When Can You Say The Property Title Is Clean To Sell?

Here’s an actual conversation between a Property Owner and a Real Estate Broker in Cebu. 

Property Owner: Coco, I am selling my vacant land along Mango Avenue in Cebu City. It is a commercial property, ideal for hotels, condominium buildings, or mix-use commercial arcades. My husband and I acquired it during our marriage, and it’s a clean title.

Coco: Wow! You got a prime property, Ma’am, considering the location is in uptown Cebu City. How big is the property? I need to ask for the Certified True Copy of your Land Title, Tax Declaration, and Lot Plan. (If you don’t have certified copies of the documents, we can assist you to secure them). 

Property Owner: Yeah sure! I’ve just placed it in the vault for safekeeping. 

We can say the Property Title is clean and ready to sell, if your property is,

• Free from any encumbrances such as unpaid mortgage from a bank, Pag-IBIG Fund or lending companies, boundary disputes (encroachments), deed of restrictions, or property easements. Then, any annotation of an adverse claim, an affidavit made by another person, claiming rights or interest over the registered land, and no pending court case involving the said property.

• The name of the owners that appear in the title are still alive and can sign the Deed of Absolute Sale. Otherwise, if one or all of the owners are deceased, it is needed to process extrajudicial settlement among the heirs, and Estate Tax paid before we can say the property title is clean.

• The Property Owner updates yearly Real Property Tax (RPT). 

• The Owner’s Duplicate Copy of the Title is available because the reconstitution of the new property title for any lost land title takes around two years to process. When the property title is lost, we need to wait for the court to order the Registry of Deeds to issue a new owner’s copy. Then, we can proceed with the sale.

The responsibility of the Licensed Real Estate Broker or Accredited Agent (Salesperson) before selling any property is to conduct due diligence on the documents to ensure LAND TITLE is CLEAN and the property is ready to sell to a buyer. 

Any Liens or Encumbrances concerning the property are usually not annotated on the Owner’s Duplicate copy. As a broker of Property Owner, we verify the property title by securing a certified true copy of the title from the Registry of Deeds, checking for legal liability on real property, or a claim against the property before saying the property’s property title about to sell is clean.

Property Owner: Oh, I did not know the adverse claim annotated on my title by my sister is not a big deal when there is the finality of the case in favor of me, and besides, she already passed away. What am I going to do?

Coco: I agree, it’s not a big deal because there is the finality of the case. However, banks will not accept titles with annotation of an adverse claim. It is better to cancel it by asking the person who made the adverse claim to submit an affidavit of cancellation or submit a court order for the cancellation of the annotation.