Managing inherited land in the Philippines can be a complex process, especially when the heirs wish 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 procedure allows heirs to distribute the estate of a deceased person and convey it to a buyer in a single, consolidated document.
The Basics of Estate Settlement
When a person passes away without leaving a will and has no pending debts, the heirs are not forced to go to court. Instead, they can choose for an extrajudicial settlement. By signing a public instrument, the heirs decide 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 streamlines the process by combining the adjudication of the property and the subsequent transfer into one legal instrument.
The Benefits of Combining the Settlement and Sale
Trading inherited assets through this method offers several advantages:
Time Efficiency: 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 minimize administrative burdens.
Simpler Registration: The Register of Deeds can process the transfer from the deceased directly to the new buyer, provided all requirements are met.
How to Proceed
To successfully execute an extrajudicial settlement with deed of sale, certain criteria must be met under Philippine law:
No Will and No Debts: The deceased must have left no will and the estate must be cleared of liabilities.
Unanimous Consent: All legal heirs must be unanimous regarding the sale and the division extrajudicial settlement of estate with deed of sale of proceeds.
Public Notice: The settlement must be advertised in a newspaper of general circulation for three consecutive weeks.
Payment of Taxes: The inheritance tax must be paid to the Bureau of Internal Revenue (BIR) before the property can be transferred.
Financial Obligations
One of the most critical aspects of selling inherited property Philippines 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 hinder the issuance of a new Certificate of Title in the buyer's name.
Risks and Safeguards
For buyers, purchasing through 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 period of two years. To reduce this risk, many buyers request an heir's bond or delay until the two-year period has expired.
Final Thoughts
Navigating an extrajudicial settlement with deed of sale is a strategic move for families looking to dispose of inherited assets quickly. By understanding the procedural steps, heirs can ensure a hassle-free transition of ownership while securing the value of their inheritance