Recently, I encountered an unnotarized Deed of Absolute Sale for a parcel of land in Lapu-Lapu City, Mactan Island, Cebu. Is this Deed valid? Let's explore this issue in detail.
In previous blogs, I touched on this topic briefly. In this post, we'll dive into the importance of the Contract of Sale, the role of the Deed of Absolute Sale in real estate transactions, and why notarization matters.
I. Contract of Sale
Definition
Article 1458 of The New Civil Code of the Philippines (NCC) defines a Contract of Sale as follows:
A Contract of Sale involves one party agreeing to transfer ownership of a specific item and another party agreeing to pay a certain price for it.
There are two main parties in a Contract of Sale:
The Seller: Transfers ownership and delivers the item.
The Buyer: Pays the agreed price.
Essential Elements
A Contract of Sale requires three essential elements:
Consent: Both parties agree to transfer ownership in exchange for the price.
Object: The specific item to be delivered.
Cause: The agreed price.
If any of these elements are missing, the contract is void. While a Contract of Sale does not generally need to be written, the sale of real property must be documented in writing to be enforceable.
II. Deed of Absolute Sale
The Contract of Sale can be either "Absolute" or "Conditional":
Absolute Sale: Ownership transfers immediately to the buyer upon full payment.
Legal Form: Deed of Absolute Sale.
Conditional Sale: Ownership transfers only when the condition (full payment) is met.
Legal Form: Deed of Conditional Sale.
Contract to Sell
This is similar to a Conditional Sale but involves a contract where the seller retains ownership until the buyer fulfills all payment conditions.
Differences:
Contract of Sale: Title passes upon delivery of the item.
Contract to Sell: Ownership remains with the seller until payment is complete.
III. Notarization of the Deed of Absolute Sale
Notarization of a Deed of Absolute Sale confirms its authenticity and converts it into a public document.
Is an unnotarized Deed of Absolute Sale valid?
Yes, it is valid between the buyer and seller. However, notarization serves two main purposes:
Public Document Status:
A notarized Deed is admissible in court without needing additional proof of execution.
Registration:
To register the property and obtain a new title, the Deed must be notarized. Without it, the BIR will not issue a Certificate Authorizing Registration (CAR), and you can't get a new title.
Why Register Your Property?
If you don't register the property in your name, the previous owner remains on record. This could lead to complications, such as the previous owner selling the property to someone else.
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.
Is it still possible to notarize the deed of absolute sale two years later after it was signed? I only have the IDs of the seller valid at the time of signing and could no longer locate them.
Is it possible a seller may engage with multiple buyers of the same lot and engage them on Contract to Sell? I've read in one of your blogs that whoever register first the property with Registry of Deeds is considered the legal owner of the property. I guess my question is, How do we know that the seller is not being sneaky and only offer to sell the property to one buyer only? I asked because any buyer may have a different payment schedules (1 year, 3 years, 6 years), and I see that whoever made the full payment first, assuming the property was offered by seller to multiple buyers, will be the one recognized as the legit owner, especially…