So you have decided to invest in real estate in the Philippines. Aside from having the means to be able to do so, what else do you need to know? For experienced investors, the real estate terms equity, amortization, and capital values are part of their everyday vocabulary, but for the inexperienced ones, these real estate terms are alien, confusing, and oftentimes overwhelming. So before you go ahead and plunge into the world of real estate investing, you should take time to familiarize yourself with some of the real estate terms you will surely encounter.
Abstract of Title It consists of the concise history of a particular title, the summary on the links, and activities that affect ownership of a property.
Acquisition This is a formal declaration by a person who has executed a legal deed that it is indeed his act to purchase a particular property. This is done before an authorized officer and is the process of acquiring real estate property.
Affidavit When you are closing your sale, you will sign several affidavits. One such affidavit, for example, is an affidavit of occupancy, which is a written legal declaration that states that you will use the property as a principal residence.
Bundle of Rights These are your rights of ownership, which state your rights to own, use, abuse, dispose, exclude others, and recover your property.
Deed This refers to a written document that, when properly executed and delivered, transfers ownership to the buyer. The deed should describe the property, name the seller and the buyer, and be signed and notarized by the seller.
Depreciation This is the decrease in an asset’s value, which may be caused by a host of factors, such as deterioration due to wear and tear, natural decay, functional or economic loss of utility, or unfavorable market conditions.
Equity This is the amount that represents the difference between the selling price and loanable amount.
Lien This is a legal claim on someone else’s property that one can have as security for a debt or charge, judgment, mortgages, and taxes.
Maceda Law Also known as Realty Installment Buyer Act (RA 6552), this piece of legislation aims to provide protection to buyers of real estate on installment payments. Under this law, when the buyer has paid at least 2 years of installments, he or she is entitled to the following rights in case he or she defaults in the payment of succeeding installments:
- To pay the unpaid installments, interest-free, due within the total grace period earned, which is fixed at 1 month for every 1 year of installment made. However, the buyer may only exercise this right once in every 5 years of the life of the contract.
- If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property. This is equivalent to 50 percent of the total payments made and an additional 5 percent every year after 5 years of installments, but shall not exceed 90 percent of the total payments made. However, the actual cancellation of the contract shall take place after 30 days from the day the buyer receives the notice of cancellation or the demand for rescission of the contract.
Power of Attorney This is a legal document that authorizes a person, called an attorney, to act as the agent on behalf of the person who is granting it, called a principal. The attorney is given the power to deal with business- and property-related matters and to make financial and legal decisions for the principal.
Sales Contract This is a contract between the buyer and seller and through it results in the transfer of the ownership of a particular property.
Torrens System A system of registration that assures the buyer that on purchase of a land covered by an Original Certificate of Title (OCT) or Transfer Certificate of Title (TCT) issued by the Registry of Deeds, the same will be judicially confirmed and recorded in the archives of the government.
