10 ESSENTIAL STEPS BEFORE BUYING LAND: A COMPREHENSIVE GUIDE WITH EXPERT INSIGHTS
Purchasing land is a significant financial commitment, and it’s essential to take every precaution to ensure that the property is legally sound and free from any potential issues. With the assistance of property valuers and legal experts, the process can be streamlined and secure. In this article, we break down the 10 essential steps to buying land and provide valuable insights from a seasoned property valuer to guide prospective buyers through this crucial investment.
Step 1: Obtain a Copy of the Title
The first and most crucial step in the land buying process is obtaining a copy of the title from the seller or real estate agent. This document is your primary proof of ownership and should be scrutinized carefully.
Expert Insight: According to a property valuer, “The title must be scrutinized to ensure it’s not encumbered by mortgages, liens, or any unresolved legal claims. You can verify this by cross-referencing the title with the records at the local Register of Deeds. This ensures that there are no issues like unpaid taxes or legal disputes that could prevent the transfer of ownership.”
Make sure the copy you receive is consistent with the official records, as discrepancies could signal potential problems. This check is particularly important if you’re buying from an individual seller rather than a developer.
Step 2: Conduct a Relocation Survey
A relocation survey involves hiring a licensed Geodetic Engineer to mark the land boundaries. This step is necessary to verify that the land you’re purchasing is accurately described in the title and that no one else is encroaching on the property.
Expert Insight: As a property valuer explains, “The relocation survey ensures that there are no physical encroachments, such as fences or structures from adjacent properties, that could lead to costly disputes later on. A properly marked boundary prevents conflicts with neighbors and gives you clear legal boundaries for future use or development.”
Without this survey, you may end up with land that is not entirely yours, leading to costly disputes and delays in your plans.
Step 3: Execute a Deed of Sale
Once you’ve confirmed that the title is clear and the land boundaries are accurate, the next step is to execute the Deed of Sale (or Contract of Sale). This legal document outlines the terms of the sale and must be signed by both the seller and the buyer. It should then be notarized to ensure its authenticity.
Expert Insight: The property valuer emphasizes, “The Deed of Sale is your official agreement with the seller, and it must clearly detail the terms, including the purchase price, payment schedule, and other essential conditions. This document acts as proof of the transfer of ownership, so ensure that everything is accurately recorded before proceeding.”
Notarization adds an extra layer of legitimacy to the agreement, ensuring that it is legally binding.
Step 4: Pay Documentary Stamps
Following the notarization of the Deed of Sale, buyers are required to pay the Documentary Stamps Tax within 30 days. This tax is a government fee applied to the transaction, and failure to pay it on time can result in penalties or delays.
Expert Insight: The property valuer notes, “Documentary stamps are a straightforward but necessary step in ensuring the legality of the transaction. The value of the tax is based on the higher of the actual selling price or the fair market value of the property.
Timely payment of this tax will help avoid unnecessary delays.”
Step 5: Pay Capital Gains Tax
Typically, it is the seller who is responsible for paying the Capital Gains Tax (CGT) to the Bureau of Internal Revenue (BIR). This tax is calculated based on the profit made from the sale of the property.
Expert Insight: A property valuer advises, “Before proceeding, ensure that the seller has paid the CGT. The BIR will issue a Certificate of Authority to Register, which confirms that all taxes related to the sale have been paid. This certificate is required for the title transfer process, so verify that the seller has fulfilled this obligation before moving forward.”
While the seller is responsible for the tax, buyers must ensure that this step is completed before they can legally claim ownership.
Step 6: Transfer Fees and Title Transfer
Once the CGT has been paid and the necessary certificates are in hand, the buyer must pay transfer fees at the Register of Deeds. These fees are relatively minor compared to other costs but must be settled before the title can be transferred into the buyer’s name.
Expert Insight: The property valuer explains, “After paying the transfer fees, the Register of Deeds will issue the new title in the buyer’s name. The process can take some time, depending on the workload of the office.
Buyers should be proactive in following up to ensure the transfer is completed in a reasonable time frame.”
Step 7: Verify Tax Declaration and Tax Map
It is important to verify the tax declaration of the property, ensuring that all real property taxes are up to date. Additionally, review the tax map to ensure that the land is correctly identified, especially in areas with complicated land ownership records.
Expert Insight: A property valuer advises, “Check the local government’s tax records and confirm that the property is up to date with all tax payments.
A property with unresolved tax issues may come with liabilities that the buyer will inherit.”
Step 8: Ensure No Land Use or Zoning Violations
Check with local authorities to confirm that the land is not subject to zoning restrictions or land use violations. Some areas may have strict regulations regarding construction, development, or land usage.
Expert Insight: The property valuer highlights, “Before committing to the purchase, confirm that the land is zoned for your intended use, whether it’s residential, commercial, or agricultural.
Zoning violations can be expensive to rectify and could prevent you from using the property as planned.”
Step 9: Obtain an Occupancy Permit (If Applicable)
If your intention is to build or develop the land, you may need an occupancy permit or other approvals from local government authorities. This is particularly important in urban or densely populated areas.
Expert Insight: A property valuer states, “If you plan on constructing buildings or other structures on the land, make sure that the property is legally zoned for such use and that all necessary permits are obtained.
Failure to do so could result in fines or demolition orders.”
Step 10: Finalize Payment and Secure the Land
Once all legal, financial, and administrative requirements are met, the final payment to the seller should be made. At this point, the buyer receives the title to the land and can officially take possession.
Expert Insight: The property valuer concludes, “Finalizing the payment and securing the title marks the end of the transaction, but it’s important to keep all documentation, including the signed Deed of Sale, title transfer records, and tax receipts, in a safe place.
These documents are vital for any future transactions or disputes related to the property.”
Buying land is a complex process, but by following these 10 detailed steps, you can ensure that the transaction is legally sound and free from complications. By working with experts like property valuers, legal advisors, and geodetic engineers, you can make your land purchase a secure and rewarding investment.
