Handling inherited land in the Philippines can be a complex process, especially when the heirs wish to sell the asset immediately. The most efficient way to achieve this is through an extrajudicial settlement of estate with deed of sale. This legal process allows heirs to divide the estate of a deceased person and sell it to a buyer in a single, integrated document.
Understanding the Legal Framework
When a person is deceased without leaving a will and has no pending 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 buyer waiting, they often perform 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?
Trading inherited assets through this method offers several advantages:
Saved Time: It removes the need for two separate transactions and two sets of notarization.
Lower Expenses: While taxes must still be paid, handling the legalities simultaneously can reduce administrative burdens.
Simpler Registration: The Register of Deeds can handle the transfer from the deceased directly to the new buyer, assuming all requirements are met.
How to Proceed
To effectively execute an extrajudicial settlement with deed of sale, certain criteria must be met under Philippine law:
No Will and No Debts: The deceased must have left no testament and the estate must be cleared of liabilities.
Unanimous Consent: All legal heirs must be unanimous 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 transferred.
The Role of Taxes
One of the essential aspects of transferring inherited land is the settlement of taxes. Aside from the Estate Tax, a transfer tax and Documentary Stamp Tax will be required because of the sale component. Forgetting to settle these taxes will block the issuance of a new Certificate of Title in the buyer's name.
Protecting extrajudicial settlement with deed of sale the Buyer
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 provides that the property is subject to the rights of any excluded heir or creditor for a period of two years. To reduce this risk, many buyers require an heir's bond or wait until the two-year period has expired.
Summary
Navigating an extrajudicial settlement with deed of sale is a smart move for families looking to sell inherited assets quickly. By mastering the necessary documentation, heirs can ensure a hassle-free transition of ownership while maximizing the value of their inheritance