Managing inherited land in the Philippines can be a daunting process, especially when the heirs intend to sell the asset immediately. The most practical way to achieve this is through an extrajudicial settlement of estate with deed of sale. This legal mechanism allows heirs to partition 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 pending debts, the heirs are not forced to go to court. Instead, they can opt for an extrajudicial settlement. By signing a public instrument, the heirs agree on how to divide the properties among themselves.
However, when the heirs already have a purchaser waiting, they often execute an extrajudicial settlement of estate with deed of sale. This simplifies the process by combining the adjudication of the property and the subsequent disposition into one legal instrument.
Why Use a Combined Deed of Sale?
Selling inherited property Philippines through this method offers multiple advantages:
Speedier Process: It removes the need for two separate transactions and two sets of notarization.
Reduced Costs: While taxes must still be paid, handling the documentation simultaneously can lower administrative burdens.
Easier Consolidation: The Register of Deeds can process the transfer from the deceased directly to the new buyer, assuming all requirements are met.
How to Proceed
To properly 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 testament and the estate must be free of debt.
Agreement Among Heirs: All legal heirs must be unanimous regarding the sale and the distribution of proceeds.
Publication: The settlement must be published in a newspaper of general circulation for three successive weeks.
Settling Tax Obligations: The inheritance 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 Capital Gains Tax and Documentary Stamp Tax will be required because of the sale component. Forgetting to settle these taxes will prevent the issuance of a new Certificate of Title in the buyer's name.
Ensuring a Valid Transaction
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 stipulates that the property is subject to the rights of any excluded heir or creditor for a duration of two years. To lessen this risk, many buyers require an extrajudicial settlement of estate with deed of sale heir's bond or delay until the two-year period has passed.
Summary
Navigating an extrajudicial settlement of estate with deed of sale is a smart move for families looking to dispose of inherited assets quickly. By learning the necessary documentation, heirs can ensure a hassle-free transition of ownership while securing the value of their estate