Understanding Deed of Sale: Definition and Importance
A deed of sale is an essential legal document that serves as proof of ownership transfer between seller and buyer, outlining terms and conditions for selling/buying particular properties such as cars, motorcycles or land. Understanding its purpose and definition will help avoid legal disputes while guaranteeing smooth ownership transfers without hassles or disputes arising during transactions. In this article, we’ll explore its definition and importance in different transactions.
Table of Contents
What is a Deed of Sale?
A deed of sale is a legal document that proves the transfer of ownership of a property or asset from the seller to the buyer. It contains all the terms and conditions of the sale, including the purchase price, payment terms, and other obligations of both parties.
Types of Deed of Sale
- Open Deed of Sale:
An open deed of sale is a type of deed of sale that does not contain a specific buyer’s name. It is often used for properties or assets the seller wants to sell but has yet to find a buyer. It is also commonly used for vehicles or real estate properties being sold on an installment basis. - Deed of Absolute Sale
A deed of absolute sale is a type of deed of sale that indicates a clear transfer of ownership from the seller to the buyer. It is commonly used for transactions involving fully paid properties or assets and does not contain any conditions or reservations that may affect the transfer of ownership.
Who Will Pay the Deed of Sale: Buyer or Seller?
Who Pays the Deed of Sale Fee
Deed-of-sale documents are an integral component of property and item transactions, transferring ownership from seller to buyer and covering a range of fees and taxes that could impact transaction costs. Therefore, understanding who will cover these expenses is crucial for the smooth operations of transactions involving real estate assets or items for sale.
In general, buyers are responsible for paying the fees and taxes associated with a deed of sale document; this may include costs such as document production fees and taxes or transfer of ownership-related fees or charges. However, there may be exceptions to this general rule depending on an agreement between buyer and seller.
Discussion of the Common Practice
In the Philippines, it is generally customary for buyers to cover all costs related to deed of sale transactions, including document fees and transfer taxes. However, depending on market conditions or the size of the transaction involved, there may be instances when sellers agree to cover some or all costs, particularly in cases involving large sums of money.
Before finalizing a deed of sale transaction, both parties must discuss and agree upon who will pay its costs. This can prevent any confusion or disputes later on.
How to Make a Deed of Sale?
Step-by-Step Guide on How to Make a Deed of Sale
- Gather the necessary information, including the names and addresses of the buyer and seller, a description of the property or item being sold, and the terms of the sale.
- Create a draft of the deed of sale or use a template.
- Include all relevant details in the deed of sale, such as the purchase price, payment terms, warranties, and any conditions or contingencies.
- Have the deed of sale notarized by a licensed notary public.
- File the deed of sale with the appropriate government agency, such as the Registry of Deeds or Land Transportation Office, depending on the type of property being sold.
Checklist of Required Documents
- Original copy of the Certificate of Title or other proof of ownership
- Valid identification cards of the buyer and seller
- Tax Declaration
- Latest Real Estate Tax Payment Receipt
- Special Power of Attorney (if applicable)
Deed of Sale for Specific Items
Deed of Sale for Motorcycle
A Deed of Sale for motorcycle sales transactions is an essential document. It ensures both parties involved are legally protected throughout their transaction. Here are steps on how to create one:
- Prepare the necessary documents, including the original Certificate of Registration (CR) and Official Receipt (OR) of the motorcycle.
- Create the Deed of Sale agreement with the following information: the name and address of the buyer and seller, the make and model of the motorcycle, the motorcycle’s engine and chassis number, the date of sale, and the agreed-upon selling price.
- Sign the Deed of Sale agreement together with the buyer in front of two witnesses.
- Have the Deed of Sale notarized by a lawyer to make it legally binding.
Deed of Sale for Car
Similar to motorcycle transactions, a Deed of Sale for car sales should also include essential details about its purchase or sale – such as ownership details. Here are the essential points you should include in such documents:
- Create the Deed of Sale agreement, including the details of both parties (buyer and seller), the make and model of the car, the car’s engine and chassis number, the date of sale, and the selling price.
- Sign the agreement with the buyer in front of two witnesses.
- Have the Deed of Sale notarized by a lawyer to make it legally binding.
- Fill out the Deed of Sale of Motor Vehicle form, which is available at the Land Transportation Office (LTO).
- Submit the necessary documents, including the Deed of Sale agreement and the accomplished Deed of Sale of Motor Vehicle form, to the LTO to transfer ownership of the car.
Deed of Sale of Land
A Deed of Sale of Land is a legal document used as evidence that ownership has transferred from seller to buyer. Below are essential details that should be included in such a deed:
- Create the Deed of Sale agreement, including the name and address of both parties, the location and description of the land being sold, the date of sale, and the selling price.
- Sign the agreement with the buyer in front of two witnesses.
- Have the Deed of Sale notarized by a lawyer to make it legally binding.
- Secure the necessary documentary requirements for the transfer of land ownership, including the Certificate of Title, Tax Declaration, and Real Property Tax Receipts.
- File the Deed of Sale of Land at the Registry of Deeds to officially transfer ownership of the land to the buyer.
Contract to Sell vs Contract of Sale
Definition And Explanation
Real estate transactions often involve two of the most frequently utilized agreements: contract to sell and contract of sale. Both arrangements involve the transfer of ownership of a property; however, their obligations differ considerably.
Contract-to-sell agreements are contracts between buyer and seller that certain conditions must be fulfilled before selling property. Typically the buyer pays the total purchase price. The seller retains ownership until payment has been completed in full by the buyer, after which time the seller transfers ownership.
Contract of sale agreements between buyers and sellers outline an arrangement whereby one agrees to sell the property to the other and transfer ownership upon execution of a contract of sale agreement.
Differences Between Contract To Sell And Contract Of Sale
The primary difference between contracts to sell and sales contracts lies in how ownership of property transfers. Under a contract to sell, ownership remains with the seller until the buyer has completed payment; while under a sale contract, ownership passes immediately upon execution of the agreement.
Another difference lies in the obligations of each party involved. For example, a contract to sell requires the buyer to pay the total purchase price while the seller promises delivery once conditions have been fulfilled; under a contract of sale, however, the buyer pays the total purchase price and takes ownership upon payment; the seller remains committed to delivering property and transfer ownership.
Importance Of Knowing The Difference
Understanding the distinction between contracts to sell and contracts of sale can significantly affect the rights and obligations of all involved. For example, under a contract to sell, buyers have less protection since ownership still rests with the seller until all payments have been completed; on the other hand, in a contract of sale, the buyer owns their investment completely and can protect it accordingly.
Tax implications vary between agreements; in the Philippines, for instance, contracts to sell are subject to capital gains tax and documentary stamp tax when payment is received, while contracts of sale require transfer tax upon execution.
Understanding the distinction between contracts to sell and contracts of sale can assist buyers and sellers in making informed decisions and avoiding legal complications that could arise from either agreement.
Deed of Sale House and Lot
When purchasing or selling real estate, the Deed of Sale should always be remembered as an essential legal document. It proves that ownership has passed from seller to buyer in an ethical and legally binding transaction.
Definition and Explanation
A Deed of Sale for house and lot sales is a legal document which sets forth the terms and conditions of the transaction between seller and buyer, including names of both parties involved, the property being sold, the price agreed upon, etc.
Importance of Deed of Sale for House and Lot
Both sellers and buyers need proof that ownership transfer has occurred when selling or buying real property, such as through a deed. Without this document, there would be no legal evidence to prove such a transfer has happened and protect both parties in case of disputes.
Checklist of Necessary Documents
To make a Deed of Sale for a house and lot, the following documents are typically required:
- Original copy of the Certificate of Title
- Tax Declaration of the property
- Tax Clearance
- Updated Real Property Tax Receipts
- Valid IDs of the seller and the buyer
- Latest Utility Bills
It is essential to ensure that all the necessary documents are complete and up-to-date to avoid any delays or complications in the transaction.
Conclusion
Deed-of-sale documents serve as legal evidence to prove the transfer of ownership of property from the seller to the buyer and provide legal protection for both parties involved. We’ve covered what a deed of sale is, its types, who pays for them and how to create them, and specific ones such as motorcycles and cars in this article. In addition, we discussed what sets it apart from contracts of sale while emphasizing its importance when selling homes/lots.
It is essential to appreciate the significance of deed of sale documents when entering into any ownership transfer transaction. By understanding how a deed of sale works and its processes, both parties can ensure they are legally valid transactions while being fully informed on what’s involved with creating one. Furthermore, knowing the difference between a contract to sell and a contract of sale may prevent any miscommunication or disputes that arise during a transaction.
Deed-of-sale documents serve as proof of transfer of ownership, so they must meet all requirements to ensure legal bindingness and protect both parties involved in any potential issues that might arise during the transfer of ownership. By understanding what a deed of sale entails, both parties can avoid potential problems when the transfer occurs.
