If you are planning to buy a property, you should know the things you need to consider before closing that deal. This is important because if something wrong happens in the future and you are sued, I tell you, you cannot feign ignorance in the court. A person who is dealing with a registered property should exercise prudence and due diligence in dealing with the sale.
1. Verify with the Registry of Deeds if the Original or Transfer Certificate of Title is authentic and clean.
A title is authentic when it is not a fraudulent or fake document. You can verify this with the Registry of Deeds where the property is located. On the other hand, a title is clean when there is no encumbrance. An encumbrance is a registered interest or claim against the property that affects or restricts the ownership of the property. Check the back of the title as well as the subsequent pages if there is something written below the words Memorandum of Encumbrances. If what is written speaks only of the description of the property then that is just fine. If there are words other than that then you can proceed to the Registry of Deeds and ask what the words mean.
Check also if the property is subject of litigation. It may happen that the Title was annotated with a notice of lis pendens. Lis pendens is a Latin term which literally means a pending suit. Notice of lis pendens is filed for the purpose of warning all persons that the title to certain property is in litigation and that if they purchase the same, they are in danger of being bound by an adverse judgment.
2. Know thy Seller.
No less than the Supreme Court reminds us that it is the duty of a buyer to examine not only the certificate of title but the factual circumstances necessary for him to determine if there are any flaws in the title of the transferor or in the latter’s capacity to transfer the land.
While I do still trust in the goodness of humanity, there is nothing wrong with being extra vigilant. If you do not personally know the seller including their addresses then it is best to ask for their government-issued identification cards. Photocopy it for your reference.
Make sure that the name appearing on the title is the person who is selling the property to you. Sometimes, some sellers hire agents or assign their attorney-in-fact to negotiate and sell the property. If this is the case, ask for a notarized Special Power of Attorney (SPA). The SPA should specifically mention that the Principal (owner of the property) is appointing the agent or attorney-in-fact to sell the subject property. Although I advise that it is always best to directly talk to the seller himself in order to avoid confusion and probably will save you from the costly agent’s fee.
Another important fact that you should know is whether or not the seller is married or not. If the seller is married, check if marital consent of his spouse has been secured.
Also, it may happen that the names written in the title are the parents or grandparents of the person selling. Ask whether the persons named in the title are living or dead. Ask if the seller has siblings and if there are issues within their co-ownership because it is presumed that all the heirs of the persons named therein are co-owners to the property. In that case, you need to call your lawyer. That doesn’t require a simple Deed of Absolute Sale.
3. Do an ocular visit.
I believe this is basic. Before purchasing a property, make sure that the subject property described in the title is really the property you are buying. Inquire as to the parameters and boundaries of the lot area. Hire a geodetic engineer to validate it for you. Check if the property is fenced, paved or with improvements.
If there are actual possessors in the property, ask how they are related to the seller or if there are “issues” in the ownership. If they adversely possess the property as against the seller, then that should be enough to notify you of a flaw in the title. Ask the neighbours, they might know whether someone else already bought the property.
4. Make sure the seller paid the taxes.
Real property taxes are paid every January of the year. Ask a copy of the Tax Declaration and check with the City Assessor’s and Treasury’s Office if the payments are up to date.
5. Can you really afford the price tag?
It’s always a good decision to invest in real properties because they say lands do not depreciate. But before giving it a go, reflect if you can really pay the selling price. This can be one-time payment or through monthly amortizations for a certain period of time through financing institutions. Remember that if you took out a loan, you will not only be paying for the selling price per se but also the interests. Imagine, supposed your business got bankrupt or you were suddenly terminated from work, what other source of income can you do? You don’t want to deal with exorbitant penalties. And of course, you don’t want the property be foreclosed even before finally owning it.