Selling property should not be a complex matter. Although it is advisable to secure the services of a lawyer to draft the Contract of Sale, there are templates that are downloadable in the internet. Of course, care must be taken in using these templates since they are not customized and may not be entirely applicable to the parties.
This article aims to give a simple guide to contracts of sale for those who wish to have a general overview on what these contracts should contain.
First, determine the type of contract you wish to enter into.
1. It will be a Deed of Absolute Sale if full payment is made and there is immediate transfer of ownership.
2. It will be a Deed of Conditional Sale if payment will be made in installments or there is some condition before transfer of full ownership.
Second, ensure that there are proper parties.
1. Seller – If married, the spouse must signify his or her consent. Otherwise, the sale is void. Under the family Code, if the spouse sold the property without the consent and knowledge of the other spouse, then the sale is void. However, the transaction shall be considered as a continuing offer and may be perfected upon acceptance of the other spouse. On the other hand, if the spouse sold the community property with the knowledge but without the consent of the other, the contract is merely annullable. The other spouse has 5 years from the date of the contract to go to court and seek the annulment of the contract.
2. Buyer – no need for spousal consent but best to include. It may form part of the Absolute Community of Property or Conjugal Partnership of Gains anyway.
3. Ensure that all parties are of legal age (18 years of age and above), of sound mind (not declared insane) and not laboring under any restrictions (under guardianship, etc.)
4. State the names, addresses, civil status and Tax Identification Number of the parties.
Third, specify the details of the property
1. Specify the address
2. Specify the TCT Number
3. Specify the Technical Description and boundaries because this will govern the scope of your ownership.
Fourth, state clearly the consideration and other terms agreed upon.
1. State the price. This will be used by the Bureau of Internal Revenue (BIR) as a basis to assess capital gains tax. If the zonal value is higher, then the BIR will use the higher value. Please know that the capital gains tax is six percent 6% of the value of the property. Hence, please ensure that the seller will be shouldering this. Although, in some cases, the buyer agrees to pay for the capital gains tax.
2. The transfer taxes to be paid to the local government unit concerned and the Register of Deeds is borne by the buyer.
3. If in installment, state the amount of downpayment and the period of installment and amount for each amortization. Oftentimes, post-dated checks are given by the buyer.
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