Transferring House Title to Buyer's Name After Mortgage Release Under Philippine Property Law

I. Overview and Governing Principles

In the Philippines, ownership of land and house (real property) is proven and protected by a Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) issued under the Torrens system (Presidential Decree No. 1529). A registered real estate mortgage is annotated on the title and constitutes a lien that follows the property whoever owns it (Art. 2126, Civil Code). The lien remains until the mortgage is fully paid and formally cancelled.

“After mortgage release” means the mortgage debt has already been fully settled, the mortgagee (bank, Pag-IBIG, or private lender) has executed a Release of Real Estate Mortgage (or Deed of Cancellation of Mortgage), and the annotation of the mortgage has either (1) already been cancelled by the Registry of Deeds or (2) is ready for simultaneous cancellation together with the registration of the sale. The property is now technically or practically “clean,” and ownership can be transferred to the buyer via Deed of Absolute Sale.

The transfer process is governed primarily by:

• Presidential Decree No. 1529 (Property Registration Decree)
• Act No. 496 as amended (Land Registration Act)
• Republic Act No. 9646 (Real Estate Service Act)
• Train Law (RA 10963) and Revenue Regulations on taxation of real property transfers
• Civil Code provisions on sale (Arts. 1458–1637) and double sale (Art. 1544)
• Local Government Code (RA 7160) on real property tax and transfer tax

II. Two Practical Scenarios After Mortgage Release

Scenario A – Mortgage Already Cancelled (Clean Title in Seller’s Name)

The bank has already registered the Release of Mortgage, the annotation is cancelled, and a new clean TCT has been issued in the seller’s name. This is the simplest case.

Scenario B – Release of Mortgage Executed but Not Yet Registered (Most Common in Practice)

The mortgage debt is paid (usually by the buyer as part of the purchase price), the bank has issued the Release of Mortgage and surrendered the owner’s duplicate title, but the cancellation of annotation has not yet been registered. In this case, the Release of Mortgage and the Deed of Absolute Sale are submitted together to the Registry of Deeds for simultaneous registration: mortgage cancelled first, then sale registered, resulting in one new TCT in the buyer’s name. This saves registration fees and is the standard practice in 95% of bank-financed or previously mortgaged properties sold in the market.

Both scenarios follow essentially the same documentation and tax requirements.

III. Step-by-Step Procedure (Current Practice as of 2025)

1. Settlement of the Mortgage and Issuance of Release

   • Full payment of the outstanding loan (redemption amount, including interest and penalties if any).
   • Bank/Pag-IBIG/private lender prepares and notarizes the Release of Real Estate Mortgage or Cancellation of Mortgage.
   • Bank surrenders the owner’s duplicate TCT/CCT (which it has been holding as mortgagee).

2. Execution of Notarized Deed of Absolute Sale (DOAS)

   • Seller and buyer execute the DOAS before a notary public.
   • The deed must state the full consideration (true selling price). Understatement is tax evasion (BIR will use zonal value or fair market value, whichever is higher).
   • If the buyer is married, the spouse must sign or give conjugal consent.

3. Payment of National Taxes at the Bureau of Internal Revenue (BIR)

   • Capital Gains Tax (CGT) – 6% of the higher amount between the gross selling price and the BIR zonal value/fair market value. Paid by the seller (or as agreed, but legally the seller’s liability).
   • Documentary Stamp Tax (DST) – 1.5% of the same tax base as CGT. Paid by the seller (TRAIN Law).
   • After payment, the BIR issues an electronic Certificate Authorizing Registration (eCAR) within 3–10 working days (faster if filed online via ORUS).

4. Payment of Local Taxes and Clearances

   • Real Property Tax Clearance – obtain latest Real Property Tax Receipt or Certificate of No Delinquency from the city/municipal Treasurer’s Office.
   • Transfer Tax – 0.5% to 0.75% of the higher of selling price, zonal value, or assessed value (rate depends on the city/municipality; e.g., 0.75% in Quezon City, Makati, Taguig).
   • Local government clearance fees (varies, usually ₱1,000–₱5,000).

5. Submission to the Registry of Deeds (RD) Required documents (original + photocopies):

   • Notarized Deed of Absolute Sale (original signed by both parties)
   • Notarized Release of Real Estate Mortgage (if not yet registered)
   • Owner’s duplicate TCT/CCT
   • Tax Identification Numbers (TIN) of seller and buyer
   • Valid government IDs of seller, buyer, and spouses (if married)
   • eCAR from BIR
   • Real Property Tax Clearance or latest tax receipt
   • Transfer Tax Receipt / Official Receipt from LGU
   • Special Power of Attorney (if executed through representative)
   • Marriage contract or affidavit of solo parent (if applicable)
   • Condominium Certificate of Assessment clearance (for condos)
   • Homeowners Association clearance (for subdivision houses/condos)

   The Registry of Deeds will:

   • Cancel the mortgage annotation (if Release is submitted)
   • Register the Deed of Absolute Sale
   • Cancel the seller’s TCT
   • Issue a new TCT in the name of the buyer

   Processing time: 15–45 days in most RDs (faster in computerized RDs such as Quezon City, Taguig, Pasig, Makati, Manila). Some RDs now offer same-week release under LRA’s “one-day titling” program if all documents are complete.

6. Payment of Registration Fees to Registry of Deeds

   • Based on the declared consideration or fair market value (approx. ₱8,000–₱25,000 for properties ₱2M–₱20M).
   • Additional ₱1,000–₱3,000 for e-title annotation if the RD is already under the Philippine Land Registration and Information System (PhilLRIS).

7. Release of New Title to Buyer

   • Buyer (or representative) claims the new TCT.
   • Secure new Tax Declaration from the Assessor’s Office (usually within 1–2 months after title issuance).

IV. Taxes and Fees Summary (Approximate, 2025 Rates)

Item	Rate/Base	Paid By	Approx. Amount (₱10M property)
Capital Gains Tax	6% of higher of selling price or zonal value	Seller	₱600,000
Documentary Stamp Tax	1.5% of same base	Seller	₱150,000
Transfer Tax (e.g., QC rate)	0.75%	Buyer	₱75,000
Registration Fees (LRA/RD)	Schedule based on FMV	Buyer	₱15,000–₱30,000
Notarial Fee (DOAS)	₱2,000–₱10,000 + 1–2% of price	Buyer/Seller	₱50,000–₱100,000
Real Property Tax Clearance	Current + advance	Seller	Varies
Miscellaneous (photocopy, etc.)			₱5,000–₱10,000

Total buyer’s cost (excluding purchase price): roughly 1.5–2.5% of property value.
Total seller’s cost: roughly 8–9% (CGT + DST + notarial).

V. Special Cases and Important Notes

1. Pag-IBIG Housing Loan Mortgage

   • Pag-IBIG issues a “Letter of Guarantee” instead of immediate release. Cancellation is done only after full payment is confirmed (30–60 days delay possible).

2. Bank-Foreclosed Properties Bought via “Redemption” or Direct Sale

   • If buyer paid the bank directly to redeem, the bank usually executes a Deed of Absolute Sale in favor of the buyer (not the original owner). Process is simpler.

3. Assumption of Mortgage (Rarely Allowed for Individual Buyers)

   • Only possible if the lender approves the buyer as new borrower. Title remains in original borrower’s name until full payment and release.

4. Married Sellers/Buyers

   • Both spouses must sign the DOAS even if title is only in one spouse’s name (conjugal property presumption, Family Code).

5. Non-Resident Seller

   • CGT is withheld at source (creditable withholding tax) at 6%, but final CGT still applies.

6. Electronic Title (e-Title) RDs

   • Quezon City, Taguig, Pasig, Makati, Mandaluyong, Marikina, San Juan, Pasay, Muntinlupa, Las Piñas, Parañaque, Davao, Cebu are now under PhilLRIS. New titles are electronic; owner receives only a printed “Certified True Copy” with QR code.

7. Title Still with Bank After Full Payment

   • Some banks delay surrender. Buyer/seller can file an administrative petition with LRA for release of title (rarely needed).

8. Double Sale Situations

   • If seller sold the same property twice, the buyer who first registers in good faith wins (Art. 1544, Civil Code).

VI. Common Problems and How to Avoid Them

• Delayed eCAR – file taxes immediately after notarization.
• Incomplete real property tax payments – settle all arrears before DOAS execution.
• Zonal value higher than selling price – BIR will use zonal value for CGT/DST.
• Lost owner’s duplicate – file petition for reconstitution or administrative reconstruction at RD/LRA.
• Encumbrances other than mortgage (lis pendens, adverse claim, Section 4 Rule 74 notice) – must be cancelled first.

VII. Conclusion

Transferring title after mortgage release is a straightforward registration process once the loan is fully settled and the Release of Mortgage is in hand. The key to a smooth, fast, and low-cost transfer is complete documentation, honest declaration of the selling price, and simultaneous submission of the Release and Deed of Absolute Sale to the Registry of Deeds. Engaging a licensed broker, lawyer, or experienced title processor significantly reduces delays and risks. Once the new TCT is in the buyer’s name, ownership is indefeasible against the whole world under the Torrens system.