Why You Should Discover the Encumbrances in Philippine Land Titles

What You Should Know About Encumbrances Before Buying a Property

Whether you’re selling or buying a property in the Philippines, it’s crucial to understand the encumbrances in a land title. Sometimes, there are details that are not disclosed by sellers to the buyers, and these are often the encumbrances of the property. So, if you want to avoid problems in the future, make sure to ask about the encumbrances of the land title before signing the sale contract.

Why Avoid Properties with Encumbrances

Basically, encumbrances are common reasons transactions get delayed, market value is decreased, or ownership rights are affected when it comes to investing in real estate. Homebuyers should assess and understand encumbrances to save time and money, and ultimately, prevent legal headaches. This legal technicality should be part of your due diligence before buying a property.
In the Philippines, you can find all property encumbrances in the Registry of Deeds records. If you ignore these legal technicalities, you may encounter unexpected financial obligations, disputes, and failed transactions. Remember to do your research before signing any contract to avoid liabilities, liens, or other legal claims against the property you are buying.

How Encumbrances Reduce Property Value

Since encumbrances are liabilities attached to properties, they can significantly reduce their value or affect their transferability. Examples are easements, Real Property Tax delinquencies, restrictions according to law, and unpaid mortgages. You can check the encumbrances of a Condominium Certificate Title or Transfer Certificate Title at the back. Any unresolved legal annotations can stop or delay the transfer of ownership.
Even registered owners with active encumbrances may encounter problems when selling their property until they are cleared. These could be bank loans, issues in Rights of Way, limitations by Homeowner’s Associations, ongoing litigation, adverse claims, and unpaid taxes to the BIR or Municipal Treasurer’s Office.

Can Encumbrances Be Removed

There are ways to clear any encumbrances from a property title. Depending on the encumbrance type, you can successfully remove them from your title for easy transfer. For instance, if it’s for adverse claims, you can negotiate with the person who filed for the legal petition or claimant.
For mortgages, you can submit a notarized Release of Mortgage request from the financial institution or bank and forward it to the Registry of Deeds. To prevent encumbrance problems in real estate transactions, update any tax payments, check title annually, always settle loans, and consult an expert lawyer for issues in legalities.

​Final Thoughts

Ensuring the property title is clear of any encumbrances helps in a smooth and fast transaction, especially for title transfer. It’s easier to manage legal technicalities in a property title when you understand encumbrances and how to avoid or remove them. If you have questions regarding legal matters on real estate, you may send us a message. You may also visit REALS.PH for our exclusive property listings, including real properties in Baguio City and other major cities in the Philippines.