Many people now prefer to work in cities, like Manila for financial reasons. However, not all originates from city centers like Manila, the Philippines’ capital.
When it comes to finding a place to stay, there are several alternatives available. You can rent an apartment, be a bed-spacer, live in a dormitory, rent to own properties, or live in your very own condominium if you’re lucky to afford one.
If you’ve been planning on buying a condo soon, it is crucial to understand how its ownership works especially when it comes to property titles. In this article, we’ll be comparing Transfer certificate of title (TCT) vs. Condominium certificate of title (CCT) to help you get a grasp of condo ownership in the Philippines.
Most common types of condominium titles in the Philippines
There are several types of condominiums available in the Philippines. Residential, and multiple unit high-rise apartment complex, and these ideas are not limited to this form.
Condominiums can be found in both commercial real estate contexts, such as office condominiums, and residential ones, such as condominium townhouses. A condominium is a form of ownership, not a type of building. Existing apartment buildings can be turned or “converted” into condominiums, and condominiums can be changed back into traditional apartment buildings.
Transfer Certificate of Title (TCT)
Transfer of Certificate Titles, or TCT, is a legal document in the Philippines that transfers ownership of a property, such as land via sale, from the previous owner to the new owner by transferring it lawfully. TCT will verify that you possessed a property. It is not just about the right to land, but also about the right to air space that the owner will consume once a structure is constructed.
A TCT must contain the TCT number, which may be located in the top center portion of the property title, a technical description of the size of the land, landmarks, location or address, owner’s name, documentary stamp tax, and other information that can be found in the title.
When purchasing a lot or any property, ensure that it has a legal title so that you will not encounter any problems. You may check the Registry of Deeds in the Philippines to see whether a land or lot has any issues or pending government allegations.
Condominium Certificate of Title (CCT)
Condominium Certificate of Title or CCT refers to the title of the condominium unit and is somewhat similar to the transfer title of certificate yet it is certifying an ownership of a condominium. CCT has two kinds, first one is the freehold ownership which the owner can stay and have the condominium unit as long as they want to, and the leasehold ownership whereas it only lasts for 25 to 50 years yet owners can renew their contract via contract renewals that can prolong the ownership to the unit.
Just like the TCT, CCT must also have the physical details of a condominium unit including the floor number, unit number, owner, unit description, registration number, address, and its dimensions and measurements. The property developers name as well as the information about the owner.
TCT vs. CCT
The primary distinction between a Transfer Certificate of Title and a Condominium Certificate of Title is that the latter only covers air space (unit number of a specific floor in the condo). As a result, condo owners receive a Condominium Certificate of Title, while developers receive a Transfer Certificate of Title.
The transfer certificate of title will grant you full ownership of the land property from the bottom to the top, allowing you to construct freely. In contrast to a condominium certificate of title, the owner only holds a property title to a specific condominium unit and is termed a registered owner. Nonetheless, both should have legal ramifications.
Cost of Transfer; Who should pay between buyer and seller?
There is a portion of sharing for the cost of paying the expenses between the buyer and the seller.
The seller should prepare and be obliged for the payment of the Capital Gains Tax of 6% of the price on the Deed of Sale or the zone value, whichever is greater. If the company is the seller, there will be a withholding tax. If there are any unpaid real estate taxes. And, of course, the commission earned to the agent or real estate broker who acts as a middleman in the transaction.
While on the other hand, buyers need to pay for the cost of Registration fees. It includes 1.5% of the selling price, zonal value, or fair market value, which is greater. Transfer tax is calculated at 0.5% of the selling price, zone value, or fair market value. Lastly, miscellaneous and incidental fees spent throughout the registration procedure.
How to check if a property has a clean title?
There is nothing wrong with being careful in examining if what we are acquiring is authentic, especially because it is so hard to earn and save money these days, and we don’t want to lose it in the blink of an eye. That is why it is important to ensure that the property we are purchasing is free of flaws especially in real estate properties.
Here are some tips on how to determine if the land has clear title:
1. Examine the paper’s quality.
Banko Sentral ng Pilipinas (BSP) has only the exclusive right to print the title. The paper is manufactured with colorful fibers from 50% cotton and 50% chemical wood pulp. And when hit by the light, the LRA or Land Registration Authority should appear.
2. Transfer Certificate of Title document should be verified as authentic.
Certified True Copy of land titles are provided by the Registry of Deeds that is commonly located near the location of the land. The seller should provide a photocopy of the property title as per the Registry of Deeds will be needing the information to authenticate the property title.
3. Examine the owner’s duplicate certificate together with its seal.
Owner’s Duplicate Copy should be on the left side of the land title. Next, on the bottom corner of the title, a red seal with no blotting should be present.
4. Check the seller’s identification.
Make sure that you are dealing with the real owner of the title to avoid problems on the latter part of the transaction.
5. Examine the property for liens and encumbrances.
A lien is an encumbrance (legal responsibility on real property that does not prevent transfer but instead decreases its value) placed on a person’s property to secure a debt owed to another person. The title’s rear page contains annotations (if any) for liens and encumbrances such as mortgages, adverse claims, and so on. If you’ve been promised a “clean” title, this page must be empty.
6. Check to see if the real estate taxes have been paid.
Go to the Municipal Assessor’s Office and check if all of the property taxes have been paid in full.
7. Check the technical description of the title again.
Ask for the help of the experts like Geodetic Engineer to properly survey the area if what is written in the document is same as what is the measurement of the land.
What are fees to pay when buying a real estate property in the Philippines?
On buying property, there is always a legal fee that needs to be paid. These are:
1. Registration fee
You may compute the registration cost, which is often set at 0.25 percent of the sales price, zonal value, or fair market value, which is greater. Notary fees and other incidental and extra charges spent throughout the registration procedure.
2. Transfer tax
The tax levied on the sale, barter, or any other manner of transferring real property ownership or title is known as the “transfer tax,” and it is due to the local treasurer’s office. Depending on the exact local government unit, the maximum amount levied is 50% of 1% of a property’s value, or 75% of 1% in cities and municipalities inside Metro Manila.
3. Documentary stamp tax
Tax on papers, instruments, loan agreements, and other things that serve as evidence of the acceptance, sale, or transfer of an obligation, right, or thing related thereto.
4. Incidental and miscellaneous expenses
Any fees or expenses you may encounter during the transferring of certificate.
5. Capital gains tax
It is the 6% of the price on the Deed of Sale or the zone value, whichever is greater.
6. Unpaid real estate dues
For each month that you fail to pay your real estate taxes, you will be charged an extra 2% interest charge. The maximum punishment is 72% for a period of up to three years or 36 months.
7. Commission of agent or real estate broker
Of course, you need to pay for the effort, skill, knowledge, and time of the agent of broker who helped you to sell or buy the property.
What are the documents needed for the Title transfer?
- Owner’s duplicate copy of CCT
- Real estate tax exempt
- Real estate tax receipt
- Certificate of Management from the Condominium Association
- Registration costs, which include 0.25% of the selling price and other small expenses, must be paid
- Notarized Deed of Absolute Sale
- Certificate Authorizing Registration (CAR) from BIR
- Documentary Stamp Tax Receipt
- Tax Declaration verified as genuine copy
- And other documents that is necessary