Please be careful with pasalo or assume with bank or Pagibig loan. (It’s easier if still paying downpayment in installment or in-house financing to the developer, you just need approval from the developer & pay their administrative fees).

The risk & penalty for assume or ‘pasalo’ is double if the land title of the property, although with a loan, has not yet been transferred to the first owner’s name and is still in the name of the developer at the time of transaction. If the only document that the 1st owner has is a Contract to Sell then beware.

If the seller or 1st owner dies, his heirs automatically and legally adjudicate the property to themselves so it’s important that you had your documents notarized immediately during the transaction. You will be required to pay penalties if you fail to pay the taxes immediately too. So just in case, please make sure to have the heirs sign an undertaking that in case of the seller’s death and you have not yet paid off the entire loan, his heirs will sign for you an Extrajudicial Settlement with Absolute Sale. In this scenario, there will be no penalties but you will have to pay the estate tax.

From the date of the new title released, there will be a 2yrs prescription period annotated at the back of the new title allowing any claimant, either ignored heir or creditor, to file for a claim against the property. This is according to Section 1 of Rule 74 of the court. After 2yrs with no claimant will the newly released title be free from any claim after you file an affidavit with RD, then the annotation of 2yrs will be canceled from the back of the title. From the time of registration of extrajudicial settlement to RD up to 2yrs, in order to protect your interests, it is imperative and very important to get and pay for heir’s bond from a reputable insurance company

Now in case you fully paid the loan after so many years and the first owner is still alive, you’re lucky but you need to have constant contact and communication with him because BIR and RD will require you to present the latest valid ID during the transfer of title to your name. You will also need to have the first owner sign a Special Power of Attorney, during the time of your transaction, assigning you as his attorney in fact for the future release and claim of the original title either by the bank or Pagibig.

After bank or Pagibig’s release of the title, you need to submit this to RD with the Cancellation of Mortgage for annotation, which will also be released by bank or Pagibig together with the original title, and at the same time process the transfer of title to your name, either through Deed of Absolute Sale or Extrajudicial Settlement with Absolute Sale.

Physical possession of the original land title does not signify absolute ownership. Only the transfer of title to your name will the ownership be absolute.

This is just a piece of unsolicited but free legal advice coming from a PRC licensed real estate broker


Thess Gabuat, REB
PRC License No. 8082

About the Author:
GABUAT, MARIA THERESA | Directory of Real Estate Service Professionals in the Philippines (realestatedirectory.org.ph)



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