A practical legal article for buyers, written in Philippine context

I. Why Philippine real estate deals fail

Most problems in house-and-lot purchases come from one of these:

bad or fake titles, 2) unpaid taxes, 3) uncleared liens/mortgages, 4) wrong documents, 5) skipping due diligence, or 6) poorly drafted contracts.

Buying property is not just “pay, sign, and move in.” In the Philippines, ownership is best protected by:

a valid Transfer Certificate of Title (TCT) (or Condominium Certificate of Title (CCT) for condos), and
registration of the deed with the Registry of Deeds, plus
updated tax declarations with the local assessor, and
taxes properly paid (especially the transfer taxes and capital gains/withholding).

This article focuses on house-and-lot transactions, which usually involve both the land (titled under a TCT) and the building improvements (reflected in the tax declaration).

II. The basic roadmap (big picture)

A typical purchase looks like this:

Pre-checks and negotiation (verify title, seller capacity, taxes, liens)
Reservation / earnest money (optional but common)
Contract to Sell (common for installment; sometimes skipped for cash)
Deed of Absolute Sale (DOAS) (main conveyance document)
Pay taxes and secure clearances (BIR + LGU)
Register with Registry of Deeds (transfer of title)
Update tax declaration and pay real property tax under buyer’s name
Actual turnover, utilities, HOA, occupancy issues

Each step has legal requirements and practical traps.

III. Step 1 — Confirm you are legally allowed to buy the property

A. Buyer eligibility (common legal limits)

Filipino citizens may generally buy land and houses without restriction.
Foreigners generally cannot own land, but may have limited options (e.g., condos within foreign ownership limits, long-term leases, or structures without land ownership—each has major caveats).
Former natural-born Filipinos have special allowances to acquire limited land area (subject to conditions).
Corporations can buy land only if they meet constitutional ownership requirements and other legal limits.

If there’s any foreign element (buyer, spouse, funding, corporate structure), treat eligibility as a first checkpoint because a void acquisition is an expensive mistake.

B. Marital status matters

In practice, titles and signatures depend heavily on whether the seller or buyer is:

single, married, separated, widowed, annulled, etc. If the seller is married, spousal consent is usually required for property considered part of the marital/absolute community or conjugal property regime.

IV. Step 2 — Identify the correct property and check what exactly is being sold

In the Philippines, “house and lot” may involve:

titled land (TCT) and
improvements (house) recorded in the Tax Declaration (not proof of ownership by itself, but a key document for taxation and local records).

Confirm boundaries and identity:

lot number, area (sqm), location, and whether fences/structures match the title and survey plan.

If the seller shows only a tax declaration and no title, that’s a different category of transaction (often higher risk). This article assumes titled property.

V. Step 3 — Due diligence checklist (do this before paying big money)

A. Verify the title is genuine and clean

Ask for a clear copy of the owner’s duplicate certificate of title (TCT). Then verify via the Registry of Deeds:

Request a Certified True Copy (CTC) of the title
Request an updated annotation check: mortgages, adverse claims, lis pendens, court orders, encumbrances

Red flags:

seller cannot produce owner’s duplicate title
title has liens, mortgage, or court annotations
title is “in the process of transfer” for years
names/spelling don’t match seller’s IDs/civil status documents

B. Check taxes and local records

Latest Real Property Tax (RPT) receipts (city/municipal treasurer)
Tax Clearance (LGU)
Latest Tax Declaration for land and improvements (assessor’s office)

Unpaid RPT can lead to penalties and even tax delinquency sale risks. Buyers often require all RPT to be updated prior to closing.

C. Confirm seller’s capacity and authority

Require:

Government IDs
Civil status documents (marriage certificate, etc., as applicable)
If seller is an estate/heirs: extra steps (see Section XIII)
If seller is a corporation: board resolution/secretary’s certificate, authorized signatory proof

D. Check possession and occupancy

Confirm who actually occupies the property. If there are tenants or informal occupants:

understand lease status, notice requirements, and eviction realities.

E. Check physical and compliance issues (practical but critical)

Right of way/access road
Flooding, easements, road widening
Zoning issues
Building permits/occupancy (practical risk)
HOA restrictions/subdivision dues These don’t always block transfer, but they can destroy value.

VI. Step 4 — Agree on the deal terms (and put them in writing)

Key deal points:

Purchase price and payment schedule
What is included (fixtures, appliances, improvements)
Who pays which taxes/fees (negotiable but common allocations exist)
Closing date and turnover date
Condition precedent: “subject to clean title,” “subject to BIR issuance,” etc.
Default remedies and refund/forfeiture rules
Vacate clause (if seller stays temporarily)
Warranties: no liens, taxes paid, authority to sell

Earnest money vs. option money vs. reservation

These terms are often used loosely. Clarify in writing:

Is it part of the price?
Is it refundable?
Under what conditions is it forfeited? A vague receipt can cause ugly disputes.

VII. Step 5 — Choose the correct contract structure

A. Deed of Absolute Sale (DOAS)

Used when the sale is completed (usually full payment). Title transfer follows.

B. Contract to Sell (CTS)

Common for installment or developer transactions. In a CTS, the seller typically retains ownership until full payment; only then is a DOAS executed. A CTS protects the seller but can expose the buyer if not drafted fairly.

C. Special Power of Attorney (SPA) transactions

If a representative signs, the SPA must be properly executed and typically notarized, often with consular requirements if executed abroad.

VIII. Step 6 — Prepare the documents for closing

Typical core documents for a standard individual-to-individual house-and-lot sale:

From Seller:

Owner’s duplicate TCT
Valid IDs (and spouse’s IDs if applicable)
Marriage certificate / proof of civil status (as relevant)
Latest Tax Declaration (land & improvements)
Latest RPT receipts and Tax Clearance
If mortgaged: bank release documents (see below)
Notarized DOAS (to be executed at closing)

From Buyer:

Valid IDs
TIN (often required for BIR documentation)
Funds for payment and taxes/fees (or proof of bank financing)

IX. Step 7 — Closing and notarization: execute the Deed of Absolute Sale properly

A. Why notarization matters

A DOAS must be notarized to become a public instrument and to be registrable. Notarization must be genuine: correct parties, proper IDs, actual appearance (or legally valid remote/alternative procedures where applicable).

B. Consider “release of payment” mechanics

To reduce risk:

Use manager’s check, escrow-like arrangements, or staged releases
Ensure the seller hands over the owner’s duplicate title and other originals upon payment
If there’s an existing mortgage: coordinate direct payoff to the bank and release of mortgage

X. Step 8 — Taxes you must deal with (the “including taxes” core)

Philippine real estate transfers involve national taxes (BIR) and local taxes (LGU). Allocation is negotiable, but there are common practices.

A. Capital Gains Tax (CGT) — usually a seller tax

For sale of real property classified as a capital asset (typical residential property not used in business), CGT is generally imposed and commonly shouldered by the seller by practice (but parties may agree otherwise).

CGT is commonly computed based on the higher of:
- selling price, or
- zonal value, or
- fair market value (as applicable in practice)

Note: Some transactions may instead be subject to creditable withholding tax (CWT) (more common if the property is an ordinary asset, e.g., seller in real estate business). Classification matters.

B. Documentary Stamp Tax (DST) — commonly buyer or shared

DST applies to documents like the deed of sale. In practice, many deals assign DST to the buyer, but it’s negotiable.

C. Transfer Tax (LGU) — commonly buyer

Paid to the city/municipality (sometimes province depending on location). You’ll need this to register the transfer.

D. Registration fees (Registry of Deeds) — commonly buyer

Computed based on value brackets.

E. Notarial fees — negotiable

Often buyer pays, sometimes split.

F. Real Property Tax (RPT) arrears and current year allocations

Common handling:

Seller pays all RPT up to the date of sale (or end of year, depending on negotiation)
Buyer pays thereafter Always settle arrears before transfer.

G. Other recurring charges

HOA dues, water association fees
Utility bills (electricity, water, internet) Set a cut-off and require proof of settlement.

XI. Step 9 — BIR processing (critical to transfer the title)

To transfer a titled property, you typically need to secure BIR clearance/documentation that allows registration, commonly culminating in a Certificate Authorizing Registration (CAR) (terminology and internal processes can vary depending on the case and updates, but the practical need is: BIR proof that transfer taxes are settled and that registration is authorized).

Practical notes for buyers:

BIR will require the notarized DOAS and supporting documents.
BIR computation often uses the higher valuation bases.
Delays usually come from missing documents, title issues, name mismatches, unpaid taxes, or questionable notarization.

If you are buying with a deadline (bank financing, move-in schedule), BIR processing time is a major planning factor.

XII. Step 10 — Pay LGU transfer tax and secure local clearances

After or alongside BIR processing (depending on local workflow), you pay transfer tax at the LGU and secure:

transfer tax receipt
tax clearance
other LGU requirements (varies by LGU)

XIII. Step 11 — Register the Deed and transfer the title (Registry of Deeds)

This is the step that perfects ownership in the land registration system.

You submit to the Registry of Deeds:

notarized DOAS
BIR authorization/clearance (e.g., CAR)
transfer tax payment proof
original owner’s duplicate title
other supporting documents required by the RD

Result: issuance of a new TCT in the buyer’s name, and the cancellation of the old title.

Do not treat the sale as “done” until the title is transferred (unless you intentionally accept risk, such as during installment under CTS).

XIV. Step 12 — Update the Tax Declaration (Assessor’s Office)

After the title transfer, update local records:

new Tax Declaration for land and improvements under the buyer
update assessed value if required
then ensure the treasurer’s office reflects the buyer for RPT billing

A common mistake is stopping after the new TCT—then RPT bills remain under the old owner, and future issues arise.

XV. Step 13 — Turnover, possession, and post-closing housekeeping

Checklist:

physical turnover inspection
keys, gate remotes, manuals
occupancy/vacate compliance
transfer utilities (electricity/water), including deposits
HOA membership/clearance and move-in rules
secure copies of all paid taxes and receipts

Keep a complete file: DOAS, CAR/BIR documents, transfer tax receipt, RD receipts, new TCT, tax declarations, RPT receipts.

XVI. Special cases you must handle differently

A. Property with an existing mortgage

You need a clean process to obtain:

bank payoff statement
release of mortgage (and annotation cancellation)
return of owner’s duplicate title Don’t rely on promises—tie releases to payment mechanics.

B. Inherited property (heirs selling)

If the titled owner is deceased, you can’t simply buy from “the children” casually. Typical requirements may include:

settlement of estate (judicial or extrajudicial)
payment of estate tax and securing BIR clearance
transfer to heirs (or direct sale with proper estate documentation, depending on structure and acceptability) This is a major risk area and must be papered properly.

C. Property owned by a corporation

Require authority documents:

board resolution approving sale
secretary’s certificate
proof that signatory is authorized Also expect different tax treatment depending on classification.

D. Property only covered by tax declaration (untitled)

This is a different risk universe: boundary disputes, adverse claims, incomplete ownership history. Buyers should approach with heightened caution, often requiring legal survey and deeper chain-of-possession review.

E. Subdivision/Developer sales

Often involve CTS, standardized documentation, and different timelines. Verify the developer’s authority, licenses, and whether the unit/lot is within approved plans.

XVII. Common scams and how to avoid them

Fake titles / tampered titles → verify via Certified True Copy and RD checks
Double sale → register promptly; do not delay title transfer
Seller not the true owner → match IDs, civil status, authority, and title details
Hidden encumbrances → check annotations, court cases, adverse claims
Unpaid taxes → require updated tax clearances and receipts
“Rights only” misrepresentation → clarify if titled or not; demand proof

XVIII. Practical “who pays what” (typical but negotiable)

Common market practice (not mandatory):

Seller: capital gains tax (or income tax/CWT depending on classification), often some document support costs
Buyer: documentary stamp tax, transfer tax, registration fees, notarial fees
RPT: seller pays arrears and often up to sale date; buyer after

Everything can be negotiated, but the contract must clearly allocate these.

XIX. A safe buyer’s closing checklist (quick reference)

Before full payment, ensure you have:

Certified True Copy of title + clean annotation check
Seller IDs + proof of civil status; spouse consent where needed
Updated RPT receipts + tax clearance
Latest tax declarations (land + improvements)
Clear occupancy plan (vacant or documented turnover)
Notarized DOAS signed correctly
Agreed allocation of taxes/fees in writing
Plan for BIR + LGU + RD submission, including who will process and deadlines

XX. Final reminders

Registration is protection. Delayed registration increases the risk of double sale, adverse claims, and leverage loss.
A tax declaration is not a title. It supports local taxation and possession claims but is not equivalent to Torrens title ownership.
Insist on document completeness. Many “good deals” are discounted because the paperwork is broken.

If you want, paste the basic facts of your planned purchase (province/city, whether cash or loan, seller status, whether mortgaged, and whether occupied), and I’ll produce a step-by-step checklist tailored to that scenario, including a draft “deal term sheet” of what to put in the deed and receipts.