Do You Need to Annotate a Deed of Assumption of Mortgage on the Title? (Philippines)

This article is for general information only and is not a substitute for legal advice on a specific transaction.

Executive Summary

Yes—annotation is strongly advisable and, in many scenarios, effectively required to protect parties and bind third persons when someone assumes an existing real estate mortgage or acquires a property “subject to” that mortgage.
What must be on the title? At a minimum, the mortgage itself must be annotated to be effective against third persons. If there is a transfer of ownership and/or a change in the debtor (assumption), the relevant instruments (e.g., deed of sale with assumption, deed of assumption and lender’s consent/release) should also be presented for registration so the Registry of Deeds (RD) can carry forward the mortgage and reflect the assumption or the “subject to” nature on the new title or on the existing title’s memorandum of encumbrances.
Without annotation: The arrangement may bind only the contracting parties; third persons (including subsequent buyers/creditors) are not bound, and the original mortgagor may remain personally liable to the lender unless there is a lender-approved novation.

Legal Foundations

Registration principle (Torrens System). Acts and contracts affecting registered land must be registered to affect or bind third persons. Unregistered interests generally cannot prejudice subsequent buyers in good faith for value.
Real estate mortgage (REM). A mortgage must be recorded/annotated on the title to affect third persons. The annotation makes the lien real, public, and enforceable against the world.
Assumption vs. “subject to” vs. novation.
- Simple assumption of mortgage: Buyer agrees with seller to pay the mortgage. Personal liability to the lender does not transfer unless the lender consents.
- Assumption with release (novation/delegation): Lender formally accepts the new debtor and releases the original mortgagor; this requires lender’s written consent.
- “Subject to” the mortgage: Buyer does not assume personal liability; buyer merely takes the property encumbered. The lender can still foreclose, but cannot demand personal payment from the buyer absent assumption.
Effect of non-annotation. Between the seller and buyer, a private assumption agreement is valid; however, as to third persons, non-annotation means no constructive notice. A later buyer in good faith or another creditor may take priority, and the RD will not reflect the change in obligor or the continuing encumbrance on a reissued title unless the proper documents are presented.

Do You Need to Annotate?

A. If there is no change of ownership, only an internal assumption agreement

Strict necessity: The mortgage must already be annotated; otherwise, it is ineffective against third persons.
Assumption annotation: While the law focuses on the mortgage lien itself, it is prudent to annotate the deed of assumption (with lender’s conformity if transferring personal liability). This places public notice that someone else has taken over obligations and helps avoid disputes (e.g., who gets notices of default, who may redeem, who is personally liable).

B. If there is a transfer of ownership (e.g., Deed of Sale with Assumption of Mortgage)

Yes. Present the deed of sale (with BIR/transfer tax clearances), the existing mortgage, and, if applicable, the assumption terms and lender’s consent/release for registration.
The RD will cancel the seller’s title and issue a new title in the buyer’s name, carrying forward the mortgage annotation and, when documents allow, noting the assumption/“subject to” language on the memorandum of encumbrances.
If the buyer is released and becomes the sole debtor (novation), the lender’s Deed of Consent and Release should also be annotated so the public record matches the current obligor.

C. If the buyer takes the property “subject to” the mortgage (no personal assumption)

The mortgage annotation remains.
The sale should be registered; the RD will issue the buyer’s title with the mortgage carried over.
A separate annotation that the purchase is “subject to” is often reflected through the wording of the deed of sale as summarized in the entry; in practice, many RDs will abstract key terms into the memorandum of encumbrances when the deed is lodged.

Practical Pathways & Documentation

Typical Document Sets

Simple assumption (no transfer of title):
- Notarized Deed of Assumption of Mortgage (parties: registered owner/original mortgagor, assuming party).
- Lender’s conformity (optional for private arrangement; required if transferring personal liability).
- Owner’s duplicate title (for annotation), valid IDs, and RD fees.
Sale with assumption (title transfer):
- Notarized Deed of Absolute Sale with Assumption of Mortgage (or separate sale + assumption).
- Lender’s consent (and Release of Original Mortgagor if novation).
- Existing mortgage already annotated (or submitted simultaneously for annotation).
- BIR: DST, CGT/CWT, and issuance of CAR; LGU Transfer Tax; RD registration fees.
- Owner’s duplicate title for cancellation/issuance of new title.
Sale “subject to mortgage”:
- Notarized Deed of Absolute Sale stating that the sale is subject to the annotated mortgage.
- BIR/LGU tax clearances and CAR.
- RD processing to carry forward the mortgage annotation into the buyer’s new title.

Tip: When the lender is a bank or Pag-IBIG/HDMF, use their standard forms for consent/assumption/release. Many institutions require credit vetting before consenting to novation.

What Exactly Gets Annotated?

The Mortgage: A memorandum stating the mortgagee, mortgagor, principal amount, date, and document details.
Deed of Sale / Transfer: The conveyance is entered, with cross-reference to existing encumbrances.
Assumption & Lender’s Consent: Where accepted by the RD, the assumption (and release/novation, if any) appears as a distinct memorandum entry identifying the new personal debtor and any release of the original.
Related instruments: Amendments, extensions, restructurings, partial releases, or cancellations are also entered as subsequent memoranda.

Consequences of Skipping Annotation

Against third persons: The assumption arrangement may be ignored; later purchasers or encumbrancers in good faith may take priority.
Lender remedies: Without lender consent to novation, the original mortgagor remains personally liable; the lender can foreclose and may still pursue any deficiency from the original mortgagor under the loan documents.
Operational headaches: Notices of default, foreclosure filings, and redemption timelines may be sent to the registered owner on record if the RD has no entry about the assumption or title transfer.

Step-by-Step: How to Annotate

Prepare and notarize the relevant document(s):
- Deed of Assumption of Mortgage; or
- Deed of Sale with Assumption / Sale “subject to” mortgage; and
- Lender’s written consent (and Release if novation).
Secure taxes/clearances (if there’s a transfer of ownership):
- DST, CGT/CWT, CAR (BIR); Transfer Tax (LGU).
File with the Registry of Deeds where the property is situated:
- Submit the owner’s duplicate title, documents, valid IDs, and pay fees (entry + registration).
- The RD will enter the document(s) in the Primary Entry Book, examine sufficiency, and annotate on the title or issue a new title (for transfers), carrying forward the mortgage.
Claim updated title / owner’s duplicate with the new or updated memorandum of encumbrances.

Special Situations

Pag-IBIG/HDMF loans: Pag-IBIG usually requires a Loan Assumption/Transfer of Rights package and formal approval before it will consent to assumption or release the original borrower. RD will annotate Pag-IBIG’s consent along with the transfer/assumption.
Developer take-outs / CTS to REM: In pre-sell settings, a Contract-to-Sell (CTS) may later be taken out by a bank REM at title issuance. If rights are assigned or assumed mid-stream, ensure the assignment/assumption and any consent are part of the bundle lodged with the RD at transfer and mortgage registration.
Corporate or spousal consent: If the mortgagor is a corporation, check board approvals/secretary’s certificates. For conjugal/community properties, ensure spousal consent is properly documented to avoid future challenges.
Partial releases or refinancing: If the assuming party refinances with a new lender, the RD sequence is: new mortgage registration, then cancellation (release) of the old mortgage upon payment and presentation of the Deed of Release/Cancellation by the old lender.

Drafting Guide: Key Clauses

Statement of Assumption: “Assignee hereby assumes and agrees to pay and perform all obligations under the Loan and Real Estate Mortgage dated ___ in favor of ___.”
Lender’s Conformity (Novation): “Creditor accepts Assignee as debtor in substitution of Assignor and releases Assignor from further liability under the Loan and Mortgage effective upon registration.”
Subject-To Language (no personal assumption): “Buyer acquires the property subject to the Real Estate Mortgage in favor of ___ annotated on TCT/CTC No. ___; Buyer does not assume personal liability for the secured debt.”
Registration Covenant: “Parties shall cause registration of this instrument with the Registry of Deeds to constitute constructive notice to third persons.”

FAQs

1) Is annotation of the mortgage itself optional? No. A real estate mortgage must be registered/annotated to affect third persons. Without it, the lender’s lien is vulnerable to later good-faith purchasers or encumbrancers.

2) If the buyer assumes the loan but the lender does not consent, is annotation still useful? Yes. Annotating the assumption (even without lender consent to novation) provides notice that someone else is paying/controlling the loan obligations. But personal liability to the lender remains with the original debtor unless and until the lender consents to novation.

3) We executed a Deed of Sale “subject to” the mortgage. What appears on the new title? The buyer becomes registered owner, and the existing mortgage annotation is carried over. The “subject to” nature is typically reflected via the abstract of the deed and the continued mortgage memorandum.

4) Can the RD refuse to annotate an assumption without lender consent? Yes, particularly if the instrument purports to transfer personal liability or alter the mortgage relationship without the mortgagee’s written conformity. The RD’s role is ministerial but it may require complete papers consistent with the public record.

5) After novation and release, do we need a new mortgage? No, the existing mortgage can stand with the new debtor—provided the lender’s consent and release are executed and annotated. Some lenders, however, prefer re-documentation; follow lender requirements.

Bottom Line

Always register/annotate the real estate mortgage.
When there is an assumption or “subject to” arrangement, register the underlying deed(s) and, where applicable, the lender’s consent/release so the title’s encumbrance page tells the full story.
Proper annotation protects priorities, clarifies who is personally liable, and avoids surprises in default, foreclosure, or resale.

Quick Checklist (Bring to the RD)

☐ Owner’s duplicate title
☐ Notarized deed(s): sale / assumption / assignment
☐ Lender’s consent and release (if novation)
☐ BIR CAR, DST, CGT/CWT receipts (if there’s a transfer)
☐ Transfer Tax receipt (LGU)
☐ Valid IDs of signatories; board/spousal approvals if required
☐ RD entry/registration fees

If your situation has unique wrinkles (Pag-IBIG rules, corporate approvals, complex chains of assignment, or pending foreclosure), consult counsel and coordinate with the Registry of Deeds and the lender before filing.