Is an Unnotarized Deed of Sale Valid? A Comprehensive Guide to Contract Validity and Registration

One of the common questions I receive is whether an unnotarized Deed of Sale is valid. While I have addressed this inquiry individually, I believe it's worth discussing in a blog post due to its relevance in real estate transactions. Let’s explore the topic in detail.

Quick Answer

Notarization and Contract Validity: Notarization of the Deed of Sale is not required for the validity of the contract. The essential factor is that the parties agree on the transaction involving the sale of the land and its improvements (e.g., house).

Notarization and Property Registration: Notarization is required for the registration of the property. You need it to transfer the title to your name, as required by the Property Registration Decree.

DISCUSSION

I. Notarization of the Deed of Sale Is Not Required for Contract Validity

According to Article 1356 of the Civil Code:

Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form to be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable.

In essence, contracts are valid as long as they meet all essential requisites, regardless of notarization.

Essential Requirements for a Valid Contract

Article 1318 of the Civil Code lists the essential requisites:

1. Consent of the contracting parties

2. Object certain (the subject matter of the contract)

3. Cause of the obligation (the reason for the contract)

Notarization is not listed as one of these requisites.

Notarization converts the contract into a public document, as stated in Article 1358 of the Civil Code. This article requires that acts and contracts affecting real property should be in a public document. While notarization is suggested, it is not necessary for the validity of the sale. The public document requirement is primarily for convenience and to ensure protection and enforceability against third parties.

The Supreme Court case of Tigno vs. Aquino (G.R. No. 129416; November 25, 2004) confirmed:

... from a civil law perspective, the absence of notarization of the Deed of Sale would not necessarily invalidate the transaction. Article 1358 of the Civil Code requires that the form of a contract that transmits or extinguishes real rights over immovable property should be in a public document, yet the failure to observe this form does not render the transaction invalid.

In summary, an unnotarized Deed of Sale is valid between the parties involved. However, converting your private contract into a public document is advisable. A public document has the presumption of validity and is admissible in court without further proof of authenticity.

However, the absence of notarization does not affect the validity of the sale. Moreover, the public document is required only for the convenience and greater protection of the parties. In addition, registration is needed only to make the contract effective against third persons.

II. Notarization of the Deed of Sale Is Required for Registration

Under Presidential Decree No. 1529 (Property Registration Decree), notarization is necessary for the Deed of Sale. Section 112 states:

Deeds, conveyances, encumbrances, discharges, powers of attorney, and other voluntary instruments affecting registered or unregistered land executed in accordance with the law in the form of public instruments shall be registerable. Every such instrument must be signed in the presence of at least two witnesses and acknowledged before a notary public or other authorized public officer.

In the case of Gallardo vs. Intermediate Appellate Court (G.R. No. L-67742; October 29, 1987), the Supreme Court ruled that an unnotarized private deed of sale is not registerable under the Land Registration Act. The Court affirmed that:

... a private conveyance of registered property is valid as between the parties. However, the vendee of registered property in a private document must compel the vendor to execute a deed of conveyance sufficient for registration.

In short, while an unnotarized Deed of Sale is valid between the parties, it is not registerable without notarization.

This discussion is for educational purposes only. Consult your lawyer for advice on your specific case. For any questions, contact us.

If you’re planning to buy a residential lot, house-and-lot, or condo unit, get in touch with us at 0920 207 6284 or email cebuhousefinder@yahoo.com for free assistance.