The Professional Regulatory Board of Real Estate Service

7/31/2019 The Professional Regulatory Board of Real Estate Service

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FUNDAMENTALS OF PROPERTY OWNERSHIP

LAND, REAL ESTATE AND REAL PROPERTY:

These words land, real estate and real property are often used interchangeably. To be able to have a clearunderstanding of the nature of real estate, licensees or brokers need to be aware of the subtle yet importantdifference in meaning.

Land - is defined as the earth surface extending downward to the center of the earth and upward toinfinity, including things permanently attached by nature such as trees, water. It also refersnot only to the surface of the earth but also to the underlying solid and things that are naturallyattached to land such as boulders, minerals and substances under the surface of the earth.

Real Estate - is defined as land at above and below the earths surface, including all things permanentlyattached to it, whether natural or artificial. The term real estate is therefore broader that theterm LAND and includes not only the physical components of land provided by nature but allpermanent improvements constructed on the land. An improvement is any artificial thingsattached to the land, such as buildings, fence, road, sewers, and underground drainagesystem and other additions to make it suitable for building.

Real Property - is defined as the INTEREST, BENEFITS, and RIGHTS inherent in the ownership of realestate. The term real property is thus broader still. It includes the physical surface of the land,what lies below it, what lies above it and what is permanently attached to it, as well as theBUNDLE OF LEGAL RIGHTS.

LAND

PHYSICALIMPROVEMENTS

REAL ESTATE

THE BUNDLEOF RIGHTS

REAL PROPERTY

Earths surface to the center of theearth and air space above the land

including the trees and water.

Land plus permanent man-madeadditions

Real plus the Bundle ofRights

CONCEPT OF OWNERSHIP

Ownership is the independent right of a person to the exclusive enjoyment and control of a property includingits disposition and recovery subject only to the restrictions established by law and rights of others.

THEORIES OF REAL PROPERTY:

There are two concepts of real estate that licensees or brokers should know. First, is the LEGAL CONCEPTOF REAL ESTATE and second, the BUNDLE OF RIGHTS concept.

Legal Concept of Real Estate - Land includes not only the ground or soil, but everything that is attached toearth, whether by course of nature, such as trees and herbage, or by the hands of man, such as houses,roads, buildings. It includes not only the surface of the earth, but everything under it and over it.

The following definitions are derived from the above concept:

Real Estate - Is defined as the physical land and appurtenances, including structures affixed thereto;


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Real Property - Are the interest, benefits and rights inherent in the ownership of real estate such as FEESIMPLE ownership and the Bundle of Rights.

Personal Property - Is defined as the movable items not permanently fixed to real estate. Generally, but withexemptions, items remain personal property if they can be removed without sort us injury to the real estate orthe items themselves.

RIGHTS INCLUDED IN OWNERSHIP

Origin of Bundle of Right Concept?

The concept of bundle of rights comes from the old English law. When the populace could not commonly readand write, a seller transferred property by giving a purchaser a bundle of sticks from a tree on the propertysold. This process was referred to a LIVERY SEISIN. The purchaser who hold the bundles also owner thetree from which the sticks came and the land to which the tree was attached. Because the rights of ownershipcan be separated and individually transferred, the sticks become symbolic to these rights.

Fee Simple Defined: is defined as the absolute right of ownership without limitations to any particular class ofheirs or restrictions, but subject to the limitation of the ESCHEAT, POLICE POWER, EMINENT DOMAIN &TAXATION

Fee simple consists of the so - called bundle of rights which are inherent in or appurtenant to ownership,without any limitations or restrictions other than those imposed by law or contract.

The bundle of rights include the following:

1. Right to posses (Jus-Possidendi)

2. Right to use (Jus-Utendi) and abuse (Jus-Abutendi)

3. Right to the fruits (Jus-Fruendi)

4. Right to dispose (Jus-Disponendi)

5. Right to vindicate or recover (Jus-Vindicandi)

The rights incident to ownership are, the right:

1. to enjoy and dispose of a property without other limitations than those established by law;

2. to file action against third parties to recover ownership;

3. to use force as may be reasonably necessary to repeal or prevent an actual or threatened unlawful

invasion or usurpation of his property (Art. 429, NCC, relate to Art. 312 RPC);

4. the right to enclose or fence property walls ditches, live or dead hedges or by any other means without

detriment of servitudes constituted thereon;

5. the demand indemnity for damages cause to property;

6. the right to compensation in the event of expropriation;


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7. the right to be restored possession in case of unlawful dispossession;

8. the right to the surface and subsurface of the land, right o construct thereon any works, plantation and

excavation without detriment to servitude and subject to special laws and without right to complain o the

reasonable requirements of aerial navigation;

9. the right to hidden treasure;

10. the right to accession and fruits o the property;

11. the right to quiet title to real property or any interest therein.

LIMITATIONS OR RESTRICTIONS OR REAL PROPERTY OWNERSHIP:

While the legal definition of land or property implies complete ownership of land and everything attached to it,under it, and over it, legal title to land in fact does not convey absolute fee simple title to property and theunrestricted exercise of the entire bundle of rights.

LIMITATIONS ON RIGHT OF OWNERSHIP1. Those imposed in general by the State in the exercise of the followinga. Police Power - The government retains the right to relate property for promoting the public

safety, health, morals and general welfare. Zoning regulations or ordinances, building codes,traffic regulations and sanitary regulations are based upon the police power of the government;

b. Eminent Domain - This is the right reserved by the government for public use/benefit uponpayment of just compensation. Or the right reserved by government to take byexpropriation/condemnation private property for public use upon payment of just compensation;

c. Taxation - The government exercise power of taxation on real properties to raise funds for its

operations and services that protect and otherwise benefit citizenry. Services or benefits mostprovided are schools, police and fire protection, parks, libraries, street maintenance, garbagecollection and welfare payment to elderly and needy.

d. Escheat -It is the reversion or automatic conveyance of realty to the government, upon ownersdeath, due to the absence of a will, heirs or other legal claimants ascertainable on the face of thetitle; or when the owner does not pay his taxes.

2. Those imposed by law such as legal casement, requirement of legitimate in succession, zoning, buildingcode, rent control, urban and agrarian reform, subdivision regulations, escheat.

3. Those imposed by the grantor of the property on the grantee by contract, such as donation, last will,usufruct.

4. Those imposed by the owner himself, such as voluntary casement, lease, mortgage.

SURFACE, SUBSURFACE AND AIR RIGHT

Land, in its legal signification, extends from the surface downwards to the enter of the earth and extendsupwards indefinitely to the skies.


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The surface and subsurface of rights of an owner entitle him to construct thereon any works or make anyplantations and excavations without detriment to servitudes and special laws.

Air right is the right of an owner to use and control the air space over his land subject to the requirements ofaerial navigation, laws, or contract.

MEANING OF TITLE

Title is not synonymous with Torrens Certificate of Title. Rather, it is a generic word which means proof,evidence, or monument of ownership, such as tax declaration, realty tax receipts, deed of sale, and TorrensCertificate of Title. But, of course, the best title or best evidence of ownership is the Torrens Title because it isindefeasible, imprescriptible, and binding against the whole world.

MODES OF ACQUIRING TITLE

1. Private Grant voluntary transfer or conveyance of private property by a private owner, such as sale ordonation.

2. Public Grant acquisition of alienable lands of the public domain by homestead patent, free patent,sales patent, or other government awards.

3. Involuntary Grant acquisition of private party against the consent of the former owners, such asforeclosure sale, expropriation, execution sale, or tax sale.

4. Descent or Divise Descent may be acquired by virtue of hereditary succession to the estate of thedeceased owner. This requires a certain degree of relationship. In Divise, succession need not be in favorof a relative. Title to the property is transferred by way of a will executed by the testator (owner of theproperty)

5. Reclamation filling of submerged land, subject to existing laws and government regulations.

6. Accretion acquisition of more lands adjoining the banks of rivers due to the gradual deposit of soil as aresult of the river current.

7. Prescription (Adverse Possession) acquisition of title by actual, open, continuous, and uninterruptedpossession in the concept of owner for the period required by law.

8. Emancipation Patent the grant of agricultural land to tenant-farmers in the implementation of the landreform program of the government.

RIGHT TO OWN1. General Rule Only Filipino citizens and corporations at least sixty percent of the capital of which is

owned by Filipinos are entitled to acquire and own land in the Philippines

2. Exceptions to General Rule Alien acquisition of real estate in the Philippines is allowed in the following

cases:

a) Acquisition before the 1935 Constitution

b) Acquisition thru hereditary succession if the acquiree is a legal heir.

c) Purchase of not more than forty percent interest in a condominium project. (RA 4726)

d) Purchase by former natural born Filipino citizens subject to limitations prescribed by B.P. 185(residential lot) and R.A. 8179 (commercial lot).


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3. A Filipina who marries an alien retains her Philippine citizenship (unless the law of her husbands countrymakes her assume the citizenship of her husband because of such marriage) and can therefore acquirereal estate in the Philippines.

ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZENS

1. Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntarydeeds (such as foreclosure, execution or tax delinquency sale).

2. Maximum area that may be acquired.

a. BP 185 - residential purpose 1,000 square meters of urban land or one hectare of rural land.

b. RA 8179 - business purpose 5,000 square meters of urban land or 3 hectares of rural land.

Business purpose refers to the use of land primarily, directly, and actually in the conduct ofbusiness or commercial activities in the broad areas of agriculture, industry and services, including

the lease of land but excluding the buying and selling thereof.3. In case of married couple where both spouses are former natural born Filipino citizens, both of them may

avail of the right provided that the total acquisition shall not exceed the maximum area allowed.

4. A transferee who acquired urban or rural land for residential purpose while still a Filipino citizen mayacquire additional urban or rural land for residential purpose which, when added to that already owned byhim, shall not exceed the maximum area allowed by law.

The same right applies to a transferee who already owns urban or rural land for business purpose whilestill a Filipino citizen.

5. A transferee who has already acquired urban land for residential purpose shall be disqualified to acquire

rural land for residential purpose and vice versa. The same rule applies to a transferee of land forbusiness purpose.

However, a transferee of residential land under B. P. 185 may still avail of the right to acquire land forbusiness purpose under R. A. 8179.

LANDS OF THE PUBLIC DOMAIN

1. Under the Constitution, lands of the public domain are classified into agricultural, forest or timber, mineral,and national parks.

2. Alienable lands of the public domain shall be limited to agricultural lands.

3. Filipino citizens may acquire alienable lands of the public domain not more than twelve hectares bypurchase, homestead, or patent; or lease not more than 500 hectares.

Private corporations cannot acquire, but may only lease alienable lands of the public domain for a period notexceeding twenty-five years, renewable for the same term, and not exceed 1,000 hectares.

Stewardship concept of property ownership


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A legal doctrine that the property is supposed to be held by the individual only as trustee for the people ingeneral, and as a mere steward, the property owner must exercise his right to the property not just for his ownexclusive and selfish benefit or interest but for the good and general welfare of the nation as a whole.

REGALIAN DOCTRINE on property ownership

A principle in law that all natural wealth agricultural, forest or timber and mineral lands of the public domainand all other natural resources belong to the state. Thus, even if a private person owns the property where

minerals are discovered, his ownership for such does not give him the right to extract or utilized said mineralswithout permission from the state to which such minerals belong.

What are Easements & Servitudes

EASEMENT refers to right of use over the property of another (dominant estate). Traditionally, the permittedkinds of uses were limited, the most important being rights of way and rights concerning flowing waters. Theeasement was normally for the benefit of adjoining lands, no matter who the owner was, rather than for thebenefit of a specific individual. While;

SERVITUDE is a burden imposed upon another (servient estate). Servitudes are also classified as positiveand negative. A positive servitude is one which obliges the owner of a servient estate to permit or suffersomething to be done on his property by another. A negative servitude is one which des not bind the servientproprietor to permit something to be done upon his property by another, but merely restrains him from makinga certain use of his property which would impair the easement enjoyed by the dominant tenement. It is statedin the law that a person has a right (easement) to impose a burden (servitude) upon another in cases providedfor by law.

Requirements for a compulsory easement of right of way

a. Property is surrounded by other properties and there is no adequate exit to the public highway;b. Payment of the proper indemnity (just compensation)c. The isolation was not due to owners own act.d. The right of way claimed is at the point least prejudicial to the grantor


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PHILIPPINE REAL ESTATE LAWS

FUNDAMENTALS OF PROPERTY OWNERSHIP, REAL ESTATE PRACTICE & TAXES

RIGHT TO OWN

1. General Rule Only Filipino citizens and corporations at least 60% capital of which is ownedby Filipinos are entitled to acquire and own land in the Philippines.2. Exceptions to the General Rule Alien acquisition of real estate in the Philippines is allowed in

the following cases:

a) Acquisition before the 1935 Constitution.b) Acquisition thru hereditary succession if the acquiree is a legal heir.c) Purchase of not more than 40% interest in a condominium project

d) Purchase by former natural born Filipino citizens subject to limitations prescribed by B.P. 185and R.A. 81793. A Filipina who marries an alien retains here Philippine citizenship (unless the law of her

husbands country makes her assume the citizenship of her husband because of such marriage)

and can therefore acquire real estate in the Philippines.

Real Estate Ownership

CONCEPT OF OWNERSHIP

Ownership is the independent right of a person to the exclusive enjoyment and control of aproperty including its disposition and recovery subject only to the restrictions established by lawand rights of others.

RIGHTS INCLUDED IN OWNERSHIP

Fee simple consists of the so called bundle of rights which are inherent in or appurtenant toownership, without any limitations or restrictions other than those imposed by law or contract.

The bundle of rights include the following: 1) Right to possess 2)Right to use and enjoy 3) Right

to the fruits 4) Right to dispose 5) Right to vindicate or recover

LIMITATIONS ON RIGHT OF OWNERSHIP

1) Those imposed in general by the State in the exercise of the power of taxation, police power,

and power of eminent domain.2) Those imposed by law such as legal easement, requirement of legitimate succession, zoning,building code, rent control, urban and agrarian reform, subdivision regulations, escheat.

3) Those imposed by the grantor of the property on the grantee by contract, such as donation,last will, or usufruct.4) Those imposed by the owner himself, such as voluntary easement, lease, mortgage.

SURFACE, SUBSURFACE AND AIR RIGHTLand, in its legal signification, extends from the surface downwards to the center of the earth

and extends upwards indefinitely to the skies. The surface and subsurface of rights of an ownerentitle him to construct thereon any works or make any plantations and excavations withoutdetriment to servitudes and special laws. Air right is the right of an owner to use and control theair space over his land subject to the requirements of aerial navigation, laws, or contract.

RIGHT TO HIDDEN TREASUREHidden treasure belongs to the owner of the land, building, other property on which it is found.

When the discovery is made on the property of another, or of the State or any of its

subdivisions, and by chance, one-half of the treasure shall be allowed to the finder. If the finderis a trespasser, he shall not be entitled to any share of the treasure. If the things found be of


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interest to science or arts, the State may acquire them at their just price, which shall be dividedin conformity with the rule above stated. Hidden treasure, for legal purpose, is understood to be

any hidden unknown deposit of money, jewelry, or other precious objects, the lawful ownershipof which does not appear.

RIGHTS OF ACCESSION1) In General The ownership of property gives the right by accession to everything which isproduced thereby, or which is incorporated or attached thereto, whether naturally or artificially.

2) With Respect to Produce of Property To the Owner belongs the:a) Natural fruits the spontaneous product of the soilb) Industrial fruits those produced by land cultivation or labor

c) Civil fruits the rental income of buildings and /or lands

3) With Respect to Immovable Property:a) The owner of the land on which anything has been built, sown or planted in good faith shallhave the right:

aa) To appropriate as his own the works, sowing or planting after payment of indemnityprovided by law, orbb) To oblige the builder or planter to pay the price of the land. However, the builder of planter

cannot be obliged to pay for the land if its value is considerably more than that of the building or

planting. In such case, he shall pay reasonable rent if the owner does not choose to appropriate

the building after proper indemnity. The parties shall agree on the terms of the lease and in caseof disagreement, the court shall fix the terms thereof.b) The owner of the land on which anything has been built, planted or sown

In bad faith may:aa) Demand the demolition of the work or removal of the planting or sowing at the expense of

the builder or planter, or

bb) compel the builder or planter to pay the price of the land and the sower, the proper rent.The landowner is also entitled to damages from the builder planter or sower.

cc) To the owners of land adjoining the banks of rivers belong the accretion which they graduallyreceive from the effects of the current of the water.

dd) Whenever a river, changing its course by natural causes, opens a new bed through a privateestate, the new bed shall become a public dominion.

Modes of acquiring title

Private Grant voluntary transfer or conveyance of private property by a private owner, such assale or donation.

Public Grant acquisition of alienable lands of the public domain by homestead patent, freepatent, sales patent, or other government awards.

Involuntary Grant acquisition of private party against the consent of the former owners, such

as foreclosure sale, execution sale, or tax sale

Inheritance acquisition of private property through hereditary successionReclamation - filling of submerged land, subject to existing laws and government regulations.

Accretion acquisition of more lands adjoining the banks of rivers due to the gradual deposit of

soil as a result of the river current

Prescription acquisition of title by actual, open, continuous, and uninterrupted possession in

the concept of owner for the period required by law


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ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZENS1. Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes

involuntary deeds (such as foreclosure, execution or tax delinquency sale)2. Maximum area that may be acquired:a) For residential purpose 1,000 square meters of urban or one hectare of rural land.

b) For business purpose 5,000 square meters of urban land or 3 hectares of rural land.

Business purpose refers to the use of land primarily, directly, and actually in the conduct ofbusiness or commercial activities in the broad areas of agriculture, industry, and services,

including the lease of the land but excluding the buying or selling thereof.

In case of married couple where both spouses are former natural born Filipino citizens, both of

them may avail of the right provided that the total acquisition shall not exceed the maximumarea allowed.

A transferee who acquired urban or rural land for residential purpose while still a Filipino citizenmay acquire additional urban or rural land for residential purpose which, when added to thatalready owned by him, shall not exceed the maximum area allowed by law.

Rule in case of double sale: The priority of rights in case of double sale of titled property shall begoverned by the following rules:

1. The buyer who acquired in good faith and was the first to register the sale shall have a better

right.

2.If none of the buyers registered the sale, the buyer who acquired to good faith and wasthe first one in possession shall have a better right.

3. If none of the buyers registered the sale or took possession, then the buyer who acquired ingood faith and has the oldest title shall have a better right

Contract of Sale and Contract to Sell

1. Distinction: In a contract of sale, there is already a transfer or ownership. In a contract tosell, there is no transfer of ownership yet but merely a mutual promise to buy and sell

. Criterion: The test to determine whether a contract is a contract of sale or a contract to sell is

not the manner of payment whether cash or installment, but whether or not there is

conveyance of ownership in the dispositive or grant clause of the deed. There is transfer ofownership when the dispositive clause states that the vendor hereby sells, transfers andconveys unto the vendee in a manner absolute and irrevocable x x x

Rights of buyer who has paid two years or more of installments:

1. To pay, without additional interest, any installment due within the grace period which is

equivalent to one month for every year of installment payment, provided that such right canonly be availed of once every five years.

2.To receive a thirty-day notarial notice of cancellation before his contract can be cancelled fordelinquency

Rights of buyer who has paid less than 2 years of installment

1. The grace period to pay without additional interest due is fixed as 60 days


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2. For cancellation of contract due to delinquency, the buyer is only entitled to receive a 30-daynotarial notice of cancellation without right to receive the cash surrender value pf his payments

Right to refund under P.D. 957 & Maceda Law

Presidential Decree 957: Right to refund applies when the developer fails to complete thedevelopment within the required period. Refund is 100% of total payments

Maceda Law: Right to refund applies as a requisite for cancellation of contract due to

delinquency when the buyer has paid at least 2 years. Refund is 50% of total payments;additional 5% per year after the 5th year.

MACEDA LAW (R.A. 6552) When the buyer is delinquent in his payment

Objective: To protect installment buyers of real estate against onerous and oppressiveconditions.

Applicability Applies to sale or financing of residential estate on installment payment covered

by contract to sell and not sale with mortgage, but excluding industrial lots, commercialbuilding, and sales to tenants under R.A. 3844.

Rights of buyer who has paid two years or more of installments: a) To pay, without additional

interest, any installment due within the grace period which is equivalent to one month for every

year of installment, provided that such right can only be availed of once every five years. b) Toreceive a thirty-day notarial notice of cancellation before his contract can be cancelled for

delinquency. c) To receive the cash surrender value of his total payments before his contract

can be cancelled due to delinquency. The refund is equivalent to fifty percent of total paymentsand, after the fifth year, an additional five percent per year of installment payment, but not toexceed ninety percent of total payments. d) To transfer or assign his right to the contract e) To

register or annotate his contract on the title f) To pay, without additional interest, the fullprincipal balance of the price before the term of the contract.

Rights of buyer who has paid less than two years of installment The buyer has practically thesame rights as a buyer who has paid two years or more of instalmments, except for thefollowing differences:

a) The grace period to pay without additional interest on any installment due is fixed at sixtydaysb) For cancellation of contract due to delinquency, the buyer is only entitled to receive a thirty-day notarial notice of cancellation but without right to receive the cash surrender value of his

payments.

FOREIGN OWNERSHIP OF CONDOMINIUM UNITIn the condominium concept of ownership, absolute ownership by a foreigner is allowed not toexceed forty percent interest in the project. The unit owner is the absolute owner of the space

within the interior surface of his unit, but is only a co-owner of the exterior faade of the unit.

RIGHTS OF A CONDOMINIUM UNIT OWNER

Absolute ownership of his unitCo-ownership of land and common areasExclusive easement of the space of his unitNon-exclusive easement to common areas for ingress or egress

Right to sell, lease, or mortgage his unitRight to repair, paint, decorate the interior surface of his unitRight to participate and vote in condominium corporation meetings

OBLIGATIONS OF A CONDOMINIUM UNIT OWNERPay the realty tax on his unit


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Pay the insurance on his unitPay the shared monthly dues for maintenance of common areas/amenities/garbage disposal

Comply with use restrictions

P.D. 957 When the developer fails to complete the development within the required periodThe refund is 100% of total payments less penalty interest plus legal interest of money

REAL ESTATE PRACTICE & REAL ESTATE TAXES

Capital Gains Tax - Income tax payable to the BIR for the sale, transfer, or other disposition ofreal estate classified as capital asset. .

Transfer Tax - A tax payable to the local government unit for sale, transfer or other dispositionof real estate, whether capital or ordinary asset

Withholding Tax - A tax payable to the BIR on the sale, transfer or other disposition of real

estate classified as ordinary asset.

Cost approach - a method of estimating the fair market value of an improvement by estimatingpresent reproduction cost and deducting depreciation.

Economic life - The period during which a property can be profitably used or expected togenerate more income than expenses.

Principle of diminishing returns - States that the application of more factors of production will

tend to increase net income up to a certain point, beyond which the introduction of more factorsof production will tend to decrease net income.

Principle of Progression - An appraisal principle which holds that the value of a property tends tobe enhanced by association with superior properties

Principle of Regression - An appraisal principle which holds that the value of a property tends tobe adversely affected by association with inferior properties.

Principle of Substitution - an appraisal principle which holds that the value of a replaceableproperty is inferred from the value of an equally desirable substitute property.

Presentation: concept It is an orderly written or oral explanation of facts and figures thatmake a given property attractive to a prospect. Scope of coverage: 1. Property Identification

location, block number, lot number, lot area and dimensions, floor area, type of property,

terrain, view, description of improvements, zoning classifications, facilities and amenities, titledor to be titled, price, terms, discounts, financing. 2. Advantages and benefits quality ofneighborhood, availability of public transportation, proximity to public marker / schools /

hospitals, reasonableness of price. 3. For income properties present potential income, returnof investment. 4. Lot and vicinity plan, subdivision map, and pictures of the property

Demonstration: concept It is the process of showing the property and pointing out its physicalqualities and other advantages and benefits to arouse the desire to own it. Preparing for


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demonstration: Preparation of checklist of physical attributes and other data which may be theobject of prospects inquiry. Update availability with the developer.

Organization of selling points to be emphasized

Anticipation of possible objections

Appointment with prospect and notice to owner

Selection of ideal route to create a favorable impression of the neighborhood

Negotiation: concept It is the process of reconciling the opposing views of the parties to atransaction as to price and terms.Items which should be covered in negotiation:

Price and terms and discounts

Expenses for execution and registration of sale

Date for delivery of property

Items included or excluded in a sale

Manner of payment & financing

Update Payment of Eletricity, Water, Telephone

Update Payment of Realty Tax

Penalties or Forfeiture in case non-compliance

Who is going to process the documents and deadline

Appointments for Earnest money, or sales contract or deed f sale

Common difficulties

*Silent objection hesitancy of the prospect to express his objection thereby depriving the

broker of the opportunity to answer or overcome it

*Presence of supposed advisers of the prospect who give negative remarks which tend toundermine the transaction

*Failure or inability to analyze prospects real need and affordability

*Promise of a prospect to call the broker which is almost always broken

*Waiting advice from spouse or relative who were not present during the tripping

*Brokers failure to identify time wasters such as window shoppers or speculators

Closing

*Persuading the prospect to visit the developers office to be able to hold the property with a

reservation fee

*Securing papers/documents from developers such as copy of title, lot plan, deed of restrictions,

copies of reservation agreement, deed of restrictions, contract to sell, deed of sale

*Securing papers/documents from prospects such as copy of income tax returns, bankstatements, certificate of employment, copy of passport, TIN, residence certificate etc

*Arrangement of appointment between parties for contract signing and payment

Non-forfeiture of Payments. No installment payment of the buyerMay be forfeited by the

developer when the buyer who is not delinquent, and after due notice, desists from furtherpayment due to failure of the developer to complete within the required period. The buyer may


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at his own option, be reimbursed with total amount paid including amortization interest, withinterest thereon at legal rate.

Mortgage of Project No mortgage of any lot by the project owner/developer without permit to

mortgage from HLURB. Permit to mortgage may be granted upon submission of proof that the

loan proceeds will be used for development and verified undertaking by the mortgagee torelease from the mortgage any lot/unit whose loan value has been paid. In case a mortgage wasexecuted by owner/developer pursuant to HLURB permit to mortgage, the buyer may at his own

option, pay his installmentdirectly to the mortgagee.

Alteration of Plans any alteration in the approved plans relating to open spaces, facilities and

other forms of development require prior approval from HLURB (now LGU) and written consentof Homeowners Asscociation

Advantages of condominium Concept

Enhance affordability by fractionalizing cost of land & building

Facilities utilities, amenities and services will cost less to build and maintain

Economy in land space. Families holding title contiguous lands of say 40 or 50 square meters by

obtaining adequate housing by consolidating their lots and constructing a condominium project

Enhances marketability because foreigners can buyMultiples saleable or rentable floor areas by as many storeys put upEliminates the routinary

chores of daily maintenance, security, and garbage collection associated with single-detached

dwellings

Rights of unit owner

1.Absolute ownership of his unit.

2.Co-ownership of land and common areas.

3.Exclusive easement of the space of his unit.

4.Non-exclusive easement to common areas for ingress or egress.

5.Right to sell, lease, or mortgage his unit.

6.Right to repair, paint, decorate the interior surface of his unit.7.Right to participate and vote in condominium corporation meetings.

Obligations of condominium unit owner

1.Pay the realty tax on his unit.

2.Share the realty tax on the land and common areas.3.Pay the insurance on his unit.

4.Share the insurance on the common areas.

5.Comply with use restrictions.

6.Pay dues and assessments.

7. Give other unit owners the priority right to buy his unit (right of first refusal). If so required

by the master deed.

Dues and Assessments

1.The Deed of Restriction usually provides for two kinds of assessments:

a.) Regular assessment a monthly obligation to fund ordinary project expenses, such as

security, garbage collection, repair and maintenance of the common areas, electricity and waterbills on the common areas and realty tax and insurance on the common areas.


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b.) Special assessment this is imposed as the need arises, such as the need for replacementof the generator.

Extent of interest in common areas

In the absence of any provision in the master deed, all unit owners shall have equal share inthe common areas. If the intent is to pro-rate the unit owners interest on the common areas,

such fact must be expressly provided in the master deed. The interest based on floor area ofownership is arrived at by dividing the unit area by the total floor area of all condominium units.

Condominium Corporation

Optional and Mandatory Requirement. The condominium corporation is optional if no unit will be

sold in foreigners. However, the corporation is mandatory if some units, not exceeding fortypercent interest in the project, will be sold to foreigners, in which case title to the land will be

transferred in the name of the condominium corporation and thus comply with the constitutional

mandate that corporations may acquire real estate provided that at least sixty percent of itscapital or membership is Filipino

1.Principal Purposes: a) To hold title to the land and b) To set as the management body of the

condominium project.

2.Conflict with Master Deed. In case of conflict between the articles of incorporation of the

condominium corporation and the master deed of the condominium project, the latter shouldalways prevail because:

a) It is the matter deed which gives birth in the condominium project. The project cannotexist without a master deed, but it can exist without a condominium corporation.

The condominium law specifically provides that the articles of incorporation and by-laws of thecondominium corporation shall not conflict with the master deed.

REAL ESTATE TAXATION

Assessment Level for Land:

Classification Not more than

Residential 20% of FMV

Commercial/ Industrial/ Mineral 50% of FMV

Agricultural 40% of FMV

Timber 20% of FMV Scientific/ Cultural/ Hospital15% of FMV

Assessment Level of Improvement:

FMV over Not over Resdl Comml/ Indl Agrl Timber

175,000 0% 0% 0% 0%

175,000 300,000 10% 30% 25% 45%

300,000 500,000 20% 35% 30% 50%


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500,000 750,000 25% 40% 35% 55%

750,000 1,000,000 30% 50% 40% 60%

1,000,000 2,000,000 35% 60% 45% 65%

2,000,000 5,000,000 40% 70% 50% 70%

5,000,000 10,000,000 50% 75% 50% 70%

10,000,000 60% 80% 50% 70%

Rate of Real Estate Tax

a) In Provinces not exceeding one percent of assessed value.

b In Cities and Metro Manila Municipalities not exceeding two percent of assessed value.

Special Education Fund Tax an annual levy on real estate equivalent to one percent of

assessed value which shall be in addition to the basic real estate tax

Date of Payment of basic realty tax and SEF tax:

a)May be paid in four equal quarterly installments on or before March 31, June 30, September30, and December 31.

Payment in advance of the schedule is entitled to not more than twenty percent discount.

Delinquent payment shall be subject to interest of two percent per month but in no case toexceed thirty six months

CAPITAL GAINS TAX

Rate and Basis Tax the rate of capital gains tax is six percent computed on the followingbasis:

a) Sale of Lot: - Basis is price per deed of sale or lot zonal value, whichever is higher.

b) Sale is Lot with improvement: - Basis is price per deed of sale, or lot zonal value plusimprovement value, whichever is higher.

Conditions for exemption from Capital Gains Tax:

a) The seller is a natural person and the capital asset sold is his principal residence (familyhome).

b) The proceeds of the sale will be used to acquire / purchase construct a new familyhome.

c) The BIR is duly notified by the taxpayer within thirty days from the date of sale through aprescribed return, of his intention to avail of the tax exemption.


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d) The tax exemption can only be availed of once every ten years.

If there is no full utilization for the proceeds of the sale, the portion of the gain presumed tohave been realized from the sales shall be subject to capital gains tax

Installment Sale A sale is considered on installment basis when the initial payment in the yearof sale is twenty-five percent or less, in which case the transferor may opt to pay initially a

portion of the tax in accordance with the following formula:

Initial Tax = Initial Payment x Total Tax

Total Price

WITHHOLDING TAX

Transactions Subject to Withholding Tax Sale, exchange, or transfer of ordinary asset bynatural persons, corporations, estate or trust.

Rates and Basis Computed on the same basis as capital gains tax, the rates of creditable

withholding tax.

Rate of Withholding Tax

0% - When the property sold is part of an HLURB registered socialized housing project of theseller

1.5% - When the seller is habitually engaged in real estate business and the price does notexceed P500,000.00

3.0% - When the seller is habitually engaged in real estate business and the price is over

P500,000.00

5.0% - When the seller is habitually engaged in real estate business and the price exceeds P 2million.

6.0% - When the seller is not habitually engaged in real estate business.

TRANSFER TAX

1.Concept A tax payable to the local government (City or Provincial Treasurer) for the sale orother disposition of real estate, regardless of classification of the property.2.The rate is not more than one percent for properties located in cities and municipalities in

Metro Manila, and not more than one-half percent for properties outside of Metro Manila.

3.Basis is the contract price or market value per tax declaration whichever is higher. However,the local government may enact an ordinance prescribing as basis the contract price or zonalvalue, whichever is higher.

DOCUMENTARY STAMPS

1.On Sales P15.00 per P1,000.00 or a major fraction thereof, computed on the same basis as

capital gains tax, and payable within five days following the month when the document was

notarized.

2.On Mortgages P20.00 for first P5,000.00 and P10.00 per P5,000.00 after the first P5,000.00


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On leases P3.00 for first P2,000.00 or fraction thereof, and additional P1.00 for every

P1,000.00 or fraction thereof in excess of the first P2,000.00 for each year of the term of the

lease

SALIENT FEATURES OF E-VAT RELATING TO REAL ESTATE Concept :

Expand Value Added Tax is an indirect tax. It can be passed on to the buyer. However, it isshould be inputed or built-in the price. The sales contract cannot stipulate the E-VAT shall befor the account of the buyer.

Transactions subject to E-VAT

1.Sale, barter or exchange or real estate held primarily for sale to customers in the ordinarycourse of trade or business where the annual gross sales or invoice exceed P750,000.00, exceptsale by real estate dealers and/or lessors of house and lot and other residential dwellings price

P1.5 Million and below.

2.Lease of real estate for commercial use when the annual gross receipts exceed P750,000.003.Lease of real estate for residential use when the monthly rental per unit exceeds P10,000,000

and the annual gross receipts exceed P750,000.00

Liability as non-VAT taxpayer

1.In cases where the real estate dealer or lessor is not subject to E-VAT, he shall be liable as a

non-VAT taxpayer subject to three percent tax. However, he has the option to register as VAT

taxpayer subject to 10% VAT with the benefit of input tax.

Commissions of real estate brokers are subject to E-VAT if the annual gross receipts exceedP550,000.00, otherwise they shall be subject to seven percent tax.

Real estate dealers are not allowed to withhold the E-VAT from commissions of real estatebrokers

Computations of E-VAT payable

1.E-VAT payable = output tax (sales receipts x 1/11) less input tax (purchase receipts x

1/11)

Credit for input tax can only be availed of if the payee is VAT-registered.

Basis of E-VAT

1.Cash/Deferred payment plan Basis is the contract price or zonal value whichever is higher.

In the absence of zonal value, basis shall be market value per tax declaration or contract price,

whichever is higher.

Installment Plan Basis is actual consideration received, including interests and other charges.

However, upon full payment, if the zonal value is higher than the total receipts / collection, theadditional E-VAT shall be paid accordingly

Expenses for execution and registration of sale In the absence of any stipulation to the contrary,the seller shall pay for the execution and registration of the sale.


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The Professional Regulatory Board of Real Estate Service (PRB-RES) which is under the Professional Regulat

Commission (PRC) had released its guidelines for the crediting of the 120 hours of real estate subjects, semina

trainings, and workshop for applicants for the Board Licensure Examination on March 27, 2011 in accordance

Rule III Section 14 (b) of the Implementing Rules and Regulation (IRR) of the Real Estate Service Act of

Philippines (RESA Law):

A holder of a relevant bachelors degree from a state university or college, or other educational institution drecognized by the CHED: Provided, That he/she has completed at least one hundred twenty (120) credit units of r

estate subjects and training from accredited service providers, as may be determined by the Board; Provided, furth

That as soon as a course leading to a Bachelors degree in Real Estate Service is implemented by the CHED, the Bo

shall make this course a requirement for taking the licensure examination.

The coverage of all the lectures and seminars shall be the subject prescribed in Section 13 c (Scope

Examination) Rule III of the IRR of RESA Law for real estate brokers.


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Fundamentals of property ownership

Code of Ethics and Responsibilities

Legal Requirements for Real Estate Service Practice

Real Estate Brokerage Practice; Subdivision Development

Condominium Concept and Other Types of Real Estate Holdings

Real Estate Finance and EconomicsBasic Principles of Ecology

Urban and Rural Land Use

Planning, Development and Zoning

Legal Aspect of Sale, Mortgage and Lease

Documentation and Registration

Real Property Laws and Taxation

and any other related subjects as may be determined by the Board

The required 120 Crediting Hours of seminars and trainings is complied with in support of their respecti

applications as follows:

Sixty (60) hours of lecture, classroom and or seminar hours on real estate subjects and modules may

include but not limited to

For applicants for the Board Licensure Examination: Equivalent or credit units earned in a bachelors degree

post-baccalaureate, masteral degree, doctoral programs; lecture hours in a related certificate courses, semina

hours under a Comprehensive Real Estate Seminar and Review (CRESR), credit units/hours in any accredited

seminar, convention, lecture of an accredited service provider.

Sixty (60) hours of On the Job Training (OJT), apprenticeship and or workshop as certified by the

following:

1. Registered and licensed real estate brokers, brokers, appraisers and consultants.

2. Duly licensed and registered real estate developers.

3. Provincial, city and municipal assessors and other government appraisers.

4. Accredited service providers for workshop attended as a formal seminar-workshop organized and offered

thereby.

The licensee, however may opt to take the full 120 hours thru seminars, training, and workshops, as the cas

may be.

Notwithstanding the foregoing, an applicant shall be deemed to have satisfied and compiled with the requi

hours upon submission of a notarized certification that he/she has attended seminars, conventions, and or lectu

for a total of full 120 hours as stated

Any form or certificate indicating the details of the foregoing may be accepted if it is duly notarized.

The PRB-RES has released a new memo Circular No. 2011-04 ( Guidelines for the 120-hours Comprehensive REstate Seminar and Review (CRESR) credit)


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@puberer, gusto ko rin try lending kaso mukang di ko alam pasikot sikot n

diskarte..May question lang ako, lets say kung may nireleasan kayo ng loan na 10,000,

paano yun payback? Yun nangutang monthly interest lang babayaran nila? and kelan

balik principalsa inyo? Or is it monthly na bayad nila is interest +a portion of principal?

Thanks!

Sir dito kasi sa cavite, daily ang bayad. 60 days to pay 16% int. so kung ang inutang

is 10,000 + 1,600 (int) = 11,600 / 60 days = 193.33 . pero ang hulog na nila per day

is 200. ibibigay nalang namin ang sukli after ma fully paid sila.

kung sa cebu naman sir sa pension loan. 5% fix int. namin per month. here's how we

compute it sa loan na 10k at 6 months to pay.


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10,000 x .05 = 500 interest

10,000 / 6 = 1,667 principal

--------------------

2,167 monthly amortization for 6 months.

nag charge din po kami ng processing fee. 5% of amount ng loan. so ang processing

fee sa 10k is 500. Then nag charge din kami ng insurance fee na Php 200.

yung insurance fee po ay pang bawi namin kahit papaano sakaling mamatayan kami ng

client ( wag sana mangyari ).

yung processing naman is pang gastos sa supplies etc.

ang maganda lang po sa amin is honest kami sa clients namin. wala kami hidden

charges. ineexplain namin sa kanila ang computation ng loan nila. sa iba kasi basta

gusto mag loan ng matanda, cocomputin ng lending at ang ipapakita nalang sa iyo is

ung babayaran mo monthly. pero di alam ng matanda na may extra charges na pala

dun. kawawa ang matanda.

madami magulang na lending. sasabihin 2% lang ang int. pero papatak din na 5%

kasi may hidden charges.

mas maganda po na int. + principal ang babayaran per month ng pautang mo. kasi

kung puro int. lang hindi mabilis ang ikot ng pera. di ka pa sure na mababayaran pa

ang principal mo, pero depende parin.

basta po para mabilis ang ikot ng pera, it's either you collect daily or kinsenaskatapusan int. + principal.

@happyknappy, puberer Thanks! Ok talaga lending business if you know the know

how....Wow boss puberer yun sa cavite nyo parang 8% per month right? ok diskarte na

daily bayaran, di masyado mabigat....And lumalabas na more than 8% per month pa

kasi evryday lumiliit na yun capital ang nasa debtor, and pre computed na yun

rate..Cool!

One more Q po boss puberer, regarding sa CI and background check, do you hire

people, or you are a one man team who handles everything? May expenses din kayo samga taong taga singil right?

^ sir GoodSteward, tama ka sir parang hindi mabigat lalo na kung maliit lang ang

inutang. mas gusto namin magpautang ng 5k kasi maliit ang hulog. mas maliit ang

hulog mas madali para sa paningin ng isang umuutang na hulugan ang utang niya.

tama ka din sir na more than 8% per month ang kalalabasan na int. kasi daily ang


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bayad. what more kung sa bumbay na 20%. May kakilala ako sa cavite na yumaman

dahil sa pautang. bumbay style.

sa pag CI at collection, isa lang ang ka partner ko diyan kada location. ako ang mag

decide kung approve ang uutang base sa CI ng partner ko. may allowance, at cel load

per month.

sa pag CI alamin ang line of work, source of income, how much? how much goes to

their expenses. ilang years na sa pwesto or tinitirhan at pinaka-importante may utang

paba sa iba? kani-kanino? maayos bang magbayad o history ba ng delays or non-

payment madali naman mahuli ang nagsisinungaling sa hindi. usually per location

dapat may mole ka or spy na pagkukuhanan mo ng accurate infos about the borrowers.

1st timer dapat may guarantor from your suki lenders. if doubtful ka reject mo, if gusto

mong subukan at least 1 round, ako 2K ang pang sample ko. also reiterate mo sa

guarantor na anytime hindi makahulog ang ginarantiya niya sa iyo, siya angmagbabayad o sisingilin mo, no excuses.

The Professional Regulatory Board of Real Estate Service

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