Selling a piece of your inheritance can be a path toward financial liquidity, but when the land is shared with siblings or relatives, the process is rarely as simple as finding a buyer and signing a paper. In the Philippines, the transition from being a "co-owner" to a "sole owner of a specific lot" involves navigating the Civil Code and specific land registration laws.
Here is a comprehensive guide on the legalities of selling a portion of inherited land.
1. Understanding Co-Ownership (Pro Indiviso)
When a parent or relative passes away leaving land to multiple heirs, those heirs become co-owners. Under the law, this is known as ownership pro indiviso (undivided).
- The "Ideal Share": You do not own the "north side" or the "left corner." Instead, you own an abstract percentage (e.g., 1/3 or 1/4) of the entire property.
- Rights of Co-owners: Every co-owner has the right to use the property, but they must not injure the interests of the others. More importantly, every co-owner has the right to sell their ideal share without the consent of the others, but they cannot sell a specific, physical portion without a partition.
2. The Necessity of Partition
To sell a "portion" (e.g., "the 200sqm facing the road"), you must first undergo a Partition. This is the process of segregating the land into distinct lots.
Types of Partition
- Extrajudicial Partition: The heirs agree among themselves on how to divide the land. They sign a "Deed of Extrajudicial Settlement of Estate with Partition."
- Judicial Partition: If the heirs cannot agree, one must file a case in court to force the division of the property.
3. The Right of Legal Redemption
Before you sell your share to a third party (someone who is not a co-heir), you must be aware of Article 1620 of the Civil Code.
- The Rule: If a co-owner sells their share to a stranger, the other co-owners have the right to "redeem" that share. This means they can buy it back from the stranger at the same price within 30 days of being notified in writing of the sale.
- The Goal: The law prefers keeping the land within the family rather than introducing outsiders into the co-ownership.
4. Essential Deed Requirements
To make the sale legal and transferable, specific documents must be executed and filed.
| Document | Purpose |
|---|---|
| Extrajudicial Settlement (EJS) | Proves who the legal heirs are and that the estate is being settled. |
| Deed of Absolute Sale | The contract transferring the specific portion/share to the buyer. |
| Subdivision Plan | A technical survey (approved by the Land Management Bureau) showing the exact boundaries of the portion being sold. |
| CAR (Certificate Authorizing Registration) | Issued by the BIR after taxes are paid; required to transfer the title. |
5. The Step-by-Step Process
- Settle the Estate Taxes: You cannot transfer inherited land until the Estate Tax is paid to the Bureau of Internal Revenue (BIR). (Note: Check for current Estate Tax Amnesty programs).
- Survey and Subdivision: Hire a Geodetic Engineer to create a subdivision plan. This defines the "portion" you intend to sell.
- Execute the Deed: Sign the Deed of Sale. If the land is still undivided, you are technically selling your "undivided interest."
- Publication: An Extrajudicial Settlement must be published in a newspaper of general circulation once a week for three consecutive weeks.
- Title Issuance: Once the BIR issues the CAR and the Registry of Deeds processes the EJS and Sale, the original title is cancelled, and new Transfer Certificates of Title (TCT) are issued for the new individual lots.
6. Common Pitfalls to Avoid
- Selling without a Survey: Selling "200sqm" without a technical description leads to overlaps and boundary disputes later.
- Ignoring the 30-Day Notice: If you don't give written notice to your co-heirs, their right to redeem the land doesn't start to run, meaning they could potentially void the sale years later.
- Unpaid Real Property Tax: Ensure all "Amilyar" (property taxes) are updated, or the local government may have a lien on the property.
Legal Tip: Always ensure that the Deed of Sale is notarized. A notarized deed transforms a private document into a public instrument, which is a requirement for registration with the Registry of Deeds.
Would you like me to draft a checklist of the specific documents you'll need to gather for the Bureau of Internal Revenue (BIR) to get the tax clearance?