This explainer is written for the Philippine legal context. It is educational, not legal advice.

Big picture

A sale of real property after a mortgage has been redeemed (i.e., the secured debt has been fully paid and the encumbrance released) is generally valid—especially when the Transfer Certificate of Title (TCT) or Original Certificate of Title (OCT) remains in the seller’s name. The decisive questions are:

Has the mortgage truly been extinguished (by payment or redemption) and cancelled on the title?
If there was a foreclosure, where are we in the foreclosure timeline (before the auction, during the redemption period, or after the period lapsed and consolidation occurred)?
What is annotated on the title? (mortgage, certificate of sale, notice of lis pendens, adverse claim, second mortgages, etc.)
Did the buyer have or is deemed to have notice of any encumbrances and pending cases?

Under the Torrens system, annotations govern. A buyer of registered land is charged with notice of anything annotated on the title. That single practical rule drives most outcomes below.

Key concepts you need

1) Real estate mortgage (REM) basics

A mortgage does not transfer ownership; it creates a real right (lien) over the property to secure an obligation.
The lien “follows the property” whoever the possessor is. A mortgagor can sell the property, but the buyer acquires it subject to the mortgage unless it is cleared or the mortgagee consents and discharges it.

2) “Redemption” vs ordinary payment

Payment: Debtor pays the loan; mortgage is extinguished; mortgagee issues a Release/Discharge of Mortgage; the Register of Deeds cancels the annotation.
Redemption after foreclosure sale: Debtor (or a redemptioner) pays the foreclosure price plus statutory additions within the applicable period to reverse the effects of the sale. Title is then cleared and stays (or returns) with the mortgagor.

3) Judicial vs extrajudicial foreclosure timelines (simplified)

Judicial foreclosure (court action):
- Equity of redemption: the debtor may redeem before the sale is confirmed by the court.
- After confirmation, as a rule, no post-sale statutory redemption, unless a special law says otherwise.
Extrajudicial foreclosure (Act No. 3135):
- After auction and registration of the Certificate of Sale, the debtor usually has a statutory redemption period (commonly one year counted from registration of the sale).
- If the debtor does not redeem within the period, the purchaser may consolidate title, and the mortgagor’s title is cancelled and replaced.

Practical effect: During the redemption period, ownership is still effectively with the mortgagor, subject to the purchaser’s inchoate rights; after the period lapses (and consolidation is done), ownership moves to the purchaser.

4) Torrens system takeaways

Clean title = no adverse annotations.
Annotated encumbrance = constructive notice to the world; a buyer cannot be in good faith as to that encumbrance.
Cancellation requires action: a lien is not erased by payment alone; it must be formally cancelled at the Registry.

Core scenarios and outcomes

A. Mortgage fully paid; annotation cancelled; seller’s name on title

Status: Mortgage extinguished and cancelled; title remains in seller’s name with no encumbrance annotation.
Validity of sale: Fully valid. Buyer acquires clean title, subject only to matters not needing annotation (e.g., legal easements).
Best practice: Attach to the deed the Release of Mortgage, Certificate Authorizing Registration (CAR), and Registry certification that the REM annotation has been cancelled.

B. Mortgage fully paid; annotation not yet cancelled; seller’s name on title

Status: Substantively paid, but lien still annotated.
Validity of sale: Sale is generally valid between the parties, but risky for the buyer. The mortgage still encumbers the land until cancellation.
Fix:
1. Secure the mortgagee’s Release/Discharge;
2. File for cancellation of the REM annotation;
3. Complete the sale after cancellation or make the sale expressly conditional on cancellation, with funds held in escrow.

C. Property sold during the extrajudicial redemption period; seller’s name still on title; Certificate of Sale annotated

Status: Auction already held; Certificate of Sale is annotated; redemption period running.
Validity of sale: The mortgagor may sell or assign their right of redemption and residual ownership. The buyer takes title subject to the purchaser’s rights and must redeem within the period to defeat consolidation.
Buyer’s checklist:
- Price the deal assuming you must fund the redemption.
- Ensure the deed assigns the right of redemption.
- Track the exact redemption deadline (counted from registration of the certificate of sale).

D. Redemption completed after foreclosure sale; seller’s name on title; Certificate of Sale annotation cancelled

Status: Mortgagor redeemed on time; Registry cancelled the sale annotation; title remains in seller’s name.
Validity of sale: Fully valid. Buyer can rely on the clean title.
Docs to see: Redemption receipt(s), Certificate of Redemption, cancellation entry by the Registry.

E. Redemption attempted by a third party (not the owner), with or without subrogation

Status: A third party pays the mortgage/foreclosure price.
Rules of thumb:
- If payment was with the debtor’s consent or under legal subrogation, the payer can be subrogated to the mortgagee’s rights and may compel assignment of the mortgage or claim reimbursement with a lien.
- If payment was without consent and no legal subrogation applies, the payer may only seek reimbursement from the debtor—not ownership—unless there is a separate sale or assignment.
Validity of a subsequent sale by the registered owner: Still generally valid, but the buyer must confirm whether the third party has a subrogated lien or a registered claim.

F. After the redemption period lapsed; title consolidated in the purchaser’s name (mortgagee or highest bidder)

Status: Seller’s name is no longer on the title once consolidation is completed.
Validity of sale by the former owner: Void as to the purchaser; the former owner no longer has title to convey.
Caveat: If the Registry still shows the old owner (i.e., consolidation not carried out yet) but the redemption period has lapsed, a buyer who sees an annotated Certificate of Sale cannot be in good faith; consolidation is a matter of course.

“When title is in the seller’s name”: what exactly to verify

Owner’s name on latest certified true copy (CTC) of title.
All annotations on the back:
- Real Estate Mortgage (REM) numbers and dates
- Certificate of Sale (if any), with date of registration
- Releases/Discharges and cancellation entries
- Lis pendens, adverse claims, writs, notices of levy, other liens
Registry of Deeds daybook entries for pending filings (optional but helpful).
Tax declarations & arrears (for local liens).
Chain of title (previous CTCs) to catch missed annotations.

How “good faith buyer” protection actually works

For registered land, good faith generally protects buyers only against unregistered or unannotated defects.
If the title shows a mortgage or certificate of sale, a buyer is charged with notice and cannot claim good faith protection against those encumbrances.
Conversely, once the Registry cancels the annotation and the title is clean, a buyer may rely on it (subject to exceptional cases like forgery or double titling).

Documentation you’ll want in your file

From the mortgagee:
- Release/Discharge of Mortgage (or Deed of Cancellation)
- Certificate of Redemption (if post-foreclosure redemption)
- Cancellation of Certificate of Sale / Registry cancellation notation
From the seller:
- Latest CTC of Title (very recent)
- Tax clearance, updated Tax Declaration
- IDs, marital consent (if conjugal/community), SPA if using an attorney-in-fact
From the Registry/BIR/LGU:
- Annotated cancellation entries (photocopy of title’s back page)
- CAR (BIR) and proof of DST, CGT/CWT, local transfer tax
If sale occurs during redemption period:
- Deed of Assignment of Right of Redemption or clear wording in the Deed of Sale transferring that right
- Computation sheet for redemption amount and deadline tracker

Deal structuring tips (to prevent nightmares)

Make the sale conditional on delivery of a clean, lien-free title—spell out that the buyer’s obligation to pay the balance arises only upon:
- issuance and annotation of the Release/Discharge, or
- successful redemption and cancellation of the sale annotation.
Use escrow for the balance of the price and taxes until the Registry cancels the encumbrance.
Require seller undertakings:
- to settle all mortgage dues/redemption costs,
- to indemnify for any leftover liens, and
- to cooperate in cancellation and title transfer.
If buying during the redemption period, pay two pockets: (a) purchase price to the seller for the equity, and (b) the redemption amount to the purchaser/mortgagee—time this carefully.
If a third party funded the payoff, require proof of subrogation or waiver to avoid latent claims.

Common pitfalls (and how to avoid them)

Paying in full before cancellation: Do not release the entire price until the Registry has cancelled the mortgage/sale annotation.
Ignoring small annotations: A “harmless” lis pendens can suspend transfer or unwind your deal later.
Assuming “paid = cancelled”: Registry cancellation is a separate step; insist on it.
Letting the redemption period lapse while processing**: If you buy during the redemption period, calendar the deadline and prepare funds early.
Thinking you’re a buyer in good faith despite annotations**: Annotations defeat good faith. Full stop.

Practical checklists

For sellers (title in your name)

Get the Release/Discharge of Mortgage from the bank.
File cancellation at the Registry of Deeds; secure a fresh CTC showing no encumbrance.
If post-foreclosure, ensure Certificate of Redemption and cancellation of sale annotation are on record.
Prepare the Deed of Sale and taxes; keep proof for the buyer’s due diligence.

For buyers

Obtain a very recent CTC of title; scrutinize all annotations.
If any mortgage/sale is annotated, stop and require cancellation or price accordingly.
Use escrow tied to Registry cancellation milestones.
If buying during redemption period, ensure assignment of the right of redemption and fund the redemption before deadline.
Get seller representations/warranties and indemnity for hidden liens.

Short answers to frequent questions

Q: If the mortgage is already paid but the annotation isn’t cancelled yet, is a sale valid? A: It’s valid between the parties, but the buyer takes the land still encumbered until the Registry cancels the annotation.
Q: Can the owner sell the property during the extrajudicial redemption period? A: Yes, but the buyer acquires the right of redemption and must redeem on time; otherwise, the purchaser at auction can consolidate title.
Q: Mortgagee refuses to issue a release even after full payment—what now? A: The owner may pursue judicial relief to compel execution of a release or cancellation of the annotation upon proof of full payment.
Q: A third party redeemed the mortgage; can the registered owner still sell? A: Usually yes, but the buyer must verify if the third party has a registered subrogated lien or claim; otherwise, risk of dispute.

Bottom line

A sale after mortgage redemption where the title remains in the seller’s name is generally valid—and safest—once all foreclosure or mortgage annotations are cancelled at the Registry of Deeds. Until the Registry proves the title is clean, treat the deal as encumbered and structure payment and timing accordingly. In the Philippine Torrens system, what’s on (or off) the title controls.