Managing 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 extrajudicial settlement of estate with deed of sale. This legal mechanism allows heirs to divide the estate of a deceased person and transfer it to a buyer in a single, consolidated document.
Understanding the Legal Framework
When a person passes away without leaving a will and has no unpaid debts, the heirs are not obligated to go to court. Instead, they can elect for an extrajudicial settlement. By signing a legal document, the heirs agree on how to divide the properties among themselves.
However, when the heirs already have a interested party waiting, they often execute an extrajudicial settlement of estate with deed of sale. This speeds up the process by combining the adjudication of the property and the subsequent sale into one legal instrument.
Advantages for Heirs and Buyers
Liquidating inherited land through this method offers several advantages:
Saved Time: It eliminates the need for two separate transactions and two sets of documentation.
Reduced Costs: While taxes must still be paid, handling the documentation simultaneously can minimize administrative burdens.
Simpler Registration: The Register of Deeds can update the transfer from the deceased directly to the new buyer, assuming all requirements are met.
The Step-by-Step Process
To effectively execute an extrajudicial settlement with deed of sale, certain conditions must be met under Philippine law:
Absence of a Will: The deceased must have left no testament and the estate must be cleared of liabilities.
Unanimous Consent: 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.
Payment of Taxes: The Estate Tax must be paid to the Bureau of Internal Revenue (BIR) before the property can be registered.
The Role of Taxes
One of the essential aspects of selling inherited property Philippines is the settlement of taxes. Aside from the Estate Tax, a transfer tax and Documentary Stamp Tax will be applicable 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.
Protecting the Buyer
For buyers, purchasing via 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 rights of any excluded heir or creditor for a duration of two years. To mitigate this risk, many buyers request an heir's bond or delay until the two-year period has passed.
Conclusion
Navigating an extrajudicial settlement with deed of sale is a practical move for families looking to liquidate inherited assets extra judicial settlement with deed of sale quickly. By understanding the necessary documentation, heirs can ensure a hassle-free transition of ownership while maximizing the value of their inheritance