Selling a piece of real estate is complex, but selling only a portion of a larger tract of land adds layers of technical and legal requirements. In the Philippines, you cannot simply "draw a line" on a map and hand over a deed. The process involves the physical segregation of the property, government approval of the survey plans, and the issuance of new titles.
1. The Preliminary Step: Verification of Title
Before engaging a buyer, ensure your Transfer Certificate of Title (TCT) is "clean."
- Encumbrances: Check the back of the title for any annotations like mortgages, adverse claims, or pending litigation.
- Taxes: Ensure that the Real Property Tax (RPT) or "Amilyar" is paid up to date. You cannot process a subdivision if there are tax delinquencies.
2. The Subdivision Survey
To sell a portion, you must define exactly where that portion begins and ends.
- Hiring a Geodetic Engineer: You must hire a licensed Geodetic Engineer to conduct a "Subdivision Survey." They will place stone markers (monuments) on the ground to define the boundaries of the new lots.
- The Subdivision Plan: The engineer will prepare a Subdivision Plan (commonly known as a "Sketch Plan" or "Blue Print"). This plan must be submitted to and approved by the Department of Environment and Natural Resources (DENR) via the Land Management Services (LMS) or the Land Registration Authority (LRA).
3. Preparation of the Deed of Sale
Once the survey is approved and you have the technical descriptions for the new lots, you can execute the legal transfer.
- Deed of Absolute Sale (DOAS): This document must specify that only a portion of the land is being sold. It should refer to the specific "Lot Number" generated by the approved subdivision plan.
- Notarization: The DOAS must be notarized to be considered a public document, which is a requirement for registration.
4. Taxes and Clearances
Transferring ownership in the Philippines involves several government agencies. Usually, the seller pays for the taxes related to the sale, while the buyer pays for the registration (though this is subject to agreement).
| Tax/Requirement | Agency | Description |
|---|---|---|
| Capital Gains Tax (CGT) | BIR | 6% of the Selling Price or Fair Market Value (whichever is higher). |
| Documentary Stamp Tax (DST) | BIR | 1.5% of the Selling Price or Fair Market Value. |
| Transfer Tax | Treasurer's Office | Usually 0.5% to 0.75% depending on the City/Province. |
| CAR (Certificate Authorizing Registration) | BIR | The "Golden Ticket" that proves taxes are paid; required by the Registry of Deeds. |
5. Splitting the Title (The Final Step)
With the CAR from the BIR and the Approved Subdivision Plan, you proceed to the Registry of Deeds (RD).
- Surrender of the Mother Title: You must surrender the original "Mother Title."
- Cancellation and Issuance: The RD will cancel the Mother Title and issue new individual TCTs:
- TCT A: For the portion sold to the buyer.
- TCT B: For the remaining portion kept by the seller (often called the "Retained Area").
Note: If the property is part of a formal housing subdivision project, you may also need a License to Sell from the Department of Human Settlements and Urban Development (DHSUD).
Common Pitfalls to Avoid
- Selling without an Approved Survey: Avoid selling "undivided shares" unless you intend to enter into a Co-Ownership. Without a specific subdivision plan, the buyer cannot get a title in their name alone.
- Rights-Only Sales: Be wary of "Rights" or "Tax Declaration Only" properties. These do not provide the same legal security as a TCT and are much harder to subdivide.
- Right of Way: When subdividing, ensure the portion being sold (or the portion being kept) has access to a public road. If it is "landlocked," you must legally provide an Easement of Right of Way.
Would you like me to draft a checklist of the specific documents you'll need to bring to the Bureau of Internal Revenue (BIR) to get your Certificate Authorizing Registration?