the title.

If any of those EJS conditions are not met—e.g., there is a will (testate succession), there are unsettled debts, or there are disputes/minors without guardianship—judicial settlement/probate is required. In a judicial estate, only the executor/administrator, and generally with court approval, may sell estate property.

3) Creditor and third-party protections (the “Rule 74 lien”)

Even after EJS, estate property remains subject for 2 years to claims by creditors or by any person unduly deprived of participation (Rule 74, Sec. 4). Distributees (and sometimes the property) can be reached to satisfy such claims.

4) Taxes and clearances

As a practical requirement, estate tax must be paid and an eCAR (Electronic Certificate Authorizing Registration) issued before the Register of Deeds will process transfers. Under current law, estate tax is due within 1 year from death (extensions possible). If a sale follows, capital gains (or ordinary income, if applicable) and documentary stamp tax (DST) also apply for the sale transaction.

So, what can be sold before EJS?

A) Sale/assignment of hereditary or successional rights

An heir may assign or sell his/her undivided hereditary rights in the estate—even before partition. This is valid, but:

Effect on buyer: The buyer steps into the shoes of the selling heir as a co-owner of the undivided estate. The buyer ultimately receives only what is eventually allotted to that heir upon partition.
No specific asset passes yet: The buyer does not acquire a particular land title or vehicle today; they acquire a right to whatever that heir’s share turns out to be.
Pre-emption by co-heirs: If a co-heir sells to a non-heir (“a stranger”), co-heirs have a legal right of redemption within a short period from written notice (Civil Code Art. 1088). Failing to give written notice keeps that redemption right alive.

Best practice: Use a Deed of Assignment of Hereditary Rights (not a deed purporting to sell a specific titled parcel), and serve written notices to co-heirs to start the redemption clock.

B) Sale of a specific property of the estate—generally not by an individual heir pre-settlement

Because no heir owns a determinate asset pre-partition, an individual heir cannot validly convey a specific property as if he/she owned it alone. Any such deed, at most, transfers only the seller’s undivided share and will not be registrable as a transfer of the whole titled land. Registries typically require either:

EJS (or court order) + Deed of Sale executed by all heirs, or
EJS with Sale (a combined instrument), with taxes paid and eCARs issued.

If there’s a pending judicial estate, a sale of a specific asset usually needs court approval and the deed must be executed by the executor/administrator, not by individual heirs.

Four common pathways (and their consequences)

Assignment of Hereditary Rights to a Buyer (pre-EJS)
- What transfers: The heir’s share in the estate as a whole.
- Registry: Typically annotated (if at all) against titles only after settlement/partition.
- Risks: Buyer waits for settlement; share could be smaller than expected; co-heirs may redeem under Art. 1088; subject to Rule 74’s 2-year exposure to claims.
EJS first, then Sale by the Heirs
- Cleanest for title work.
- Steps: EJS → pay estate tax → eCAR (estate) → heirs become registered owners (or deed directly to buyer in “EJS with Sale”) → deed of sale → capital gains/DST → eCAR (sale) → transfer.
- Pros: Registrable to buyer without ambiguity.
EJS with Sale (single instrument)
- The heirs settle and simultaneously sell the identified property to the buyer.
- Tax sequencing is handled so the estate tax is assessed on transmission to heirs and CGT/DST on the sale to the buyer.
- Often the fastest registrable route when all heirs consent and debts are nil/settled.
Judicial Estate Sale
- If probate or judicial settlement is required, the executor/administrator, with court authority, sells the property.
- Registrable upon submission of court orders and tax clearances.
- Buyer protection is stronger because the court vets debts, notices, and approvals.

Special issues & edge cases

Minor heirs / persons under disability: Need a legal guardian and court approval for settlement and any sale of their interest.
Disputed heirship or unknown heirs: Extrajudicial route is unsafe. Judicial proceedings avoid void distributions.
Outstanding debts: EJS requires that no debts exist or that creditors are paid. Otherwise go judicial or settle debts first with proof (e.g., quitclaims, receipts).
Conjugal or community property: Determine the net conjugal/community share of the decedent first. Only that portion enters the estate. The surviving spouse participates in EJS for liquidation.
Multiple properties in different RDs: You may use one EJS covering all, but you’ll file/annotate in each relevant Register of Deeds.
Movables vs. immovables: EJS requires a bond equal to the value of personal property distributed; real property needs no bond but requires publication and, as a matter of practice, estate-tax eCAR before transfer.
Buyer already occupying the property: Occupation does not cure defective title. Without proper settlement and tax clearances, registration will stall; possession may later be disturbed.
Creditor window (2 years): Titles obtained via EJS/Sale may still be reached to satisfy valid claims within two years from EJS, and distributees can be pursued thereafter within general prescriptive periods.

What registries and the BIR usually want to see (real property)

For EJS (or EJS with Sale):
- Notarized Deed of Extrajudicial Settlement (or EJS with Sale), with complete heir list and shares.
- Affidavit of publication + proof of publication once a week for 3 weeks.
- Proof of payment of estate tax and eCAR (estate); Tax Identification Numbers (TINs).
- Owner’s duplicate title, latest tax declaration, real property tax clearances.
- If there’s a sale, deed of sale, payment of CGT/creditable withholding (as applicable), DST, and eCAR (sale).
For an Assignment of Hereditary Rights (pre-EJS):
- Deed of Assignment of Hereditary Rights (public instrument).
- Written notice to co-heirs (to trigger or waive Art. 1088 redemption).
- Annotation practices vary; full transfer of the certificate of title typically must await EJS/partition.

Practical answers to frequent questions

Q: Can I sell the house now, before EJS, if my siblings agree? Yes, if all heirs sign either (i) an EJS with Sale, or (ii) an EJS then a Sale. That is the registrable route. If only one heir signs, the deed transfers only that heir’s undivided rights, not the whole house.
Q: We’re one heir short—he’s abroad/unreachable. Can we sell? For a registrable sale of a specific property, you need all co-owners (heirs) or proceed judicially. An individual heir may sell only his/her undivided rights (with the limitations noted).
Q: Can a buyer register a title from a pre-EJS sale? No, not as a direct transfer of that titled land. The buyer must wait for EJS/partition (or court approval) so the seller (or the estate) can convey registrable title.
Q: Can we just sign a private receipt or “authority to sell”? Private documents don’t meet the public instrument and registration requirements and are vulnerable. Use notarized deeds and follow EJS/judicial procedures.
Q: We discovered debts after EJS with Sale—what then? Creditors may proceed against the distributees/buyer within the Rule 74 window or under general rules. Practically, keep escrows/indemnities in the sale documents.

Document checklists & drafting tips

A) Deed of Assignment of Hereditary Rights (pre-EJS)

Clear identification of decedent (name, date of death, civil status).
Statement that the assignor is an heir and assigns all hereditary rights and participation in the estate as undivided.
Express acknowledgment of co-heirs’ Art. 1088 rights and warranties limited to the assignor’s status/rights (not to specific assets).
If consideration is paid, state amount and that taxes arising from the assignment will be handled per agreement.

B) EJS with Sale

Recitals satisfying Rule 74 (no will; no debts or debts settled; heirs of legal age/represented).
Publication undertaking and bond (for movables).
Clear allocation (even if property is being sold entirely to the buyer).
Authority to sell and convey; warranties of title consistent with estate context.
Tax and closing mechanics: who bears estate tax, CGT/DST, publication, and registration fees.
Indemnities for undisclosed heirs/claims; escrow until eCARs and transfer are completed.

Risk map (buyer & heir)

Buyer risks: delay (no registrable title yet), co-heirs’ redemption, smaller-than-expected share after partition, creditor claims within 2 years, or court proceedings if EJS is improper.
Heir risks: personal liability to creditors/disinherited claimants, tax penalties for late estate tax, and potential nullity/unregistrability if attempting to convey specific property without authority.

Bottom line

Before EJS or court settlement, heirs may sell only their undivided hereditary rights—not a specific titled property.
To deliver registrable title of a specific asset to a buyer, complete EJS (or judicial settlement) and tax clearances; commonly done through an EJS with Sale when permitted.
Handle creditor protections, co-heir redemption rights, guardian/court approvals (for minors), and tax timing carefully to avoid later challenges.

If you want, I can draft a tailored EJS with Sale or an Assignment of Hereditary Rights template based on your scenario (number of heirs, debts, minors, property details), and a step-by-step filing and tax checklist.