House and Lot Purchase: Key Legal Concerns in the Philippines

(Comprehensive practitioner-level overview — July 2025)

Disclaimer: This article is for general information only and does not constitute formal legal advice. Real-estate transactions always merit consultation with a Philippine-licensed lawyer, broker, or geodetic engineer.

1. Land Ownership Basics

Topic	Core Rules	Key Statutes / Jurisprudence
Torrens system	Title is indefeasible once decreed and registered, except for void titles (e.g., fraud, lack of jurisdiction).	Land Registration Act (Act 496); Spouses Abalos v. Heirs of Gomez, G.R. 158989 (2005)
Foreign ownership	Land ownership is restricted to Filipino citizens and Philippine corporations/partnerships with ≥ 60 % Filipino equity. Foreigners may inherit land intestate and may own condominium units up to a 40 % building cap.	1987 Constitution, Art. XII §7; Anti-Dummy Law (Commonwealth Act 108); Condominium Act (RA 4726)
Spousal consent	Under the Absolute Community regime (default if married on/after 3 Aug 1988) either spouse may not sell, encumber, or lease real property without the written consent of the other.	Family Code, Arts. 96 & 124
Agricultural land limits	Sale/transfer beyond 5 ha. (retention) needs DAR clearance; ARB-covered land requires a DAR Certificate of Non-Coverage (CNC) or a DAR Clearance.	CARP (RA 6657); DAR A.O. 1-1989

2. Due-Diligence Road-Map

Verify the Title
- Get a Certified True Copy (CTC) from the Registry of Deeds (RD).
- Check: correct Transfer Certificate of Title (TCT) series; technical description; previous title numbers.
- Scan the Memoranda/Annotations section for:
  - Mortgages (§7 Rule 74);
  - Notice of Lis Pendens;
  - Adverse Claim;
  - Writs of Attachment;
  - Section 4 Rule 74 “heirs” annotation (estate issues).
Trace Ownership Chain
- Secure CTCs of the -1, -2 titles.
- Ascertain authority of signatories (e.g., corporate board resolutions, SPA, guardian’s bond, executor’s letters of administration).
Check Tax Compliance
- Real Property Tax (RPT) receipts (latest four quarters).
- BIR Certification Authorizing Registration (CAR) if property was recently transferred.
- Estate Tax Clearance if seller is an heir.
Survey & Ocular
- Engage a licensed geodetic engineer for relocation survey; match boundaries to title.
- Confirm no encroachments, easements, or informal settler occupants.
- For subdivisions/condominiums, validate approved subdivision plan or HLURB-approved Master Deed.
Confirm Land Classification
- DENR LMB certification that the land is alienable & disposable (A&D) if originating from public domain.
- For foreshore/bank protection strips, check DENR foreshore lease or special patent.
Regulatory Documents for Pre-Selling (horizontal or condo)
- Certificate of Registration (CR) and License to Sell (LTS) from HLURB/now DHSUD.
- Ocular the site, sales office, and verify advertised amenities.
- Maceda Law cooling-off rights (RA 6552) for installment buyers.

3. Contracts & Instruments

Instrument	Use-Case	Legal Requisites	Notes
Offer to Purchase / Letter of Intent	“Reservation fee” scenario	Not binding unless accepted; may function as Option	Clarify if earnest (part of price) or option (separate consideration).
Contract to Sell (CTS)	Installment or bank-financed sale where ownership transfers after full payment	Must be in writing; notarized for enforceability	Maceda Law: ≥ 2 yrs paid → grace period rights; ≥ 5 yrs → refund rights.
Deed of Absolute Sale (DOAS)	Full-payment or simultaneous cash/loan release	Public instrument; notarized; both spouses sign if conjugal; marital status declared	Subject to taxes and RD registration.
Real Estate Mortgage (REM)	Bank/Pag-IBIG loan	Notarized; registered on title	Extrajudicial foreclosure governed by Act 3135.

4. Taxes, Fees & Who Usually Pays

Levy	Rate (2025)	Base	Statutory Payer*
Capital Gains Tax (CGT)	6 %	Higher of (1) BIR Zonal Value, (2) Assessed FMV, (3) Contract Price	Seller
Documentary Stamp Tax (DST)	1.5 %	Same as CGT base	Buyer (commonly shared)
Transfer Tax (LGU)	≤ 0.75 % (cities/provinces may vary)	Contract Price or Zonal, whichever higher	Buyer
Registration Fees (RD)	~0.25 % + ₱50 ITF	Same base	Buyer
VAT (if developer)	12 % (exempt if residential lot ≤ ₱2.5 M or house-and-lot/condo ≤ ₱4.2 M, 2025 threshold)	Gross selling price	Developer

* Practice may differ; allocate clearly in the DOAS/CTS.

5. Common Legal Pitfalls & How to Guard Against Them

Double Sale (Art. 1544 Civil Code)
- Earliest registration in good faith wins.
- Remedy: instantly annotate your adverse claim if title cannot yet be transferred.
Fake or Reconstituted Titles
- Red flags: non-security paper, blurred red serial numbers, erasures.
- Compare against RD’s Daybook entry and Title Verification System (e-title barcode).
Seller Lacks Authority
- Corporations need a notarized board resolution and Secretary’s Certificate.
- Guardians need court approval (Rule 95).
- Trustees need deed of assignment or Secretary’s Certificate.
Unpaid Estate Taxes
- No valid transfer until estate settlement (extrajudicial if no will & heirs all of age).
- Estate tax amnesty expired 14 June 2025 (per RA 11956 extension). Hefty surcharges now apply.
Zoning Violations & Setbacks
- Secure City/Municipal Zoning Certification.
- Check expanded road-right-of-way projects (e.g., Build Better More) and “background noise” of possible expropriation.
Agrarian Reform Beneficiary (ARB) Rights
- ARB land has 10-year lock-in from award + right of redemption within five years of sale.
- Require DAR Emancipation Patent/CLT clearance and ARB waiver.
HLURB Complaints vs. Developer
- PD 957 grants buyers refund + 6 % interest if developer fails to deliver on schedule.
- File within prescriptive periods (one year from cause) before DHSUD Adjudication Board.

6. Step-by-Step Transfer Flow (Cash Sale Scenario)

Draft & Sign DOAS (Notary: within territorial jurisdiction).
Pay CGT & DST at BIR → obtain eCAR (15–30 days).
Pay Transfer Tax at LGU Treasurer (60-day deadline from notarization).
Register at RD: present DOAS, owner’s duplicate TCT, eCAR, Transfer Tax receipt, RPT clearance.
Secure New Tax Declaration at City/Municipal Assessor (submit new TCT).
Notify HOA / Condominium Corp., update shares or membership book.

7. Special Laws Affecting Residential Buyers

Law	Buyer Protections
PD 957 (Subdivision & Condo Buyers’ Protective Decree)	LTS & CR pre-selling requirement; automatic HLURB approval of subdivision roads as public; 10-year structural warranty.
RA 6552 (Maceda Law)	Grace periods & refund for buyers who have paid at least two years on installment.
RA 9646 (Real Estate Service Act)	Brokers must be PRC-licensed; buyers can refuse to pay unlicensed agents.
RA 9485 (Anti-Red Tape Authority Act, as amended by RA 11032)	7-7-20-Day rule for government offices (BIR, RD).
Anti-Money Laundering Act, as amended	Cash transactions ≥ ₱7.5 M must be reported by real-estate professionals.

8. Financing & Default

Facility	Key Terms	Default/Remedies
Bank Loan	80–90 % LTV, 5- to 20-year term, PNB-M3 or MLR interest repricing	Act 3135 foreclosure within 90 days notice; 1-yr equity of redemption (judicial).
Pag-IBIG End-User Home Financing	Up to ₱6 M; rate resets every 3-5 yrs; up to 30 yrs term	Foreclosure via (i) extra-judicial, then (ii) cash-bid auction; borrower’s buyback window before RD transfer.
Developer In-House	2- to 5-yr term, higher interest; balloon payment	Typically Maceda-Law covered; 60-day grace; refund rights.

9. Practical Tips for Buyers

Never rely solely on photocopies—always pull CTCs.
Insist on a walkthrough of the exact unit/lot; use smartphone GPS or a surveyor’s stakes.
Watch the “Total Contract Price” vs. “Net Proceeds”; clarify taxes in writing.
Keep proof of payments (ORs, bank slips) — needed for Maceda Law and BIR CAR.
Demand deliverables: subdivision plan, condominium floor plan, HLURB LTS, HOA by-laws.
Budget 7-10 % of the selling price for taxes, fees, and incidental expenses.
Record email trails with agents; Philippine courts now admit electronic evidence (Rules on E-Evidence, A.M. 01-7-01-SC).

10. Seller’s Checklist

Secure updated RPT clearance and Tax Declaration.
If married, prepare Spouse’s Consent & both IDs.
If corporate, issue Secretary’s Certificate + SEC GIS.
Pay estate or donor’s taxes first, if applicable.
Clear mortgages or prepare Mortgagee’s Cancellation.
Plan for Withholding Tax/VAT if habitually engaged in real estate business.

11. Emerging Trends (2024–2025)

Trend	Impact on Buyers
Digital Title Verification (e-Title)	Faster CTC retrieval; but be wary of phishing “online escrow” portals.
Estate Tax Amnesty Expiry (June 2025)	Heirs must now pay full surcharges → expect more “stalled” titles in secondary market.
Rise of Co-Living & Dorm-tel Projects	Most structures use long-term lease of land to skirt foreign ownership rules—buyer often gets shares/participating interest, not title.
DHSUD One-Stop-Shop Portal (pilot)	Developers lodge LTS digitally; check the portal before paying reservation.

Conclusion

Purchasing a house and lot in the Philippines is less about form-signing and more about sober due diligence: verify the title, know the statutes, and understand the tax matrix. A buyer who systematically checks authority, encumbrances, and compliance documents can avoid the classic traps of double sale, fake titles, and hidden liens. Retain a licensed broker, a seasoned lawyer, and—when boundaries matter—a geodetic engineer. With the legal landscape mapped out above, you can navigate from “dream home” to TCT in hand with confidence and lawful certainty.