Ensuring that the land title is authentic when investing in real estate properties in the Philippines could be pretty tricky. The country is a growing market for domestic and foreign real estate developers. And many illicit operators are exploiting this open demand. Several property alternatives are available, ranging from urban lands to abandoned development sites to large farmland plots. While purchasing a real estate property may seem like a simple procedure, consider these indispensable factors when making such a significant investment.
Ready to get your defenses up? Here is everything you need to know about land titles and how to conduct due diligence before sealing the deal:
What To Expect From A Land Title From The Transfer Certificate Of Title
After executing the Deed of Absolute Sale or Deed of Sale, the Transfer Certificate of Title (TCT) is a property title assigned to the new owner with a parcel of land either with or without a built physical structure. It contains details on the land’s registration number, owner name, and geophysical conditions. Apart from land ownership, it also awards “air rights” to the owner, which allows him to develop the “air space” above his property.
However, another essential part of the TCT you should watch is its transfer history. Typically, this includes a directory of legally canceled Transfer Certificate of Titles due to the cycle of ownership.
Pre – TCT: Verify The Seller’s Identity
Anyone can pose and act as a landowner. Before initiating any real estate transaction (or any transaction, for that matter), checking the person’s identity is the first step in checking its authenticity. Potential buyers must request a copy of the seller’s legitimate identification to verify that the same individual is the land’s lawful owner. For that matter, buyers must only deal with the land’s actual owner, not through an agent or an unregistered owner.
Buyers may encounter difficulties dealing with sellers whose parents are the legal owners. Heirs may have conflicting stands on how to utilize the property. Mainly whether they should sell the property or not. If the sellers wish to sell the property, they must first file a petition in court before engaging in negotiations with possible bidders.
If the landowner is a corporation, ensure that the corporate entity is registered correctly. The secretary’s certificate documentation should accompany the legal representative appointed by a board decision.
Continue to check the land title’s authenticity – physically, internally, and legally – after the buyer’s legitimacy has been confirmed.
Mid – TCT: The Physical Document Of The Land Title And Contents
One of the fastest ways to detect fake land titles is by examining the physical document itself. Remember that the Banko Sentral ng Pilipinas is the only duly-authorized supplier for papers to be used in original land titles in the country. The land title document makes them physically different from the commercially-issued form. Below are six elements to watch out for:
Texture: Must be similar to that of a bank check
Watermark: A faint watermark with the letters “LRA” must be visible.
Paper Color: Light yellow for old titles; pale straw for e-titles; all tiny dots and fibers must be noticeable
Under UV light: The duplicate threads must slightly shine when exposed to UV light.
After establishing the land title document’s physical legitimacy, the next step is to check the TCT’s legal “cleanliness,” which assures investors that it passed through the correct legal procedures. To do so, review the following checklist to see whether your land title meets the requirements:
For Original Certificate of Title (OCT): “Judicial Form No. 108-D” must be indicated at the top of the land title.
For Transfer Certificate of Title (TCT): “Judicial Form No. 109-D” must be indicated at the top of the land title.
Serial Number: Its label (SN No.) should be in red, while the owner’s duplicate should have black digits.
Page Number: Its last two digits located on the upper right-hand side should correspond to the last two digits of the TCT number.
Border: The red or blue border appearing on the land title document should be slightly embossed and not flatly printed.
Seal: Should be located in the lower left-hand side; dark red, and does not blot when subjected to water.
Title History: Track the TCT’s mother title, derivative titles, and other relevant documents to check if the source is genuine.
Primary Entry Book: Look for a related transaction to confirm the issuance of the title based on a duly registered document.
Enumeration or Log Book: Determine who was appointed to prepare the title on a certain day, as well as the serial number on the judicial form utilized.
Releasing Book: Confirm if the Registry of Deeds released a title of such number on the same date.
Signatories:
- Registry of Deeds: Check if the person signing the land title is the same as the person registered with the Register of Deeds upon the issuance of the title.
- Judicial OCT and TCT: Two signatures must be present in the OCT – the Administrator and Registrar; for TCTs, only the Registrar’s signature must be present.
- Administrative OCT and TCT: Two signatures must show – one from a PENRO or CENRO officer and another from the Registrar.
For e-Titles: All entries must be computer encoded and printed.
For Destroyed Titles: Destroyed titles must undergo reconstitution; OCTs should have the initials “RO” before the title number; for TCT’s, the initials “RT” should be provided before the title number.
Liens and Encumbrances: The owner of a piece of land with a Lien may use it to satisfy a debt to another party. In this case, the owner shall pertain to the seller himself. Annotations for liens and encumbrances such as adverse claims and mortgages, among others, are located on the back page of the title. The sections of these pages should be empty in assuring buyers of a “clean” land title.
Paid Real Estate Taxes: The seller should settle this obligation. The buyer may confirm with the Assessor’s Office of the complete payment. Both buyer and seller should work out arrears and back taxes reflecting the difference in the property price negotiations. Remember to have a notarized document for the agreement on the payment of back taxes.
Double Check the Technical Description: If possible, ask permission from the seller to have the lot surveyed by a Geodetic Engineer. The physical shape and size indicated in the land title can be verified by a professional. In cases where the actual lot area is less than the declared size, you may request a proportional price reduction.
Post – TCT: Check With The Authorities
Even if the land title in question has all of the advantages mentioned, this does not guarantee its legitimacy. Completing evaluating an original land title requires a few more steps. Visits to any five offices may further validate the property’s existence and legality.
Registry of Deeds: Personally visit the office of your locality’s Registry of Deeds to confirm the authenticity of your TCT
Municipal or City Assessor’s & Treasurer’s Offices: Visit your locality’s Assessor’s Office to double-check the accuracy of your TCT’s technical description as well as the vicinity map needed for either DAR or BIR clearance. A visit to the Treasurer’s Offices may verify the property’s financial records about tax payments, arrears, and delinquencies.
Land Registration Authority (LRA): LRA serves as the repository for all titles in the Philippines. Hence, a visit to their office could help trace the property’s history.
Department of Human Settlements and Urban Development (DHSUD): For buyers looking for subdivisions or condominium properties, ensure that the seller has the necessary approvals and permits from DHSUD before selling or advertising.
National Housing Authority (NHA), Department of Environment and Natural Resources (DENR), Bases Conversion and Development Authority (BCDA): These offices should cater to specific land titles and applications such as housing programs, public land patents, and conversion of military bases to civilian properties, respectively.
Governing Laws Against Fraudulent Land Titles
Section IV of the Revised Penal Code of the Philippines covers the law against the falsification of legislative, public, commercial, and private documents and wireless, telegraph, and telephone messages. Penalties of up to Php 5,000 and six-month imprisonment await offenders as stated under articles 171 and 172.
Amendments to the articles above are also on the rise. House Bill No. 6357 seeks life imprisonment upon offenders. Furthermore, the Land Registration Authority also initiated an inter-agency task force named Task Force Titulong Malinis (TFTM). The task force works with the National Bureau of Investigation (NBI), Office of the Solicitor General, and the Department of Justice (DOJ), among others. This agency is in charge of investigating, prosecuting, and canceling fake land titles and their corresponding syndicates.
Apart from TFTM, the agency also launched the Voluntary Title Standardization Program. The program allows property owners to convert manually-issued titles to electronic titles or e-Titles. With e-Titles, property owners can protect their titles from tampering, theft, loss, and damage. They also come with unique barcodes and watermarks.
Conducting Thorough Land Title Due Diligence
Being mindful of the qualities of an authentic land title is an excellent way to dodge potential fraudulent scenarios in the real estate industry. In conclusion, remembering the old saying caveat emptor of “buyer beware” is a must when looking for potential properties.
