When Buying Property on Bantayan Island

Having just completed the purchase of a beach front lot on Bantayan Island, I have learned many things concerning the purchase of land and some of the correct procedures for doing so.

First of all, it is quite normal for a piece of land to have no title when you make an inquiry to purchase a lot or parcel of land. It may even be possible that the land has already been subdivided among family members who never formally had the land surveyed or acquired a title for each parcel.

The prospective sellers will assure you that they will give you a “Tax Declaration” and assure you that this document is enough to show ownership of the land. This is not true and should you pay the full cash price for the land and accept a tax declaration for the property, you do not own the land and may never be able to get a title for the property that you have just paid for.

There have been numerous cases in the Philippine courts where a person has purchased a parcel of land and accepted a tax declaration from the seller, that later lost the land and all of the money that they paid for the land. Under no circumstances ever accept a tax declaration as proof of ownership. You should not give the sellers the full cash price for the land before your name is on the title for the land.

It is customary and a normal part of the purchase of land in the Philippines, to have a “Contract to Sell” signed by yourself as the buyer and the seller of the land. Contained within this document are the various provisions that you and the seller will agree to upon the signing of the document.

Some of these provisions may include an agreement to give you a title upon the final payment of the amount owed on the land. At the signing of the Contract to Sell, you are formally entering into an agreement to purchase the land from the seller, and they are agreeing to sell you the property if the conditions of the contract are met. This document protects both the buyer and the seller from any future problems down the road and ensures that everything that both parties believed that they were going to receive as a part of the sale, are fulfilled.

I would suggest that you pay no more that 50% of the agreed price at the signing of the Contract to Sell. Also included would be the agreement that upon the signing of the agreement, you as the buyer will receive immediate possession of the land and have the right to start building a home or any other legal structure on the land. When I first became aware of this provision of the contract to sell, I was shocked that a seller would give the buyer possession of land that was not fully paid for and titled. I later learned that this is normal and customary in the Philippines.

It should be defined in the contract to sell, just who will pay for the fees necessary to secure the title, and how much the buyer and the seller will share in these costs. Although one would think that it is the seller’s sole responsibility to secure the title, Filipinos do not always see things this way. You may have to negotiate with your seller to come to an equitable agreement for how much they will pay and how much you will pay. Get it all in writing.

If all of the documents are in order, it should take about 3 months to obtain the title to the property you are purchasing. At least six weeks of this time are dedicated to the publication notice for a title in a local newspaper for six consecutive weeks. The other six weeks are the time that an attorney or qualified person would require to process the documents necessary to obtain the title for your new parcel of land.

As a part of and an attachment to the Contract to Sell is a “Deed of Extrajudicial Settlement” for the parcel of land you are buying. This document defines the legal area of land that you are buying in relation to the land around it. In many cases the land you are buying was originally a part of a “Mother Deed” that has never been subdivided. Although all the heirs of the land may currently be occupying the property or may have already sold their share of land to someone else, the land may not have ever been formally subdivided with a title for each parcel.

Unfortunately, you must have the signature of everyone who is an heir of the land, with their proper identity indicated on the document and have the entire document notarized by an attorney.

In the Philippines, only an attorney can notarize documents. This means that the person who will sign your documents as having authentic signatures, has gone to 8 years of college. His or her fee will be from 1-5 percent of the contract price. On a parcel of land that is being purchased for 1.5 million Pesos, the attorney can charge you from P15,000 to P75,000 Pesos. This fee is negotiable, so make sure that you find a good reputable attorney who is familiar with real estate law in the Philippines and has processed land titles in the past. It is acceptable to offer the attorney less than 1-5 percent, but many will not budge on at least 1 percent of the contract price.

The actual processing of the title will require additional documents such as a “Deed of Absolute Sale”, a complete survey of the land and subdivision of the lots on the Mother Title, and a processing fee with documents drawn up by an attorney to obtain the title. All of this can cost you from 15,000 Pesos to over 200,000 pesos depending on the attorney you hire. Take in to account these amounts when you begin your negotiation with the seller. Note the amounts or percentage to be shared between the buyer and seller on the Contract to Sell.

In future posts on this subject I will give you additional information regarding the purchase of land on Bantayan Island and the correct procedure for buying land and obtaining a title to that land. I will also discuss how to build a home on Bantayan Island and the correct procedure for the construction process.

Rob Robinson