How do I know if the property I am buying has a clean title?

Finally, you can now afford to buy a property using your hard-earned money. In real estate transactions, before signing the deed of sale, you must first check that everything is in order. As an investor, do not fall prey to titles with hidden encumbrances or worse, a fake title. Be a wise and diligent buyer by checking the veracity of the title of the property you are purchasing. You must evaluate a property to be able to make informed decisions and purchase with confidence.

Conduct Due Diligence in Real Estate Investment

Due diligence is the process of in-depth investigation, evaluation, and inspection procedure that assists in identifying potential risks, liabilities, and problems associated with a property before the completion of a transaction. Due diligence helps identify any legal, financial, or physical issues that may affect the property’s value or ownership rights. A real estate investor needs to know the real estate due diligence process before you purchase a property because it helps you make an informed decision.

Here is the due diligence checklist that you need to observe in buying a real estate property before you close the deal:

1. Check the authenticity of the Title

   You may verify the title with the Registry of Deeds by securing the certified true copy of the title (it is a blue copy on security paper).

2. Double check the owner-seller’s identity

   You may ask the seller for the disclosure of his/her identity. He/she must show you his/her valid government IDs to verify if the seller’s actually the owner of the property. It is important to note that you must only buy property from the owner. Only the owner can actually sell the land, or his duly authorized real estate agent. Also, if the owner is married, make sure that he/she has the consent of the spouse. Better yet, make sure that the spouses will both sign the deed of sale.

3. Check the owner’s Duplicate Certificate

   Duplicate Certificates distinctly have “Owner’s Duplicate” marked right above the title number if you already have the e-title.

4.  Property Inspection

   Inspect the property by making sure that the zone or land area and the location indicated on the title are both accurate. You may need the services of a surveyor or real estate professional for this purpose. You may also check the physical condition of the property before closing a deal.

5. Traceback the ownership history

   Secure a copy of the previous canceled titles prior to the current title.

6. Verify the name on the title and pertinent documents

   Check if the registered name on the title is the same as that in the tax declarations and other pertinent documents.

7. Check if the property is free from any annotations or encumbrances

   The annotations for the liens and encumbrances are found on the back page of the title or the following page(s). If the back page of the title or the following page(s) is/are blank, it has no recorded liens and encumbrances. However, to be sure, check the title with the Registry of Deeds because while the owner’s duplicate may be clean, the Registry copy may not be.

8.  Check the real property tax clearance.

   Make sure that the real property taxes are being paid by the owner yearly. The owner must not have defaulted on payments.

Need further information and assistance in Property Due Diligence?Talk to our team at  FILEDOCSPHIL to know more about the requirements and process. Call us today at  (+63) 917 149 2337 or send an email to info@filedocsphil.com or simply message us through the live chat for more information.