Caveat Emptor: Buyer Beware!

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The season of Christmas comes the season of spending. It’s the time when the thirteenth month or fourteenth (or more, if you’re lucky) month pay is released to employees, OFW remittances in full gear, and possibly year-end collections for employers are set.

Everybody has the money to spend, spend, spend!

But this is not a finance article. It’s more of a brief guide to help you assess what you’re planning to buy, whether personal goods (i.e. motor vehicles, gifts) or real property (i.e. condo, land). This article assumes that you have already weighed your financial options and have the capacity to purchase the same. 

Real Property: Condo, Lot, House and Lot

Ask the seller for the latest certified true copies of the title: Condominium Certificate of Title for condo units and Transfer Certificate of Title or Original Certificate of Title for lots, issued and certified by the Register of Deeds where the property is located. It is blue in color and has security marks like with money. It’s longer than your long bond paper. 

Inspect the title. A clean title would have nothing annotated in the memorandum of encumbrances, except for condo titles where a Master Deed of Restrictions is annotated. That’s normal. 

Annotations of an adverse claim, or of lis pendens, should raise a red flag. Ask the seller why those are annotated in the title, and consult your lawyer to help clarify. An annotation of Lis pendens means that the property is subject to a pending case or court proceeding. An adverse claim annotation means that there are third parties who claim a right of ownership over the title. 

Mortgages annotated on the back of the title should also warn you as a buyer that the property is under mortgage by a bank or financial institution. If your seller defaults in his obligation to the bank, the bank has the ultimate right to foreclose on the mortgage, leaving you high and dry. 

Apart from titles, check for the tax declarations over the property you’re seeking to buy. It should be up to date in tax payments (paid to the Municipal or City Assessor’s Office where the property is located). 

It’s possible that a property is not yet covered by a title, but by a tax declaration. In those cases, consult your lawyer to help verify and trace the ownership and possession of the seller of the property.

Make sure that the seller is also the registered owner as reflected in the title or tax declaration. If not, he or she should have a notarized Special Power of Attorney specifically authorizing him or her to SELL the specific property to third parties. If it’s commonly owned, all sellers should sign the Deed of Sale, or if done through a representative, all co-owners should have signed the Special Power of Attorney. 

If you’re purchasing pre-selling real estate, make sure you are transacting with a licensed broker or seller, and that the developer has the License to Sell and Certificate of Registration issued by the HLURB (Housing and Land Use Regulatory Board), the government agency that regulates real estate developers and projects for sale to the public. 

Personal property or chattel, in legalspeak

The same principle applies to your purchase of motor vehicles. Check the LTO-issued OR (Official Receipt) and CR (Certificate of Registration) to make sure that the seller is really the owner of the car he is selling. If not, he should be authorized to sell the same in a notarized Special Power of Attorney.

The vehicle should also come with macro-etching certification from the PNP Crime Lab, to certify that the engine and chassis numbers were checked and cleared.

For those who want to be extra careful with the cars they are purchasing, especially if these do not come from authorized dealerships or if they are second hand (or third hand, and so on), you may request the PNP HPG (Philippine National Police Highway Patrol Group) to issue a spot report or a certification that the motor vehicle is not a “hot car” (carnapped, chopped, used in crimes and illegal activities etc.)

In sum, be wary of offers to purchase property and vehicles! If the offer is too good, or does not have the documentation to support it, or raises red flags in any other way, then stop, pause, rethink and reassess the situation and consult legal counsel to clarify your doubts. It’s always better to be aware and beware and take your time than to regret the purchase later on.