Dealing with inherited land in the Philippines can be a daunting process, especially when the heirs intend to sell the asset immediately. The most efficient way to achieve this is through an extra judicial settlement with deed of sale. This legal process allows heirs to partition the estate of a deceased person and convey it to a buyer in a single, consolidated document.
Understanding the Legal Framework
When a person is deceased without leaving a will and has no pending debts, the heirs are not forced to go to court. Instead, they can opt 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 with deed of sale. This speeds up 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
Liquidating inherited land through this method offers multiple advantages:
Saved Time: It avoids the need for two separate transactions and two sets of documentation.
Lower Expenses: While taxes must still be paid, handling the legalities simultaneously can minimize administrative burdens.
Clear Title Transfer: The Register of Deeds can process the transfer from the deceased directly to the new buyer, provided all requirements are met.
Key Requirements and Steps
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 selling inherited property philippines will and the estate must be cleared of liabilities.
Unanimous Consent: All legal heirs must be of one mind regarding the sale and the distribution of proceeds.
Public Notice: The settlement must be advertised in a newspaper of general circulation for three consecutive weeks.
Payment of Taxes: The Estate Tax must be paid to the Bureau of Internal Revenue (BIR) before the property can be transferred.
Financial Obligations
One of the essential aspects of transferring inherited land is the payment of taxes. Aside from the Estate Tax, a transfer tax and Documentary Stamp Tax will be required because of the sale component. Neglecting to settle these taxes will block the issuance of a new Certificate of Title in the buyer's name.
Ensuring a Valid Transaction
For buyers, purchasing through an extrajudicial settlement of estate with deed of sale carries a specific 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 period of two years. To mitigate this risk, many buyers request an heir's bond or delay until the two-year period has expired.
Summary
Executing an extrajudicial settlement with deed of sale is a strategic move for families looking to liquidate inherited assets quickly. By learning the procedural steps, heirs can ensure a seamless transition of ownership while maximizing the value of their inheritance