1.

Verify Ownership
 
One of the situations you wouldn’t want to end up with is buying land that
is claimed by several parties. The initial step that you should take is to
verify who the rightful property owner is. Deal only with the right person
or the verified owner of the land that you are interested in buying.
 
To check, secure a ‘Certified True Copy’ of the title from the Register of
Deeds. The title will show the name of the owner and other pertinent
information. Make sure to ask for a photocopy of the title from the seller
to be able to provide the information that the Register of Deeds will ask
from you.
 
2. Look into Possible Issues
 
Once you already have the land title, check for possible issues that it may
reveal. At this stage, you should beware of risks. After all, land acquisition
involves a huge amount of money.
 
 Check the description. What’s described in the title should match
the actual land being sold. To ensure accuracy, you may need the
help of a surveyor to verify technical descriptions.
 
 Ask for a copy of the Tax Declaration. Unpaid taxes can be costly
so you have to make sure that annual taxes are paid. The property’s
tax declaration should present you with the receipts and documents
you need to confirm that taxes are duly paid and there are no
penalties.
 
 Do not overlook right of way issues. This is a critical aspect that
you should inspect. If a road or street bounds the land, you may
need to pay for the property’s right of way.
 
  Confirm rightful seller. There are times when the owners of
property prefer to not deal with the buyers. If this is the case, you’ll
be dealing with brokers or agents. Ask them if they have a Special
Power of Attorney (SPA) from the owner. You also have to check the
validity of the authorized signatures.
 
3. Secure Notarized and Signed Deed of Sale
 
Upon validating that the title is clean and there are no risks overlooked in
buying land and once you are already sure about the property you are
eyeing, you can proceed with the sale. In this process, you need to secure
a notarized and signed deed of sale. Keep in mind that this document will
identify which between the buyer or the seller will shoulder the gains and
documentary stamp tax.
 
4. Settle BIR Fees
 
Once the Deed of Sale is signed, the assigned party must be able to settle
fees with BIR within 30 days. Aside from the payment, some documents
must be furnished. These include:
 
 Original and photocopy of the Deed of Absolute Sale 
 
 Original and photocopy of the Transfer Certificate of Title 
 
 Tax Declaration for Land and Improvement (if applicable)
 
 Buyer and Seller’s Tax ID Numbers 
 
Other documents may be required by BIR. To avoid delays and
inconveniences, it is best to check first with the BIR before going to their
branch.
 
5. Process Transfer Taxes 
 
You’ll need to have transfer taxes assessed and secure its documentation.
Your Capital Gains Tax will be calculated by a BIR representative as well
as the Documentary Stamp Tax. Signed copies of the BIR Form
1706 and BIR Form 2000 will also be required. Once completed, these
forms will be submitted and filed at the office of the Municipal or City
Treasurer’s or authorized agent bank.
 
6. File CGT and DST Documents
 
To be able to obtain the Certificate Authorizing Registration, you need to
file the CGT and DST documents at the BIR. A claim slip will be issued
which you will use to claim the following documents:
 
 Certificate Authorizing Registration (CAR) 
 
 Original copy of BIR-stamped Absolute Deed of Sale 
 
 Owner’s copy of Transfer of Certificate Title
 
 Original copy of Tax Clearance
 
 Original copies of official receipts for all payments made including
transfer fee, tax clearance certificate, DST, CGT
 
 Original copy of latest Tax Declaration for land and improvement (as
applicable)
 
7. Secure New Tax Declaration Copy
 
A copy of the new Tax Declaration document should be secured from the
Municipal or Provincial’s Assessor’s office. Usually, it is released 5 days
after the following documents are presented.
 
  Deed of Absolute Sale
 
 Certificate Authorizing Registration
 
 Transfer Certificate Title
 
 Transfer Tax Receipt
 
Once all payments are settled and documents have been signed, the old
land title will be cancelled by the Registry of Deeds. 
 
A new title with the name of the new owner will be issued. Upon the
official transfer of the land title, ownership of the Tax Declaration will
follow. A copy of the new land title and the Land Tax Declaration from the
City Assessor’s office must be obtained.
 
II. Transaction Costs Guide
 
 Transfer Tax is equivalent to 0.5% of the actual sale price and must
be paid by the land buyer.
 
 Capital Gains is 6% of the actual sale price.
 
 Documentary Stamp accounts for 1.5% of the actual sale price.
 
 The registration fee for the new land title is equivalent to 0.25% of
the actual sale price.
 
NOTE: The percentages reflected above apply for land bought from
individual’s. Land purchased from developers or corporations has different
percentages.
5 Documents You Need When Buying a Lot in the Philippines
Land properties are also a form of investment; it is a significant investment. Getting into real
estate can be tricky, especially if you’re just new. But think of the brighter side; you can build
your dream home, an apartment, a business, or a location to raise livestock that will pay off in
the long term by owning a piece of land. Having land allows you the freedom to choose.

If you’re a land buyer, make sure a lawyer notarizes the transaction and that you have copies of
the contract of sale. After all, this is your money at stake, so don’t skimp on the documentation.
There are a few legal documents you should be aware of in order to buy land and secure your
hard-earned money. 

Deed of Absolute Sale

After receiving the entire payment, a Deed of Absolute Sale will be prepared and filed with the
Registry of Deeds before being delivered to you. This is a notarized document stating officially
that you purchased the property from the seller and are now the owner.

Deed of Adjudication with Sale

The Deed of Adjudication with Sale declares that all surviving heirs have agreed to sell the land,
protecting this contract from future disputes on the sale.

Certificate of Titles
This is the best and most legitimate proof of land ownership. You will receive a copy of this
from the Registry of Deeds. If you purchased a house or lot, you would receive a Transfer of
Certificate of Title (if it was issued after the first title). Still, if you purchased a condominium
unit, you will receive a Condominium Certificate of Title.

Tax Declaration
You must verify that the seller is current on property tax payments. After transferring the title to
your name, you must request a Tax Declaration from your municipality’s Assessor’s office.
Submit the property’s new title and a photograph. Once completed, you will be free of tax
responsibilities.

Contract to Sell
Contract to Sell will act as a reserve agreement, with the seller agreeing to remove the property
from the market. However, until the outstanding debt is settled, the seller retains possession of
the property. If the buyer must make a down payment first and then pay the entire balance over
time, a contract to sell is issued (depends on what they agreed on).
This is a written agreement between the property owner and the land buyer. 

Steps in Buying A Land

Owning a land process isn’t as easy as you think, but it will be totally worth it. It would also be
best to consult with a professional to avoid getting scammed. Professional assistance from real
estate specialists or legal advisers will also make you have an informed decision. Here are the
following steps when you buy land in the Philippines.

Step 1: Confirm Ownership

The first thing you should do is to find out who owns the land. Get a copy of the title from the
Register of Deeds to see if it’s true. The title will show the name of the person who owns it and
other essential things. Remember to get a copy of the title from the seller to be able to answer
questions that the Register of Deeds will ask you when you buy a home.

Step 2: Double check possible issues

Land acquisition involves a lot of money, so make sure to check for possible issues that may
arise in the future.

 Check the land description

 Make sure you get a copy of the Tax Declaration from them.
 Do not forget about the right of way.
 Make sure the seller is legitimate.

Step 3: Obtain a Notarized and Signed Deed of Sale.

A notarized and signed deed of sale is necessary. Make sure to keep in mind that this document
identifies which party will bear the burden of taxation on the sale of the property.

Step 4: Sort out BIR Fees

To avoid inconveniences and delays, make sure to check with the BIR website first before going
to their branch. Within 30 days of signing the Deed of Sale, the assigned party must be able to
pay the BIR any outstanding fees. In addition to the money, some paperwork is required. You
may need the following:

 Deed of Absolute Sale (original and photocopy)

 Transfer Certificate of Title (original and photocopy)
 Tax Declaration for Land and Improvement
 Buyer and Seller’s Tax ID Number

Step 5: Process transfer taxes

A BIR representative will figure out your Capital Gains Tax and Documentary Stamp Tax. The
BIR Form 1706 and BIR Form 2000 will also need to be signed. Submission of these documents
to the Municipal or City Treasurer’s office or an agent bank will be completed and filed once
finished.

Step 6: File CGT and DST Documents

You must submit the CGT and DST documents to the BIR in order to receive the Certificate of
Authorization to Register.

Step 7: Get a copy of the new tax declaration.

Get a copy of the new Tax Declaration paperwork from the Assessor’s office, whether it’s
municipal or provincial. Five days after the following documents are presented, it is usually
made public.

Frequently Asked Questions

What documents are needed when buying land?

You will need the following documents as proof that you have purchased the land. These sample
documents attest to the fact that you purchased the property from the seller and are now the legal
owner of the land or property in question.

 Contract to sell
 Deed of absolute sale
 Deed of adjudication with sale
 Certification of titles
 Tax declaration

What to do before buying a lot in the Philippines?

Here’s a checklist you can refer to so you’d have an informed decision when buying your first lot
investment.

If you are buying from an individual:

 Check the authenticity of the Transfer of Certificate of Title.

 The property should not be mortgaged.
 Ascertain that the land described on the title is, in fact, the land you are purchasing.
 Do background checks on the owner. If you are purchasing from an individual property owner,
get identification documents such as a passport or driver’s license. It is also good to speak with
the sellers’ neighbors to verify their identity.
 To ensure that real estate tax payments are current, request a copy of the Tax Declaration and Tax
Receipts.
If you’re buying from a developer:
 Verify the mother title’s availability.
 Trust a trustworthy developer with a proven track record.
 Examine each clause of the contract to sell that you intend to sign, including the annexes. Hire a
lawyer if possible.
 Negotiate as much as you can.