Handling inherited real estate in the Philippines can be a challenging process, especially when the heirs decide to sell the asset immediately. The most practical way to achieve this is through an extrajudicial settlement of estate with deed of sale. This legal mechanism allows heirs to partition the estate of a deceased person and sell it to a buyer in a single, integrated document.
Understanding the Legal Framework
When a person passes away without leaving a will and has no pending debts, the heirs are not required to go to court. Instead, they can elect for an extrajudicial settlement. By signing a legal document, the heirs concur on how to divide the properties among themselves.
However, when the heirs already have a purchaser waiting, they often sign an extrajudicial settlement of estate with deed of sale. This streamlines the process by combining the adjudication of the property and the subsequent transfer into one legal instrument.
Why Use a Combined Deed of Sale?
Selling inherited property Philippines through this method offers various advantages:
Time Efficiency: It avoids the need for two separate transactions and two sets of notarization.
Lower Expenses: While taxes must still be paid, handling the paperwork simultaneously can lower administrative burdens.
Clear Title Transfer: The Register of Deeds can handle the transfer from the deceased directly to the new buyer, provided all requirements are met.
The Step-by-Step Process
To successfully execute an extrajudicial settlement with deed of sale, certain requirements must be met under Philippine law:
No Will and No Debts: The deceased must have left no will and the estate must be free of debt.
Unanimous Consent: All legal heirs must be of one mind regarding the sale and the division of proceeds.
Public Notice: The settlement must be published in a newspaper of general circulation for three consecutive weeks.
Settling Tax Obligations: The Estate Tax must be paid to the Bureau of Internal Revenue (BIR) before the property can be sold.
Financial Obligations
One of the vital aspects of transferring inherited land is the settlement of taxes. Aside from the Estate Tax, a Capital Gains Tax and Documentary Stamp Tax will be required because of the sale component. Forgetting to settle these taxes will prevent the issuance of a new Certificate of Title in the buyer's name.
Ensuring a Valid Transaction
For buyers, purchasing through an extra judicial settlement with deed of sale carries a unique risk under Rule 74, Section 4 of the Rules of Court. This law stipulates that the property is subject to the claims of any excluded heir or creditor for a period of two years. To lessen this risk, many buyers request an heir's bond or wait until extrajudicial settlement of estate with deed of sale the two-year period has expired.
Summary
Executing an extrajudicial settlement of estate with deed of sale is a strategic move for families looking to dispose of inherited assets quickly. By understanding the procedural steps, heirs can ensure a seamless transition of ownership while securing the value of their inheritance