Whether you’re planning to purchase a piece of property or venture into the real estate business this 2023, the fact remains that you need to comply with legal requirements. You must be familiar with all the details of the paperwork as part of your due diligence. This is easier said than done, but you can get a head start by understanding the concepts of legal forms and their significance in practical terms.
Here are important details you need to know about legal documents in the Philippines as of 2023.
The Contract to Sell is a document that refers to an agreement between a seller and a buyer. It states that the seller commits to selling the property to the buyer and the buyer also promises to pay for it. However, a signed contract to sell does not mean that there is a transfer of ownership. Both buyer and seller must first meet a set of conditions and obligations to fulfill their part of the agreement.
The Contract to Sell signifies that both parties agree to hold up their end of the bargain at the end of the period agreed upon. It is drafted by either the broker or the developer and issued to home buyers who have put up a down payment for their homes.
The Contract to Sell serves as the basis for the execution of the Deed of Sale. When both parties have fully complied with the conditions and obligations stated in the Contract of Sale, then they can enter into a Deed of Sale. This legal document proves that full payment has been made and the sale has already transpired between the seller and the buyer. After having the deed of sale signed by both parties, the document must be notarized to protect it from fraud.
Transfer of ownership and turn over of property rights happen at this stage. The Deed of Sale is the final document that will be filed with the Registry of Deeds as the basis for the issuance of a certificate. This would effectively transfer title from the seller to the buyer.
The Memorandum of Agreement (MOA) is also a legal document that signifies two parties or separate entities have entered into a general agreement prior to finalizing a more detailed contract. The purpose of the MOA is to show that two parties have agreed to work together to meet an objective. It also outlines the discussed terms of a new partnership.
The loan agreement is a document that shows a borrower promises to pay a sum of money to a lender at a later date. It details the loan amount, how the loan will be repaid, and the due date of payment. Lenders who are loaning out money, goods, or services must ensure a loan agreement is in place so they can take legal action and have their money back.
This legal document outlines the specifics surrounding the loan including the frequency of payments (e.g. monthly, one lump sum, etc) and acceptable payment methods (e.g., cash, credit card, debit payments, etc).
Article 1318 of the Civil Code states that a contract shall be obligatory in whatever form it has been entered into, provided all the essential requisites – consent, object, and cause – for their validity are present.
Consent happens when there’s a definite offer by one party and there’s an absolute acceptance by another. The object or subject matter of the contract may be a thing, right, or service that must not be contrary to law, morals, and good customs. The cause of the obligation may vary but is essentially the promise to give a thing or perform a service.
The demand letter is a formal notice urging a party to perform a legal obligation, such as paying a sum of money, resolving a problem, or acting on a contract. Commonly used by businesses, demand letters are used to resolve disputes and prevent filing a claim in court. The legal form contains details of the dispute, a specified resolution, a deadline, a justification for the demand, and steps to be taken if the dispute is not resolved.
An employment contract is a legal document that outlines an agreement between an employee and employer. It specifies the job title and duties, salary and benefits, work hours, confidentiality, terms of employment, grievance procedures, and several other clauses. An employee should have a written contract within the first two months of being hired.
Learning the basics will help you be more confident to put an agreement in black and white. If you’re a home buyer, be smart and read the fine print before finalizing a transaction. Knowing key details about contract review and management is helpful but it is still best to seek legal advice to better protect your investment.
Another document required when buying a home is a reservation letter. Due to the common practice of “first come, first served,” a reservation letter will shield you from losing your rights in the event that another customer makes a reservation.
This letter serves as an assurance that the property you wish to purchase is no longer on the market and has been set aside for you, excluding any potential rival bidders. As a result, the seller will want you to provide earnest money (sometimes referred to as the reservation fee) as proof of your intent to buy the relevant property. Additionally, the seller must give a receipt proving payment of the reservation fee.
A guarantee letter confirms that the buyer has received approval for a loan from a bank or another financial institution. If the buyer’s requirements are accepted by the bank or other financial institution and found to be eligible, complete, and in compliance, a guarantee letter will be issued.
One of the most important legal documents when buying or owning a real estate property is a tax declaration. A Certificate of Tax Declaration (CTD) is a declaration of the worth of your property for taxation. It is used to indicate the value of your land and improvements for real property tax reasons. As a property owner, you are responsible for paying the property’s annual taxes or amilyar and updating your tax declaration for your local government to document its current value.
