In the Philippines, the death of a landowner does not automatically transfer the legal right to sell the property to their heirs. While succession occurs at the moment of death, the Transfer Certificate of Title (TCT) remains in the name of the deceased until a formal legal process is completed. Selling a property without updating the title or following the proper probate or extrajudicial procedures is legally impossible and can lead to significant liabilities.

To successfully sell inherited land, heirs must navigate the settlement of the estate, payment of taxes, and the issuance of a new title.

1. Settlement of the Estate

The first step is to legally establish who the heirs are and how the property is divided. There are two primary ways to do this:

A. Extrajudicial Settlement of Estate (EJS)

This is the most common and fastest route, applicable only if:

The deceased left no will.
The deceased left no debts (or all debts have been paid).
All heirs are of legal age (or represented by judicial guardians) and are in unanimous agreement on the division of the property.

The heirs must execute a public instrument called a "Deed of Extrajudicial Settlement of Estate." If there is only one heir, an "Affidavit of Self-Adjudication" is filed instead.

B. Judicial Settlement of Estate

If the heirs cannot agree on how to divide the property, or if there is a Last Will and Testament, the settlement must go through the courts. This involves filing a petition for probate (if there is a will) or judicial partition. This process is significantly more expensive and can take years to resolve.

2. Mandatory Publication

Under Rule 74, Section 1 of the Rules of Court, an Extrajudicial Settlement must be published in a newspaper of general circulation once a week for three consecutive weeks. This serves as notice to any creditors or unknown heirs who may have a claim against the estate.

3. Payment of Estate Taxes

Before any title can be transferred or a sale can be recognized by the government, the Estate Tax must be paid to the Bureau of Internal Revenue (BIR).

Rate: Under the TRAIN Law (effective Jan 1, 2018), the estate tax is a flat rate of 6% of the net estate.
eCAR: Once the taxes are settled, the BIR will issue an Electronic Certificate Authorizing Registration (eCAR). This document is strictly required by the Register of Deeds to transfer the title.

4. The Process of Selling: Two Approaches

Heirs generally choose one of two methods when finding a buyer:

Method A: Transfer to Heirs First (Clean Title)

The heirs complete the EJS, pay the taxes, and have the Register of Deeds cancel the parent’s title to issue a new TCT in the names of the heirs. Once the heirs’ names are on the title, they can sell the property as the registered owners.

Method B: Simultaneous Sale (Deed of Sale with EJS)

To save on processing time, heirs often execute a "Deed of Extrajudicial Settlement with Absolute Sale." In this document, the heirs first adjudicate the property to themselves and then immediately sell it to the buyer within the same deed.

Note: While this combines steps, the BIR and the Register of Deeds will still treat this as two "transfers" for tax purposes: one from the deceased to the heirs (Estate Tax), and one from the heirs to the buyer (Capital Gains Tax).

5. Required Documents for the Sale

To finalize the transfer from the deceased parent to a buyer, the following documents are essential:

Death Certificate (PSA Certified).
Birth Certificates of the Heirs (To prove relationship).
Marriage Certificate (If the surviving spouse is involved).
Original Owner’s Duplicate Copy of the TCT.
Certified True Copy of the Tax Declaration.
Deed of Extrajudicial Settlement of Estate.
Affidavit of Publication and clippings from the newspaper.
BIR eCAR.
Real Property Tax Clearance (From the City/Municipal Treasurer).

6. Important Legal Considerations

The Two-Year Lien (Rule 74, Section 4)

Every title issued through an extrajudicial settlement carries an encumbrance (annotation) for two years. This lien protects any rightful heir or creditor who may have been excluded from the settlement. While the property can still be sold, many banks are hesitant to accept such titles as collateral for loans until the two-year period has lapsed.

Capital Gains Tax (CGT) and Other Fees

In addition to the 6% Estate Tax, the sale itself is subject to:

Capital Gains Tax: 6% of the selling price or zonal value, whichever is higher.
Documentary Stamp Tax: 1.5% of the value.
Transfer Tax: Usually 0.5% to 0.75% depending on the local government unit.
Registration Fees: Paid to the Register of Deeds.

The Role of the Surviving Spouse

If the property was acquired during the marriage, it is likely conjugal property. In this case, only half of the property belongs to the "estate" of the deceased. The other half belongs to the surviving spouse. The Deed of Settlement must reflect this distinction accurately to avoid the rejection of the transfer.