Managing inherited property in the Philippines can be a daunting 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 process allows heirs to partition the estate of a deceased person and transfer it to a buyer in a single, combined document.
What is an Extrajudicial Settlement?
When a person dies without leaving a will and has no pending debts, the heirs are not required to go to court. Instead, they can opt for an extrajudicial settlement. By signing a notarized deed, the heirs concur on how to divide the properties among themselves.
However, when the heirs already have a interested party waiting, they often sign an extrajudicial settlement of estate with deed of sale. This speeds up the process by combining the adjudication of the property and the subsequent transfer into one legal instrument.
Advantages for Heirs and Buyers
Selling inherited property Philippines through this method offers various advantages:
Saved Time: It eliminates the need for two separate transactions and two sets of documentation.
Lower Expenses: While taxes must still be paid, handling the paperwork simultaneously can minimize administrative burdens.
Easier Consolidation: The Register of Deeds can process the transfer from the deceased directly to the new buyer, granted all requirements are met.
Key Requirements and Steps
To properly execute an extrajudicial settlement with deed of sale, certain requirements must be met extrajudicial settlement with deed of sale under Philippine law:
Absence of a Will: The deceased must have left no testament and the estate must be cleared of liabilities.
Agreement Among Heirs: All legal heirs must be of one mind regarding the sale and the distribution of proceeds.
Publication: 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 registered.
Understanding the Tax Implications
One of the vital aspects of selling inherited property Philippines is the payment of taxes. Aside from the Estate Tax, a transfer tax and Documentary Stamp Tax will be due because of the sale component. Neglecting to settle these taxes will prevent the issuance of a new Certificate of Title in the buyer's name.
Protecting the Buyer
For buyers, purchasing via an extra judicial settlement 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 claims of any excluded heir or creditor for a period of two years. To reduce this risk, many buyers require an heir's bond or wait until the two-year period has lapsed.
Conclusion
Executing an extrajudicial settlement with deed of sale is a practical move for families looking to liquidate inherited assets quickly. By understanding the necessary documentation, heirs can ensure a hassle-free transition of ownership while maximizing the value of their inheritance