Managing inherited land 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 extra judicial settlement with deed of sale. This legal process allows heirs to distribute the estate of a deceased person and convey it to a buyer in a single, combined document.
The Basics of Estate Settlement
When a person dies without leaving a will and has no unpaid debts, the heirs are not obligated 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.
The Benefits of Combining the Settlement and Sale
Trading inherited assets through this method offers multiple advantages:
Speedier Process: It eliminates the need for two separate transactions and two sets of documentation.
Cost-Effectiveness: While taxes must still be paid, handling the documentation simultaneously can reduce administrative burdens.
Simpler Registration: The Register of Deeds can update the transfer from the deceased directly to the extrajudicial settlement of estate with deed of sale new buyer, assuming all requirements are met.
The Step-by-Step Process
To successfully execute an extrajudicial settlement with deed of sale, certain conditions 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 advertised in a newspaper of general circulation for three consecutive weeks.
Settling Tax Obligations: The inheritance tax must be paid to the Bureau of Internal Revenue (BIR) before the property can be transferred.
Understanding the Tax Implications
One of the essential aspects of selling inherited property Philippines is the payment of taxes. Aside from the Estate Tax, a transfer tax and Documentary Stamp Tax will be applicable because of the sale component. Neglecting to settle these taxes will hinder the issuance of a new Certificate of Title in the buyer's name.
Protecting the Buyer
For buyers, purchasing via an extrajudicial settlement of estate with deed of sale carries a unique risk under Rule 74, Section 4 of the Rules of Court. This law states that the property is subject to the claims of any excluded heir or creditor for a duration of two years. To lessen this risk, many buyers request an heir's bond or wait until the two-year period has expired.
Summary
Navigating an extrajudicial settlement of estate with deed of sale is a strategic move for families looking to sell inherited assets quickly. By mastering the legal requirements, heirs can ensure a seamless transition of ownership while optimizing the value of their estate