An extrajudicial settlement by sale is commonly used when a person dies owning property in the Philippines and the heirs want to sell that property instead of first transferring the title to their names. It can be efficient, but it is also document-heavy: the heirs must prove their right to inherit, settle estate taxes, pay sale-related taxes, publish the settlement, secure the BIR electronic Certificate Authorizing Registration, and register the transfer with the Registry of Deeds. A missing heir, unpaid tax, defective SPA, or wrong property document can delay the transfer for months.
What Is an Extrajudicial Settlement by Sale?
An Extrajudicial Settlement of Estate with Sale is a notarized document where the heirs do two things in one transaction:
- Settle the estate of the deceased person among themselves; and
- Sell the inherited property to a buyer.
It is often called:
- Deed of Extrajudicial Settlement with Sale
- Extrajudicial Settlement of Estate with Absolute Sale
- EJS with Sale
- Deed of Extrajudicial Settlement and Simultaneous Sale
The important point is that the deceased owner can no longer sell the property. Once the owner dies, ownership rights pass to the heirs by operation of law, but the title may still be in the deceased person’s name. The heirs therefore execute the deed as the sellers, after declaring who the legal heirs are and how the estate is being settled.
For example, if a mother dies leaving a house titled in her name, and her three children agree to sell it to a buyer, the children may execute one deed stating that they are the only heirs, they settle the estate among themselves, and they sell the property to the buyer.
When Is Extrajudicial Settlement Allowed?
The main legal basis is Rule 74, Section 1 of the Rules of Court, which allows heirs to settle an estate without going to court if the basic requirements are met.
Extrajudicial settlement is generally allowed when:
| Requirement | What it means in practical terms |
|---|---|
| The deceased left no will | If there is a will, it generally needs probate in court. |
| The estate has no outstanding debts | The deed usually states that the estate has no known debts, or that debts have been paid. |
| All heirs agree | Every compulsory or legal heir must participate or be properly represented. |
| Heirs are of legal age | Minors must be represented by a duly authorized legal or judicial representative. |
| The settlement is in a public instrument | The deed must be notarized. |
| The deed is published | Publication must be once a week for three consecutive weeks in a newspaper of general circulation. |
| The deed is filed/registered | For titled real property, registration is made with the Registry of Deeds after BIR and local requirements are completed. |
If any of these requirements is missing, a court proceeding may be necessary.
Legal Basis: Why Heirs Can Sell Inherited Property
Under Article 777 of the Civil Code, rights to succession are transmitted from the moment of death. This means the heirs acquire rights to the inheritance immediately upon the decedent’s death, although the estate still has to be settled and taxes must be paid.
The Supreme Court has repeatedly applied this principle. In Treyes v. Larlar, G.R. No. 232579, September 8, 2020, the Court explained that heirs’ rights vest from the moment of death and are not merely expectant rights.
Before partition, the heirs generally co-own the estate. Under Article 1078 of the Civil Code, where there are two or more heirs, the estate is owned in common before partition, subject to the payment of debts. This is why one heir cannot normally sell the entire property alone. At most, under Article 493 of the Civil Code, a co-owner may sell only his or her undivided share, not the shares of the other heirs.
For married decedents, the family property regime must also be considered. Under Articles 103 and 130 of the Family Code, the absolute community or conjugal partnership is liquidated when a marriage ends by death. In practice, this means you must determine first what portion belongs to the surviving spouse and what portion forms part of the deceased spouse’s estate.
Extrajudicial Settlement by Sale vs. Ordinary Deed of Sale
An ordinary deed of sale is not enough when the registered owner is already dead. The Registry of Deeds and BIR will need documentation showing how the heirs became entitled to sell.
| Document | Used when | Main purpose |
|---|---|---|
| Deed of Absolute Sale | Seller is alive and registered owner or authorized owner | Transfers property from seller to buyer |
| Extrajudicial Settlement of Estate | Heirs want to divide or transfer inherited property to themselves | Settles estate without sale to outsider |
| Extrajudicial Settlement with Sale | Heirs want to settle the estate and sell the property to a buyer | Combines estate settlement and sale |
| Judicial Settlement | There is a will, disagreement, debts, minor issues, missing heirs, or dispute | Court-supervised estate settlement |
Step-by-Step Process for Extrajudicial Settlement by Sale
1. Identify all heirs and determine their shares
Start by confirming the family facts:
- Was the deceased married?
- Was there a valid will?
- Did the deceased have legitimate children?
- Were there illegitimate children?
- Are the parents of the deceased still alive?
- Did any heir predecease the decedent, leaving children of their own?
- Was the property exclusive, conjugal, or community property?
This step is often where mistakes happen. Families sometimes assume that only the children inherit, forgetting the surviving spouse. Others exclude illegitimate children, children from a prior relationship, or heirs of a deceased child.
If an heir is excluded, the buyer may face a future claim.
2. Check the title and property records
Before signing anything, review the title and local tax records.
For titled land or condominium property, secure:
- Certified true copy of the Transfer Certificate of Title, Original Certificate of Title, or Condominium Certificate of Title
- Owner’s duplicate title
- Latest tax declaration for land
- Latest tax declaration for improvements, if any
- Real property tax clearance
- Certificate of no improvement, if the land has no declared building
- Lot plan, vicinity map, or location plan if needed for BIR zonal valuation
Also check for annotations on the title, such as:
- Mortgage
- Notice of lis pendens
- Adverse claim
- Levy or attachment
- Restrictions on subdivision or sale
- Agrarian reform coverage
- Road right-of-way issues
- Homeowners’ association restrictions
If the property is agricultural, the Registry of Deeds may require DAR-related documents depending on the title history and land classification.
3. Prepare the deed of extrajudicial settlement with sale
The deed should clearly state:
- Full name, citizenship, civil status, and address of the deceased
- Date and place of death
- Statement that the deceased left no will and no debts, if true
- Names, civil status, citizenship, addresses, and relationship of all heirs
- Description of the property exactly as shown on the title
- Tax declaration details
- Agreement of the heirs to settle the estate
- Sale of the property to the buyer
- Purchase price and payment terms
- Warranties of the heirs
- Undertaking on taxes and expenses
- Marital consent, when applicable
- Acknowledgment before a notary public
If some heirs are abroad, they may sign before the Philippine Embassy or Consulate, or issue a properly authenticated Special Power of Attorney authorizing someone in the Philippines to sign for them. BIR checklists recognize documents executed abroad when supported by Philippine Consulate certification or Apostille, depending on where and how the document was executed.
4. Have all heirs and necessary spouses sign
All heirs should sign. If an heir is married, the spouse is often asked to sign the deed or marital consent, especially when the Registry of Deeds, BIR, buyer, or bank wants to avoid issues involving marital property rights.
If an heir cannot personally sign, the representative must have a Special Power of Attorney that specifically authorizes:
- Settlement of the estate
- Sale of the identified property
- Signing of the deed
- Receiving or acknowledging payment, if applicable
- Processing BIR, LGU, and Registry of Deeds requirements
A general authorization may not be accepted.
5. Notarize the deed
The deed must be notarized because Rule 74 requires the settlement to be made in a public instrument. Notarization also converts the document into a public document that government offices can rely on.
Make sure the notarial details are complete:
- Notary name
- Notarial commission details
- Doc number
- Page number
- Book number
- Series year
- Competent evidence of identity of all signatories
Antedated, incomplete, or improperly notarized deeds commonly cause BIR delays.
6. Publish the extrajudicial settlement
Rule 74 requires publication once a week for three consecutive weeks in a newspaper of general circulation.
Publication is not just a formality. It gives notice to possible creditors, omitted heirs, and interested parties.
After publication, secure:
- Publisher’s affidavit of publication
- Newspaper clippings or full newspaper pages showing the published notice
- Official receipt from the publisher
Some families publish before BIR processing; others do it while preparing BIR requirements. What matters is that proof of publication is available when required for registration and related processing.
7. File and pay estate tax with the BIR
Estate tax is separate from the sale taxes. The estate tax arises because property passed from the deceased to the heirs.
For deaths on or after January 1, 2018, the estate tax rate under the TRAIN Law, Republic Act No. 10963, and BIR Revenue Regulations No. 12-2018, is generally 6% of the net taxable estate.
The BIR Form 1801 guidelines state that the estate tax return is filed within one year from the decedent’s death, with a possible extension to file not exceeding 30 days in meritorious cases.
For deaths before the TRAIN Law, the applicable estate tax law is generally the law in force at the time of death. Families with old unsettled estates should be careful because penalties can be substantial. The estate tax amnesty under RA 11213, as extended by RA 11956, covered certain estates but the availment period was extended only until June 14, 2025, unless a new law later changes the rule.
For real property, BIR valuation usually considers the higher of:
- BIR zonal value; or
- Fair market value under the local assessor’s schedule of values.
8. Pay taxes on the sale
After or together with estate tax processing, the sale itself is taxed.
For real property classified as a capital asset, the BIR Form 1706 guidelines provide for 6% capital gains tax based on the selling price, BIR zonal value, or assessor’s fair market value, whichever is higher. The return is generally filed and paid within 30 days following the sale.
Other taxes and fees usually include:
| Tax or fee | Usual basis | Who usually shoulders it in practice |
|---|---|---|
| Estate tax | Depends on net taxable estate and date of death | Estate/heirs |
| Capital gains tax | 6% of highest applicable value for capital asset real property | Seller/heirs, though buyer often withholds from price |
| Documentary stamp tax | Commonly 1.5% of applicable value for deed of sale | Buyer, unless parties agree otherwise |
| Local transfer tax | Rate depends on LGU ordinance, subject to Local Government Code limits | Buyer, unless parties agree otherwise |
| Registration fees | LRA/Registry of Deeds schedule | Buyer, unless parties agree otherwise |
| Real property tax arrears | Unpaid RPT, penalties, and current year taxes | Usually seller/heirs before turnover |
| Publication fee | Newspaper rate | Usually heirs/seller |
| Notarial fee | Depends on value and notary | Depends on agreement |
The deed should state who pays which taxes. However, private agreement does not remove the government’s right to require payment before transfer.
9. Secure the BIR eCAR
The electronic Certificate Authorizing Registration, or eCAR, is the BIR document that allows the Registry of Deeds to register the transfer.
The BIR now has an eONETT system for one-time transactions involving sale and donation of real or personal properties, although actual processing practices still vary by RDO.
For an extrajudicial settlement with sale, there may be two taxable movements:
- Transfer from the deceased to the heirs by succession; and
- Transfer from the heirs to the buyer by sale.
In practice, the BIR may require documentation and tax processing for both the estate settlement and the sale before the Registry of Deeds can issue the new title to the buyer.
10. Pay local transfer tax and secure LGU documents
The buyer or processing party usually goes to the city or municipal treasurer’s office where the property is located.
Common LGU requirements include:
- Notarized deed
- BIR eCAR
- Tax declaration
- Real property tax clearance
- Official receipts for real property tax payments
- Valid IDs
- Transfer tax payment
After payment, the LGU issues a transfer tax receipt or clearance.
11. Register the transfer with the Registry of Deeds
The final title transfer is done at the Registry of Deeds where the property is located.
Typical Registry of Deeds requirements include:
- Original notarized Extrajudicial Settlement with Sale
- Owner’s duplicate title
- BIR eCAR
- Proof of payment of BIR taxes
- Transfer tax receipt or clearance
- Real property tax clearance
- Tax declarations
- Publication documents
- Valid IDs and TINs
- SPAs, consular documents, or apostilles if applicable
- Registration fee payment
The Registry of Deeds cancels the old title and issues a new title in the buyer’s name, if all requirements are complete and the deed is registrable under the Property Registration Decree, Presidential Decree No. 1529.
12. Transfer the tax declaration to the buyer
After the new title is issued, go to the city or municipal assessor’s office to transfer the tax declaration.
Bring:
- New title
- Deed
- BIR eCAR
- Transfer tax receipt
- Real property tax clearance
- Buyer’s IDs and TIN
- Assessor’s forms
This step is important because real property tax billing is based on local assessor records, not just the title.
Required Documents Checklist
| Document | Where to get it | Notes |
|---|---|---|
| PSA death certificate | Philippine Statistics Authority | Foreign death certificates may need apostille/authentication and translation. |
| PSA marriage certificate | PSA | Needed for spouse and property regime issues. |
| PSA birth certificates of heirs | PSA | Helps prove relationship to deceased. |
| Valid IDs of heirs and buyer | Government-issued ID sources | IDs should match names in deed. |
| TINs of estate, heirs, and buyer | BIR | Missing or inconsistent TINs delay BIR processing. |
| Certified true copy of title | Registry of Deeds or LRA eSerbisyo | Check annotations before signing. |
| Owner’s duplicate title | Usually with owner/heirs/bank | Required for registration of voluntary dealings. |
| Tax declarations | Local assessor | Land and improvements may have separate declarations. |
| Real property tax clearance | Local treasurer | Unpaid RPT must usually be settled. |
| Certificate of no improvement | Local assessor | Needed if land has no declared building. |
| Notarized EJS with Sale | Prepared by parties and notarized | Must include complete property and heir details. |
| Affidavit of publication | Newspaper | Publication must be once a week for three consecutive weeks. |
| BIR Form 1801 and proof of estate tax payment | BIR | Required for estate tax. |
| BIR Form 1706 and proof of CGT payment | BIR | Required for capital asset real property sale. |
| DST return/payment | BIR | Required for taxable deed. |
| eCAR | BIR | Needed by Registry of Deeds. |
| Transfer tax receipt | LGU treasurer | Needed before Registry of Deeds transfer. |
| SPA or consularized/apostilled authority | Heir abroad or representative | Must specifically authorize settlement and sale. |
Typical Timeline
A clean transaction can move relatively quickly, but many inherited-property sales are not clean.
| Stage | Practical timeline |
|---|---|
| Collecting PSA, title, tax, and ID documents | 1 to 4 weeks |
| Drafting and signing deed, including abroad signatures | 1 to 8 weeks |
| Publication | 3 weeks, plus time to receive affidavit |
| BIR estate tax and sale tax processing | 2 to 8 weeks or longer |
| LGU transfer tax and clearances | A few days to 2 weeks |
| Registry of Deeds title transfer | 2 to 8 weeks |
| Assessor’s tax declaration transfer | 1 to 4 weeks |
A realistic total timeline is often 2 to 6 months for a cooperative family with complete documents. It can take longer if heirs are abroad, names do not match, the estate is old, taxes are unpaid, the title is missing, there are annotations, or heirs disagree.
Common Problems That Delay or Defeat the Sale
One heir refuses to sign
Extrajudicial settlement requires agreement. If one heir refuses, the family may need a judicial partition or settlement case. A buyer should be cautious about paying in full when not all heirs have signed.
One heir is abroad
This is common for OFW families. The heir may sign the deed abroad or issue an SPA. The document must meet Philippine requirements, and BIR commonly looks for consular acknowledgment or apostille depending on the document.
The family forgot an heir
This is one of the biggest risks. A child from a prior relationship, an illegitimate child, or descendants of a deceased child may have inheritance rights. If omitted, they may challenge the settlement or sale.
The property is conjugal or community property
If the deceased was married, only the deceased spouse’s share forms part of the estate. The surviving spouse may own one-half or another legally determined share before inheritance is computed.
There are unpaid real property taxes
The LGU will usually require real property tax clearance before transfer. Old RPT arrears and penalties can be a major cost.
The estate tax was never settled
BIR will not issue the eCAR unless estate tax compliance is completed. For old estates, determining the applicable tax law, penalties, and documentary requirements can be more difficult.
The title has a mortgage or adverse claim
A clean sale usually requires cancellation or settlement of liens and annotations. Banks, developers, heirs, creditors, or adverse claimants may need to execute additional documents.
The buyer is a foreigner
Foreigners are generally prohibited from owning private land in the Philippines, except in cases allowed by law, such as hereditary succession under Article XII, Section 7 of the 1987 Constitution. A foreigner may inherit land by hereditary succession, but generally cannot buy land from heirs.
Foreigners may buy condominium units subject to the nationality limits under the Condominium Act, RA 4726, including the 40% foreign ownership limit in the condominium corporation or project structure.
When You Should Not Use Extrajudicial Settlement by Sale
Extrajudicial settlement by sale may not be suitable when:
- The deceased left a will
- Heirs disagree
- There are unpaid estate debts
- An heir is missing or cannot be located
- An heir is a minor and there is no proper legal authority
- Someone contests the identity of the heirs
- The title is lost and needs court reissuance or reconstitution
- The property is under litigation
- The estate involves complicated business assets, shares, or multiple creditors
- The deed would exclude a known heir
In these situations, a court-supervised settlement, partition, guardianship authority, or other judicial remedy may be required.
Frequently Asked Questions
Can heirs sell inherited property without transferring the title to their names first?
Yes, in many cases. The heirs may execute an Extrajudicial Settlement of Estate with Sale so the property passes from the deceased to the heirs by succession and then from the heirs to the buyer by sale. BIR and Registry of Deeds requirements must still be completed before the buyer receives a new title.
Is publication required for extrajudicial settlement with sale?
Yes. Rule 74 requires publication once a week for three consecutive weeks in a newspaper of general circulation. The affidavit of publication and newspaper copies are important supporting documents.
Who must sign the deed of extrajudicial settlement with sale?
All legal heirs should sign, or be represented through a valid SPA. Depending on the property regime, civil status, and Registry of Deeds practice, spouses may also be asked to sign or give marital consent.
Can one heir sell the entire inherited property?
Generally, no. One heir can usually sell only his or her undivided share, not the entire property, unless properly authorized by all other heirs. A buyer who purchases from only one heir may end up buying only that heir’s share.
How much is the estate tax?
For decedents who died on or after January 1, 2018, estate tax is generally 6% of the net taxable estate under the TRAIN Law and BIR Revenue Regulations No. 12-2018. For earlier deaths, the law at the time of death must be checked, unless covered by a valid amnesty law.
How much is the capital gains tax on the sale?
For real property classified as a capital asset, capital gains tax is generally 6% of the highest among the selling price, BIR zonal value, or assessor’s fair market value. It is generally filed and paid within 30 days following the sale.
What is the BIR eCAR and why is it important?
The eCAR is the BIR’s electronic Certificate Authorizing Registration. The Registry of Deeds needs it before registering the transfer and issuing a new title. Without the eCAR, the buyer usually cannot complete the title transfer.
Can an OFW heir sign from abroad?
Yes. The OFW heir may sign the deed abroad or issue a Special Power of Attorney. The document should be acknowledged before the Philippine Consulate or properly apostilled/authenticated, depending on where and how it is executed.
Can a foreigner buy land from Filipino heirs?
Generally, no. Foreigners are constitutionally restricted from owning Philippine land, except in limited cases such as hereditary succession. A foreigner may be able to buy a condominium unit if the project complies with the Condominium Act and foreign ownership limits.
How long does an extrajudicial settlement by sale take?
A straightforward transaction often takes 2 to 6 months from document gathering to title transfer. It can take longer if heirs are abroad, the estate is old, documents are inconsistent, taxes are unpaid, or the title has legal issues.
Key Takeaways
- An extrajudicial settlement by sale lets heirs settle an estate and sell inherited property in one transaction.
- It is allowed only when the deceased left no will, there are no debts, and all heirs agree or are properly represented.
- All heirs must be correctly identified; excluding an heir can expose the buyer and family to future claims.
- Publication once a week for three consecutive weeks is required under Rule 74.
- Estate tax and sale taxes are separate; both must be addressed before title transfer.
- The BIR eCAR is essential because the Registry of Deeds will not complete the transfer without tax clearance.
- Foreign heirs may inherit Philippine land, but foreign buyers generally cannot buy Philippine land.
- The cleanest transactions start with complete PSA records, clear title, updated real property taxes, valid TINs, and properly drafted authority for heirs who are abroad.