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FUNDAMENTALS OF PROPERTY OWNERSHIP

LAND, REAL ESTATE AND REAL PROPERTY: These words land, real estate and real property are often used interchangeably. To be able to have a clear understanding of the nature of real estate, licensees or brokers need to be aware of the subtle yet important difference in meaning. Land is defined as the earth surface extending downward to the center of the earth and upward to infinity, including things permanently attached by nature such as trees, water. It also refers not only to the surface of the earth but also to the underlying solid and things that are naturally attached to land such as boulders, minerals and substances under the surface of the earth.

Real Estate - is defined as land at above and below the earths surface, including all things permanently attached to it, whether natural or artificial. The term real estate is therefore broader that the term LAND and includes not only the physical components of land provided by nature but all permanent improvements constructed on the land. An improvement is any artificial things attached to the land, such as buildings, fence, road, sewers, and underground drainage system and other additions to make it suitable for building. Real Property - is defined as the INTEREST, BENEFITS, and RIGHTS inherent in the ownership of real estate. The term real property is thus broader still. It includes the physical surface of the land, what lies below it, what lies above it and what is permanently attached to it, as well as the BUNDLE OF LEGAL RIGHTS.
PHYSICAL IMPROVEMENTS THE BUNDLE OF RIGHTS

LAND

REAL ESTATE Land plus permanent man-made additions

REAL PROPERTY Real plus the Bundle of Rights

Earths surface to the center of the earth and air space above the land including the trees and water.

CONCEPT OF OWNERSHIP
Ownership is the independent right of a person to the exclusive enjoyment and control of a property including its disposition and recovery subject only to the restrictions established by law and rights of others. THEORIES OF REAL PROPERTY: There are two concepts of real estate that licensees or brokers should know. First, is the LEGAL CONCEPT OF REAL ESTATE and second, the BUNDLE OF RIGHTS concept. Legal Concept of Real Estate - Land includes not only the ground or soil, but everything that is attached to earth, whether by course of nature, such as trees and herbage, or by the hands of man, such as houses, roads, buildings. It includes not only the surface of the earth, but everything under it and over it. The following definitions are derived from the above concept: Real Estate - Is defined as the physical land and appurtenances, including structures affixed thereto;

Real Property - Are the interest, benefits and rights inherent in the ownership of real estate such as FEE SIMPLE ownership and the Bundle of Rights. Personal Property - Is defined as the movable items not permanently fixed to real estate. Generally, but with exemptions, items remain personal property if they can be removed without sort us injury to the real estate or the items themselves.

RIGHTS INCLUDED IN OWNERSHIP


Origin of Bundle of Right Concept? The concept of bundle of rights comes from the old English law. When the populace could not commonly read and write, a seller transferred property by giving a purchaser a bundle of sticks from a tree on the property sold. This process was referred to a LIVERY SEISIN. The purchaser who hold the bundles also owner the tree from which the sticks came and the land to which the tree was attached. Because the rights of ownership can be separated and individually transferred, the sticks become symbolic to these rights. Fee Simple Defined: is defined as the absolute right of ownership without limitations to any particular class of heirs or restrictions, but subject to the limitation of the ESCHEAT, POLICE POWER, EMINENT DOMAIN & TAXATION Fee simple consists of the so - called bundle of rights which are inherent in or appurtenant to ownership, without any limitations or restrictions other than those imposed by law or contract. The bundle of rights include the following: 1. 2. 3. 4. 5. Right to posses (Jus-Possidendi) Right to use (Jus-Utendi) and abuse (Jus-Abutendi) Right to the fruits (Jus-Fruendi) Right to dispose (Jus-Disponendi) Right to vindicate or recover (Jus-Vindicandi)

The rights incident to ownership are, the right: 1. 2. 3. to enjoy and dispose of a property without other limitations than those established by law; to file action against third parties to recover ownership; to use force as may be reasonably necessary to repeal or prevent an actual or threatened unlawful invasion or usurpation of his property (Art. 429, NCC, relate to Art. 312 RPC); the right to enclose or fence property walls ditches, live or dead hedges or by any other means without detriment of servitudes constituted thereon; the demand indemnity for damages cause to property; the right to compensation in the event of expropriation;

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the right to be restored possession in case of unlawful dispossession; the right to the surface and subsurface of the land, right o construct thereon any works, plantation and excavation without detriment to servitude and subject to special laws and without right to complain o the reasonable requirements of aerial navigation; the right to hidden treasure;

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10. the right to accession and fruits o the property; 11. the right to quiet title to real property or any interest therein. LIMITATIONS OR RESTRICTIONS OR REAL PROPERTY OWNERSHIP: While the legal definition of land or property implies complete ownership of land and everything attached to it, under it, and over it, legal title to land in fact does not convey absolute fee simple title to property and the unrestricted exercise of the entire bundle of rights. LIMITATIONS ON RIGHT OF OWNERSHIP 1. Those imposed in general by the State in the exercise of the following a. Police Power - The government retains the right to relate property for promoting the public safety, health, morals and general welfare. Zoning regulations or ordinances, building codes, traffic regulations and sanitary regulations are based upon the police power of the government; Eminent Domain - This is the right reserved by the government for public use/benefit upon payment of just compensation. Or the right reserved by government to take by expropriation/condemnation private property for public use upon payment of just compensation; Taxation - The government exercise power of taxation on real properties to raise funds for its operations and services that protect and otherwise benefit citizenry. Services or benefits most provided are schools, police and fire protection, parks, libraries, street maintenance, garbage collection and welfare payment to elderly and needy. Escheat - It is the reversion or automatic conveyance of realty to the government, upon owners death, due to the absence of a will, heirs or other legal claimants ascertainable on the face of the title; or when the owner does not pay his taxes.

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Those imposed by law such as legal casement, requirement of legitimate in succession, zoning, building code, rent control, urban and agrarian reform, subdivision regulations, escheat. Those imposed by the grantor of the property on the grantee by contract, such as donation, last will, usufruct. Those imposed by the owner himself, such as voluntary casement, lease, mortgage.

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SURFACE, SUBSURFACE AND AIR RIGHT Land, in its legal signification, extends from the surface downwards to the enter of the earth and extends upwards indefinitely to the skies.

The surface and subsurface of rights of an owner entitle him to construct thereon any works or make any plantations and excavations without detriment to servitudes and special laws. Air right is the right of an owner to use and control the air space over his land subject to the requirements of aerial navigation, laws, or contract.

MEANING OF TITLE Title is not synonymous with Torrens Certificate of Title. Rather, it is a generic word which means proof, evidence, or monument of ownership, such as tax declaration, realty tax receipts, deed of sale, and Torrens Certificate of Title. But, of course, the best title or best evidence of ownership is the Torrens Title because it is indefeasible, imprescriptible, and binding against the whole world. MODES OF ACQUIRING TITLE 1. Private Grant voluntary transfer or conveyance of private property by a private owner, such as sale or donation. Public Grant acquisition of alienable lands of the public domain by homestead patent, free patent, sales patent, or other government awards. Involuntary Grant acquisition of private party against the consent of the former owners, such as foreclosure sale, expropriation, execution sale, or tax sale. Descent or Divise Descent may be acquired by virtue of hereditary succession to the estate of the deceased owner. This requires a certain degree of relationship. In Divise, succession need not be in favor of a relative. Title to the property is transferred by way of a will executed by the testator (owner of the property) Reclamation filling of submerged land, subject to existing laws and government regulations. Accretion acquisition of more lands adjoining the banks of rivers due to the gradual deposit of soil as a result of the river current. Prescription (Adverse Possession) acquisition of title by actual, open, continuous, and uninterrupted possession in the concept of owner for the period required by law. Emancipation Patent the grant of agricultural land to tenant-farmers in the implementation of the land reform program of the government.

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RIGHT TO OWN 1. General Rule Only Filipino citizens and corporations at least sixty percent of the capital of which is owned by Filipinos are entitled to acquire and own land in the Philippines Exceptions to General Rule Alien acquisition of real estate in the Philippines is allowed in the following cases: a) b) c) d) Acquisition before the 1935 Constitution Acquisition thru hereditary succession if the acquiree is a legal heir. Purchase of not more than forty percent interest in a condominium project. (RA 4726) Purchase by former natural born Filipino citizens subject to limitations prescribed by B.P. 185 (residential lot) and R.A. 8179 (commercial lot).

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A Filipina who marries an alien retains her Philippine citizenship (unless the law of her husbands country makes her assume the citizenship of her husband because of such marriage) and can therefore acquire real estate in the Philippines.

ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZENS 1. Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds (such as foreclosure, execution or tax delinquency sale). Maximum area that may be acquired. a. BP 185 - residential purpose 1,000 square meters of urban land or one hectare of rural land. RA 8179 - business purpose 5,000 square meters of urban land or 3 hectares of rural land. Business purpose refers to the use of land primarily, directly, and actually in the conduct of business or commercial activities in the broad areas of agriculture, industry and services, including the lease of land but excluding the buying and selling thereof. 3. In case of married couple where both spouses are former natural born Filipino citizens, both of them may avail of the right provided that the total acquisition shall not exceed the maximum area allowed. A transferee who acquired urban or rural land for residential purpose while still a Filipino citizen may acquire additional urban or rural land for residential purpose which, when added to that already owned by him, shall not exceed the maximum area allowed by law. The same right applies to a transferee who already owns urban or rural land for business purpose while still a Filipino citizen. 5. A transferee who has already acquired urban land for residential purpose shall be disqualified to acquire rural land for residential purpose and vice versa. The same rule applies to a transferee of land for business purpose. However, a transferee of residential land under B. P. 185 may still avail of the right to acquire land for business purpose under R. A. 8179.

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LANDS OF THE PUBLIC DOMAIN 1. Under the Constitution, lands of the public domain are classified into agricultural, forest or timber, mineral, and national parks. Alienable lands of the public domain shall be limited to agricultural lands. Filipino citizens may acquire alienable lands of the public domain not more than twelve hectares by purchase, homestead, or patent; or lease not more than 500 hectares.

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Private corporations cannot acquire, but may only lease alienable lands of the public domain for a period not exceeding twenty-five years, renewable for the same term, and not exceed 1,000 hectares. Stewardship concept of property ownership

A legal doctrine that the property is supposed to be held by the individual only as trustee for the people in general, and as a mere steward, the property owner must exercise his right to the property not just for his own exclusive and selfish benefit or interest but for the good and general welfare of the nation as a whole. REGALIAN DOCTRINE on property ownership A principle in law that all natural wealth agricultural, forest or timber and mineral lands of the public domain and all other natural resources belong to the state. Thus, even if a private person owns the property where minerals are discovered, his ownership for such does not give him the right to extract or utilized said minerals without permission from the state to which such minerals belong. What are Easements & Servitudes EASEMENT refers to right of use over the property of another (dominant estate). Traditionally, the permitted kinds of uses were limited, the most important being rights of way and rights concerning flowing waters. The easement was normally for the benefit of adjoining lands, no matter who the owner was, rather than for the benefit of a specific individual. While; SERVITUDE is a burden imposed upon another (servient estate). Servitudes are also classified as positive and negative. A positive servitude is one which obliges the owner of a servient estate to permit or suffer something to be done on his property by another. A negative servitude is one which des not bind the servient proprietor to permit something to be done upon his property by another, but merely restrains him from making a certain use of his property which would impair the easement enjoyed by the dominant tenement. It is stated in the law that a person has a right (easement) to impose a burden (servitude) upon another in cases provided for by law. Requirements for a compulsory easement of right of way a. b. c. d. Property is surrounded by other properties and there is no adequate exit to the public highway; Payment of the proper indemnity (just compensation) The isolation was not due to owners own act. The right of way claimed is at the point least prejudicial to the grantor

PHILIPPINE REAL ESTATE LAWS FUNDAMENTALS OF PROPERTY OWNERSHIP, REAL ESTATE PRACTICE & TAXES

RIGHT TO OWN 1. General Rule Only Filipino citizens and corporations at least 60% capital of which is owned by Filipinos are entitled to acquire and own land in the Philippines. 2. Exceptions to the General Rule Alien acquisition of real estate in the Philippines is allowed in the following cases: a) Acquisition before the 1935 Constitution. b) Acquisition thru hereditary succession if the acquiree is a legal heir. c) Purchase of not more than 40% interest in a condominium project d) Purchase by former natural born Filipino citizens subject to limitations prescribed by B.P. 185 and R.A. 8179 3. A Filipina who marries an alien retains here Philippine citizenship (unless the law of her husbands country makes her assume the citizenship of her husband because of such marriage) and can therefore acquire real estate in the Philippines. Real Estate Ownership CONCEPT OF OWNERSHIP Ownership is the independent right of a person to the exclusive enjoyment and control of a property including its disposition and recovery subject only to the restrictions established by law and rights of others. RIGHTS INCLUDED IN OWNERSHIP Fee simple consists of the so called bundle of rights which are inherent in or appurtenant to ownership, without any limitations or restrictions other than those imposed by law or contract. The bundle of rights include the following: 1) Right to possess 2)Right to use and enjoy 3) Right to the fruits 4) Right to dispose 5) Right to vindicate or recover LIMITATIONS ON RIGHT OF OWNERSHIP 1) Those imposed in general by the State in the exercise of the power of taxation, police power, and power of eminent domain. 2) Those imposed by law such as legal easement, requirement of legitimate succession, zoning, building code, rent control, urban and agrarian reform, subdivision regulations, escheat. 3) Those imposed by the grantor of the property on the grantee by contract, such as donation, last will, or usufruct. 4) Those imposed by the owner himself, such as voluntary easement, lease, mortgage. SURFACE, SUBSURFACE AND AIR RIGHT Land, in its legal signification, extends from the surface downwards to the center of the earth and extends upwards indefinitely to the skies. The surface and subsurface of rights of an owner entitle him to construct thereon any works or make any plantations and excavations without detriment to servitudes and special laws. Air right is the right of an owner to use and control the air space over his land subject to the requirements of aerial navigation, laws, or contract. RIGHT TO HIDDEN TREASURE Hidden treasure belongs to the owner of the land, building, other property on which it is found. When the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half of the treasure shall be allowed to the finder. If the finder is a trespasser, he shall not be entitled to any share of the treasure. If the things found be of

interest to science or arts, the State may acquire them at their just price, which shall be divided in conformity with the rule above stated. Hidden treasure, for legal purpose, is understood to be any hidden unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear. RIGHTS OF ACCESSION 1) In General The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, whether naturally or artificially. 2) With Respect to Produce of Property To the Owner belongs the: a) Natural fruits the spontaneous product of the soil b) Industrial fruits those produced by land cultivation or labor c) Civil fruits the rental income of buildings and /or lands 3) With Respect to Immovable Property: a) The owner of the land on which anything has been built, sown or planted in good faith shall have the right: aa) To appropriate as his own the works, sowing or planting after payment of indemnity provided by law, or bb) To oblige the builder or planter to pay the price of the land. However, the builder of planter cannot be obliged to pay for the land if its value is considerably more than that of the building or planting. In such case, he shall pay reasonable rent if the owner does not choose to appropriate the building after proper indemnity. The parties shall agree on the terms of the lease and in case of disagreement, the court shall fix the terms thereof. b) The owner of the land on which anything has been built, planted or sown In bad faith may: aa) Demand the demolition of the work or removal of the planting or sowing at the expense of the builder or planter, or bb) compel the builder or planter to pay the price of the land and the sower, the proper rent. The landowner is also entitled to damages from the builder planter or sower. cc) To the owners of land adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the water. dd) Whenever a river, changing its course by natural causes, opens a new bed through a private estate, the new bed shall become a public dominion. Modes of acquiring title Private Grant voluntary transfer or conveyance of private property by a private owner, such as sale or donation. Public Grant acquisition of alienable lands of the public domain by homestead patent, free patent, sales patent, or other government awards. Involuntary Grant acquisition of private party against the consent of the former owners, such as foreclosure sale, execution sale, or tax sale Inheritance acquisition of private property through hereditary succession Reclamation - filling of submerged land, subject to existing laws and government regulations. Accretion acquisition of more lands adjoining the banks of rivers due to the gradual deposit of soil as a result of the river current Prescription acquisition of title by actual, open, continuous, and uninterrupted possession in the concept of owner for the period required by law

ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZENS 1. Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds (such as foreclosure, execution or tax delinquency sale) 2. Maximum area that may be acquired: a) For residential purpose 1,000 square meters of urban or one hectare of rural land. b) For business purpose 5,000 square meters of urban land or 3 hectares of rural land. Business purpose refers to the use of land primarily, directly, and actually in the conduct of business or commercial activities in the broad areas of agriculture, industry, and services, including the lease of the land but excluding the buying or selling thereof. In case of married couple where both spouses are former natural born Filipino citizens, both of them may avail of the right provided that the total acquisition shall not exceed the maximum area allowed. A transferee who acquired urban or rural land for residential purpose while still a Filipino citizen may acquire additional urban or rural land for residential purpose which, when added to that already owned by him, shall not exceed the maximum area allowed by law. Rule in case of double sale: The priority of rights in case of double sale of titled property shall be governed by the following rules: 1. The buyer who acquired in good faith and was the first to register the sale shall have a better right. 2.If none of the buyers registered the sale, the buyer who acquired to good faith and was the first one in possession shall have a better right. 3. If none of the buyers registered the sale or took possession, then the buyer who acquired in good faith and has the oldest title shall have a better right Contract of Sale and Contract to Sell 1. Distinction: In a contract of sale, there is already a transfer or ownership. In a contract to sell, there is no transfer of ownership yet but merely a mutual promise to buy and sell . Criterion: The test to determine whether a contract is a contract of sale or a contract to sell is not the manner of payment whether cash or installment, but whether or not there is conveyance of ownership in the dispositive or grant clause of the deed. There is transfer of ownership when the dispositive clause states that the vendor hereby sells, transfers and conveys unto the vendee in a manner absolute and irrevocable x x x Rights of buyer who has paid two years or more of installments: 1. To pay, without additional interest, any installment due within the grace period which is equivalent to one month for every year of installment payment, provided that such right can only be availed of once every five years. 2.To receive a thirty-day notarial notice of cancellation before his contract can be cancelled for delinquency Rights of buyer who has paid less than 2 years of installment 1. The grace period to pay without additional interest due is fixed as 60 days

2. For cancellation of contract due to delinquency, the buyer is only entitled to receive a 30-day notarial notice of cancellation without right to receive the cash surrender value pf his payments Right to refund under P.D. 957 & Maceda Law Presidential Decree 957: Right to refund applies when the developer fails to complete the development within the required period. Refund is 100% of total payments Maceda Law: Right to refund applies as a requisite for cancellation of contract due to delinquency when the buyer has paid at least 2 years. Refund is 50% of total payments; additional 5% per year after the 5th year. MACEDA LAW (R.A. 6552) When the buyer is delinquent in his payment Objective: To protect installment buyers of real estate against onerous and oppressive conditions. Applicability Applies to sale or financing of residential estate on installment payment covered by contract to sell and not sale with mortgage, but excluding industrial lots, commercial building, and sales to tenants under R.A. 3844. Rights of buyer who has paid two years or more of installments: a) To pay, without additional interest, any installment due within the grace period which is equivalent to one month for every year of installment, provided that such right can only be availed of once every five years. b) To receive a thirty-day notarial notice of cancellation before his contract can be cancelled for delinquency. c) To receive the cash surrender value of his total payments before his contract can be cancelled due to delinquency. The refund is equivalent to fifty percent of total payments and, after the fifth year, an additional five percent per year of installment payment, but not to exceed ninety percent of total payments. d) To transfer or assign his right to the contract e) To register or annotate his contract on the title f) To pay, without additional interest, the full principal balance of the price before the term of the contract. Rights of buyer who has paid less than two years of installment The buyer has practically the same rights as a buyer who has paid two years or more of instalmments, except for the following differences: a) The grace period to pay without additional interest on any installment due is fixed at sixty days b) For cancellation of contract due to delinquency, the buyer is only entitled to receive a thirtyday notarial notice of cancellation but without right to receive the cash surrender value of his payments.

FOREIGN OWNERSHIP OF CONDOMINIUM UNIT In the condominium concept of ownership, absolute ownership by a foreigner is allowed not to exceed forty percent interest in the project. The unit owner is the absolute owner of the space within the interior surface of his unit, but is only a co-owner of the exterior faade of the unit. RIGHTS OF A CONDOMINIUM UNIT OWNER Absolute ownership of his unit Co-ownership of land and common areas Exclusive easement of the space of his unit Non-exclusive easement to common areas for ingress or egress Right to sell, lease, or mortgage his unit Right to repair, paint, decorate the interior surface of his unit Right to participate and vote in condominium corporation meetings OBLIGATIONS OF A CONDOMINIUM UNIT OWNER Pay the realty tax on his unit

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Pay the insurance on his unit Pay the shared monthly dues for maintenance of common areas/amenities/garbage disposal Comply with use restrictions

P.D. 957 When the developer fails to complete the development within the required period The refund is 100% of total payments less penalty interest plus legal interest of money

REAL ESTATE PRACTICE & REAL ESTATE TAXES Capital Gains Tax - Income tax payable to the BIR for the sale, transfer, or other disposition of real estate classified as capital asset. . Transfer Tax - A tax payable to the local government unit for sale, transfer or other disposition of real estate, whether capital or ordinary asset Withholding Tax - A tax payable to the BIR on the sale, transfer or other disposition of real estate classified as ordinary asset. Cost approach - a method of estimating the fair market value of an improvement by estimating present reproduction cost and deducting depreciation. Economic life - The period during which a property can be profitably used or expected to generate more income than expenses. Principle of diminishing returns - States that the application of more factors of production will tend to increase net income up to a certain point, beyond which the introduction of more factors of production will tend to decrease net income. Principle of Progression - An appraisal principle which holds that the value of a property tends to be enhanced by association with superior properties Principle of Regression - An appraisal principle which holds that the value of a property tends to be adversely affected by association with inferior properties. Principle of Substitution - an appraisal principle which holds that the value of a replaceable property is inferred from the value of an equally desirable substitute property. Presentation: concept It is an orderly written or oral explanation of facts and figures that make a given property attractive to a prospect. Scope of coverage: 1. Property Identification location, block number, lot number, lot area and dimensions, floor area, type of property, terrain, view, description of improvements, zoning classifications, facilities and amenities, titled or to be titled, price, terms, discounts, financing. 2. Advantages and benefits quality of neighborhood, availability of public transportation, proximity to public marker / schools / hospitals, reasonableness of price. 3. For income properties present potential income, return of investment. 4. Lot and vicinity plan, subdivision map, and pictures of the property Demonstration: concept It is the process of showing the property and pointing out its physical qualities and other advantages and benefits to arouse the desire to own it. Preparing for

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demonstration: Preparation of checklist of physical attributes and other data which may be the object of prospects inquiry. Update availability with the developer. Organization of selling points to be emphasized Anticipation of possible objections Appointment with prospect and notice to owner Selection of ideal route to create a favorable impression of the neighborhood Negotiation: concept It is the process of reconciling the opposing views of the parties to a transaction as to price and terms.Items which should be covered in negotiation: Price and terms and discounts Expenses for execution and registration of sale Date for delivery of property Items included or excluded in a sale Manner of payment & financing Update Payment of Eletricity, Water, Telephone Update Payment of Realty Tax Penalties or Forfeiture in case non-compliance Who is going to process the documents and deadline Appointments for Earnest money, or sales contract or deed f sale

Common difficulties *Silent objection hesitancy of the prospect to express his objection thereby depriving the broker of the opportunity to answer or overcome it *Presence of supposed advisers of the prospect who give negative remarks which tend to undermine the transaction *Failure or inability to analyze prospects real need and affordability *Promise of a prospect to call the broker which is almost always broken *Waiting advice from spouse or relative who were not present during the tripping *Brokers failure to identify time wasters such as window shoppers or speculators Closing *Persuading the prospect to visit the developers office to be able to hold the property with a reservation fee *Securing papers/documents from developers such as copy of title, lot plan, deed of restrictions, copies of reservation agreement, deed of restrictions, contract to sell, deed of sale *Securing papers/documents from prospects such as copy of income tax returns, bank statements, certificate of employment, copy of passport, TIN, residence certificate etc *Arrangement of appointment between parties for contract signing and payment Non-forfeiture of Payments. No installment payment of the buyerMay be forfeited by the developer when the buyer who is not delinquent, and after due notice, desists from further payment due to failure of the developer to complete within the required period. The buyer may

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at his own option, be reimbursed with total amount paid including amortization interest, with interest thereon at legal rate. Mortgage of Project No mortgage of any lot by the project owner/developer without permit to mortgage from HLURB. Permit to mortgage may be granted upon submission of proof that the loan proceeds will be used for development and verified undertaking by the mortgagee to release from the mortgage any lot/unit whose loan value has been paid. In case a mortgage was executed by owner/developer pursuant to HLURB permit to mortgage, the buyer may at his own option, pay his installmentdirectly to the mortgagee. Alteration of Plans any alteration in the approved plans relating to open spaces, facilities and other forms of development require prior approval from HLURB (now LGU) and written consent of Homeowners Asscociation Advantages of condominium Concept

Enhance affordability by fractionalizing cost of land & building Facilities utilities, amenities and services will cost less to build and maintain Economy in land space. Families holding title contiguous lands of say 40 or 50 square meters by obtaining adequate housing by consolidating their lots and constructing a condominium project Enhances marketability because foreigners can buy Multiples saleable or rentable floor areas by as many storeys put upEliminates the routinary chores of daily maintenance, security, and garbage collection associated with single-detached dwellings Rights of unit owner 1.Absolute ownership of his unit. 2.Co-ownership of land and common areas. 3.Exclusive easement of the space of his unit. 4.Non-exclusive easement to common areas for ingress or egress. 5.Right to sell, lease, or mortgage his unit. 6.Right to repair, paint, decorate the interior surface of his unit. 7.Right to participate and vote in condominium corporation meetings. Obligations of condominium unit owner 1.Pay the realty tax on his unit. 2.Share the realty tax on the land and common areas. 3.Pay the insurance on his unit. 4.Share the insurance on the common areas. 5.Comply with use restrictions. 6.Pay dues and assessments. 7. Give other unit owners the priority right to buy his unit (right of first refusal). If so required by the master deed. Dues and Assessments 1.The Deed of Restriction usually provides for two kinds of assessments: a.) Regular assessment a monthly obligation to fund ordinary project expenses, such as security, garbage collection, repair and maintenance of the common areas, electricity and water bills on the common areas and realty tax and insurance on the common areas.

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b.) Special assessment this is imposed as the need arises, such as the need for replacement of the generator. Extent of interest in common areas In the absence of any provision in the master deed, all unit owners shall have equal share in the common areas. If the intent is to pro-rate the unit owners interest on the common areas, such fact must be expressly provided in the master deed. The interest based on floor area of ownership is arrived at by dividing the unit area by the total floor area of all condominium units. Condominium Corporation Optional and Mandatory Requirement. The condominium corporation is optional if no unit will be sold in foreigners. However, the corporation is mandatory if some units, not exceeding forty percent interest in the project, will be sold to foreigners, in which case title to the land will be transferred in the name of the condominium corporation and thus comply with the constitutional mandate that corporations may acquire real estate provided that at least sixty percent of its capital or membership is Filipino 1.Principal Purposes: a) To hold title to the land and b) To set as the management body of the condominium project. 2.Conflict with Master Deed. In case of conflict between the articles of incorporation of the condominium corporation and the master deed of the condominium project, the latter should always prevail because: a) It is the matter deed which gives birth in the condominium project. The project cannot exist without a master deed, but it can exist without a condominium corporation. The condominium law specifically provides that the articles of incorporation and by-laws of the condominium corporation shall not conflict with the master deed. REAL ESTATE TAXATION Assessment Level for Land: Classification Residential Commercial/ Industrial/ Mineral Agricultural Timber 15% of FMV Assessment Level of Improvement: FMV over Not over 175,000 175,000 300,000 300,000 500,000 Resdl Comml/ Indl 0% 10% 20% 0% 30% 35% Agrl Timber 0% 25% 30% 0% 45% 50% Not more than 20% of FMV 50% of FMV 40% of FMV 20% of FMV Scientific/ Cultural/ Hospital

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500,000 750,000 1,000,000 2,000,000 5,000,000 10,000,000 Rate of a) b

750,000 1,000,000 2,000,000 5,000,000 10,000,000

25% 30% 35% 40% 50% 60%

40% 50% 60% 70% 75% 80%

35% 40% 45% 50% 50% 50%

55% 60% 65% 70% 70% 70%

Real Estate Tax

In Provinces not exceeding one percent of assessed value. In Cities and Metro Manila Municipalities not exceeding two percent of assessed value.

Special Education Fund Tax an annual levy on real estate equivalent to one percent of assessed value which shall be in addition to the basic real estate tax Date of Payment of basic realty tax and SEF tax: a)May be paid in four equal quarterly installments on or before March 31, June 30, September 30, and December 31. Payment in advance of the schedule is entitled to not more than twenty percent discount. Delinquent payment shall be subject to interest of two percent per month but in no case to exceed thirty six months CAPITAL GAINS TAX Rate and Basis Tax the rate of capital gains tax is six percent computed on the following basis: a) Sale of Lot: - Basis is price per deed of sale or lot zonal value, whichever is higher. b) Sale is Lot with improvement: - Basis is price per deed of sale, or lot zonal value plus improvement value, whichever is higher. Conditions for exemption from Capital Gains Tax: a) The seller is a natural person and the capital asset sold is his principal residence (family home). b) The proceeds of the sale will be used to acquire / purchase home. construct a new family

c) The BIR is duly notified by the taxpayer within thirty days from the date of sale through a prescribed return, of his intention to avail of the tax exemption.

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d)

The tax exemption can only be availed of once every ten years.

If there is no full utilization for the proceeds of the sale, the portion of the gain presumed to have been realized from the sales shall be subject to capital gains tax Installment Sale A sale is considered on installment basis when the initial payment in the year of sale is twenty-five percent or less, in which case the transferor may opt to pay initially a portion of the tax in accordance with the following formula: Initial Tax = Initial Payment Total Price WITHHOLDING TAX Transactions Subject to Withholding Tax Sale, exchange, or transfer of ordinary asset by natural persons, corporations, estate or trust. Rates and Basis Computed on the same basis as capital gains tax, the rates of creditable withholding tax. Rate of Withholding Tax 0% - When the property sold is part of an HLURB registered socialized housing project of the seller 1.5% - When the seller is habitually engaged in real estate business and the price does not exceed P500,000.00 3.0% - When the seller is habitually engaged in real estate business and the price is over P500,000.00 5.0% - When the seller is habitually engaged in real estate business and the price exceeds P 2 million. 6.0% - When the seller is not habitually engaged in real estate business. TRANSFER TAX 1.Concept A tax payable to the local government (City or Provincial Treasurer) for the sale or other disposition of real estate, regardless of classification of the property. 2.The rate is not more than one percent for properties located in cities and municipalities in Metro Manila, and not more than one-half percent for properties outside of Metro Manila. 3.Basis is the contract price or market value per tax declaration whichever is higher. However, the local government may enact an ordinance prescribing as basis the contract price or zonal value, whichever is higher. DOCUMENTARY STAMPS 1.On Sales P15.00 per P1,000.00 or a major fraction thereof, computed on the same basis as capital gains tax, and payable within five days following the month when the document was notarized. 2.On Mortgages P20.00 for first P5,000.00 and P10.00 per P5,000.00 after the first P5,000.00 x Total Tax

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On leases P3.00 for first P2,000.00 or fraction thereof, and additional P1.00 for every P1,000.00 or fraction thereof in excess of the first P2,000.00 for each year of the term of the lease SALIENT FEATURES OF E-VAT RELATING TO REAL ESTATE Concept : Expand Value Added Tax is an indirect tax. It can be passed on to the buyer. However, it is should be inputed or built-in the price. The sales contract cannot stipulate the E-VAT shall be for the account of the buyer.

Transactions subject to E-VAT 1.Sale, barter or exchange or real estate held primarily for sale to customers in the ordinary course of trade or business where the annual gross sales or invoice exceed P750,000.00, except sale by real estate dealers and/or lessors of house and lot and other residential dwellings price P1.5 Million and below. 2.Lease of real estate for commercial use when the annual gross receipts exceed P750,000.00 3.Lease of real estate for residential use when the monthly rental per unit exceeds P10,000,000 and the annual gross receipts exceed P750,000.00 Liability as non-VAT taxpayer 1.In cases where the real estate dealer or lessor is not subject to E-VAT, he shall be liable as a non-VAT taxpayer subject to three percent tax. However, he has the option to register as VAT taxpayer subject to 10% VAT with the benefit of input tax. Commissions of real estate brokers are subject to E-VAT if the annual gross receipts exceed P550,000.00, otherwise they shall be subject to seven percent tax. Real estate dealers are not allowed to withhold the E-VAT from commissions of real estate brokers Computations of E-VAT payable 1.E-VAT payable = output tax (sales receipts x 1/11) less input tax (purchase receipts x 1/11) Credit for input tax can only be availed of if the payee is VAT-registered. Basis of E-VAT 1.Cash/Deferred payment plan Basis is the contract price or zonal value whichever is higher. In the absence of zonal value, basis shall be market value per tax declaration or contract price, whichever is higher. Installment Plan Basis is actual consideration received, including interests and other charges. However, upon full payment, if the zonal value is higher than the total receipts / collection, the additional E-VAT shall be paid accordingly Expenses for execution and registration of sale In the absence of any stipulation to the contrary, the seller shall pay for the execution and registration of the sale.

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The Professional Regulatory Board of Real Estate Service (PRB-RES) which is under the Professional Regulatory Commission (PRC) had released its guidelines for the crediting of the 120 hours of real estate subjects, seminars, trainings, and workshop for applicants for the Board Licensure Examination on March 27, 2011 in accordance to Rule III Section 14 (b) of the Implementing Rules and Regulation (IRR) of the Real Estate Service Act of the Philippines (RESA Law): A holder of a relevant bachelors degree from a state university or college, or other educational institution duly recognized by the CHED: Provided, That he/she has completed at least one hundred twenty (120) credit units of real estate subjects and training from accredited service providers, as may be determined by the Board; Provided, further, That as soon as a course leading to a Bachelors degree in Real Estate Service is implemented by the CHED, the Board shall make this course a requirement for taking the licensure examination. 1. The coverage of all the lectures and seminars shall be the subject prescribed in Section 13 c (Scope of Examination) Rule III of the IRR of RESA Law for real estate brokers.

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Fundamentals of property ownership Code of Ethics and Responsibilities Legal Requirements for Real Estate Service Practice Real Estate Brokerage Practice; Subdivision Development Condominium Concept and Other Types of Real Estate Holdings Real Estate Finance and Economics Basic Principles of Ecology Urban and Rural Land Use Planning, Development and Zoning Legal Aspect of Sale, Mortgage and Lease Documentation and Registration Real Property Laws and Taxation and any other related subjects as may be determined by the Board

2. The required 120 Crediting Hours of seminars and trainings is complied with in support of their respective applications as follows:

Sixty (60) hours of lecture, classroom and or seminar hours on real estate subjects and modules may include but not limited to: For applicants for the Board Licensure Examination: Equivalent or credit units earned in a bachelors degree, post-baccalaureate, masteral degree, doctoral programs; lecture hours in a related certificate courses, seminar hours under a Comprehensive Real Estate Seminar and Review (CRESR), credit units/hours in any accredited seminar, convention, lecture of an accredited service provider. Sixty (60) hours of On the Job Training (OJT), apprenticeship and or workshop as certified by the following:

1. Registered and licensed real estate brokers, brokers, appraisers and consultants. 2. Duly licensed and registered real estate developers. 3. Provincial, city and municipal assessors and other government appraisers. 4. Accredited service providers for workshop attended as a formal seminar-workshop organized and offered thereby.

The licensee, however may opt to take the full 120 hours thru seminars, training, and workshops, as the case may be. Notwithstanding the foregoing, an applicant shall be deemed to have satisfied and compiled with the required hours upon submission of a notarized certification that he/she has attended seminars, conventions, and or lectures for a total of full 120 hours as stated Any form or certificate indicating the details of the foregoing may be accepted if it is duly notarized. The PRB-RES has released a new memo Circular No. 2011-04 ( Guidelines for the 120-hours Comprehensive Real Estate Seminar and Review (CRESR) credit)

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@puberer, gusto ko rin try lending kaso mukang di ko alam pasikot sikot n diskarte..May question lang ako, lets say kung may nireleasan kayo ng loan na 10,000, paano yun payback? Yun nangutang monthly interest lang babayaran nila? and kelan balik principalsa inyo? Or is it monthly na bayad nila is interest +a portion of principal? Thanks! Sir dito kasi sa cavite, daily ang bayad. 60 days to pay 16% int. so kung ang inutang is 10,000 + 1,600 (int) = 11,600 / 60 days = 193.33 . pero ang hulog na nila per day is 200. ibibigay nalang namin ang sukli after ma fully paid sila. kung sa cebu naman sir sa pension loan. 5% fix int. namin per month. here's how we compute it sa loan na 10k at 6 months to pay. 20

10,000 x .05 = 10,000 / 6 =

500 interest 1,667 principal -------------------2,167 monthly amortization for 6 months.

nag charge din po kami ng processing fee. 5% of amount ng loan. so ang processing fee sa 10k is 500. Then nag charge din kami ng insurance fee na Php 200. yung insurance fee po ay pang bawi namin kahit papaano sakaling mamatayan kami ng client ( wag sana mangyari ). yung processing naman is pang gastos sa supplies etc. ang maganda lang po sa amin is honest kami sa clients namin. wala kami hidden charges. ineexplain namin sa kanila ang computation ng loan nila. sa iba kasi basta gusto mag loan ng matanda, cocomputin ng lending at ang ipapakita nalang sa iyo is ung babayaran mo monthly. pero di alam ng matanda na may extra charges na pala dun. kawawa ang matanda. madami magulang na lending. sasabihin 2% lang ang int. pero papatak din na 5% kasi may hidden charges.

mas maganda po na int. + principal ang babayaran per month ng pautang mo. kasi kung puro int. lang hindi mabilis ang ikot ng pera. di ka pa sure na mababayaran pa ang principal mo, pero depende parin. basta po para mabilis ang ikot ng pera, it's either you collect daily or kinsenas katapusan int. + principal. @happyknappy, puberer Thanks! Ok talaga lending business if you know the know how....Wow boss puberer yun sa cavite nyo parang 8% per month right? ok diskarte na daily bayaran, di masyado mabigat....And lumalabas na more than 8% per month pa kasi evryday lumiliit na yun capital ang nasa debtor, and pre computed na yun rate..Cool! One more Q po boss puberer, regarding sa CI and background check, do you hire people, or you are a one man team who handles everything? May expenses din kayo sa mga taong taga singil right? ^ sir GoodSteward, tama ka sir parang hindi mabigat lalo na kung maliit lang ang inutang. mas gusto namin magpautang ng 5k kasi maliit ang hulog. mas maliit ang hulog mas madali para sa paningin ng isang umuutang na hulugan ang utang niya. tama ka din sir na more than 8% per month ang kalalabasan na int. kasi daily ang 21

bayad. what more kung sa bumbay na 20%. May kakilala ako sa cavite na yumaman dahil sa pautang. bumbay style. sa pag CI at collection, isa lang ang ka partner ko diyan kada location. ako ang mag decide kung approve ang uutang base sa CI ng partner ko. may allowance, at cel load per month.

sa pag CI alamin ang line of work, source of income, how much? how much goes to their expenses. ilang years na sa pwesto or tinitirhan at pinaka-importante may utang paba sa iba? kani-kanino? maayos bang magbayad o history ba ng delays or nonpayment madali naman mahuli ang nagsisinungaling sa hindi. usually per location dapat may mole ka or spy na pagkukuhanan mo ng accurate infos about the borrowers. 1st timer dapat may guarantor from your suki lenders. if doubtful ka reject mo, if gusto mong subukan at least 1 round, ako 2K ang pang sample ko. also reiterate mo sa guarantor na anytime hindi makahulog ang ginarantiya niya sa iyo, siya ang magbabayad o sisingilin mo, no excuses.

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