The internet is filled with stories of unsuspecting buyers victimized with fake or forged titles. Property owners have also fallen prey into giving away personal information and copies of vital documents that have allowed their identities to be stolen and used by scammers to defraud others. Worse, some sellers have resorted to double or multiple sales or mortgages, thus affecting the rightful claims of legitimate buyers or lenders.
I’ve had a personal experience where someone offered to sell a property using a falsified owner’s duplicate copy of the certificate of title. At first glance, everything seemed perfect but with experience and closer scrutiny, the type-fonts used and placement of words were different from that of the Registry of Deeds’ original copy. The document presented was obviously a fake! You have to give way to gut feel and some degree of suspicion.
In another instance, one person claimed that the land in our possession is rightfully his, but in exchange for payment of half of the property’s value, he would forgo the claim over the said property. Knowing the circumstances behind the acquisition of the property, I repeatedly ignored him until he eventually lost the drive to claim and harass me.
The importance of the title cannot be overemphasized. No other than the Land Registration Authority (LRA) and the Register of Deeds (RD) have espoused that the titles in the registration system are accurate, updated and complete. With our property rights protected, sale transactions can be undertaken smoothly, and if needed, used as collaterals for personal or business loans to spur economic growth and development.
Titles may be good, doubtful or bad, as explained by Antonio and Edilberto Noblejas in their book Registration of Land Titles and Deeds. Good title, also referred to as clean or clear title, means that the property owner’s rights are indefeasible and that no other party can lay claim to it.
A property bought on good faith and properly registered is an example. On the far end is a bad title where no ownership right is vested. Titles acquired through fraudulent or scrupulous means are such examples.
Then there is a doubtful title, one that is in between a good and bad title spectrum. In this case, there are issues and concerns that cast uncertainties and need to be cleared before it can be classified as a good or a bad title. It includes properties that are the subjects of claims by legitimate or illegitimate heirs, unregistered properties, those under litigation or very recently reconstituted in which a claimant may suddenly appear.
What to do?
What can we do so as not to fall prey to sellers of bad or doubtful titles? An excellent practice is to undertake a comprehensive Due Diligence, a term defined by Merriam-Webster as “the care that a reasonable person exercises to avoid harm to other persons or their property.”
While this concept is simple, it takes reasonable time, considerable effort and money to undertake property research.
Today, checking a property from a distant place is no longer as difficult as it was before. Requesting copies of title to perform research, back-tracking, and verification of genuineness is easier with the LRA’s launch of its “Anywhere-to-Anywhere (A2A)” program, a service wherein certified copies may be requested from any of the Registries of Deeds around the country.
Back-tracking the title evolution involves checking the source of the current title against the preceding titles issued over time. Herein, property information such as location, technical descriptions, size, cadastral survey origins, sellers and buyers’ transaction history and details are verified.
Certified copies from the RD will be compared with that of the owner’s duplicate as the latter should be identical since it is a carbonized copy only. In instances where the owner’s duplicate copy was not presented for proper inscription/s, the Registry of Deeds’ copy may contain annotations of mortgage when the property is used as collateral, or the subject of extra-judicial settlements that carries a 2-year lien on the property, or lis pendens/notice of legal suits involving the subject property. With endless possible problems, a thorough due diligence may reveal issues that could affect the disposal of the property.
Additionally, verification with the assessor’s and treasurer’s offices will indicate if the current property owner has paid the property tax, is updated or facing near or imminent confiscation or foreclosure due to unpaid amounts.
Checking the DENR-Land Management Services can also show how the property was subdivided and arrived at its current size and configuration. It may also contain information like encroachments or miscalculation in the size of the property.
Checking with the subdivision or condominium’s property management office can reveal if the property owner’s dues, fees or charges are paid and updated, was assessed penalties that remained unpaid, with outstanding utility bills, or have issues with neighboring residents or the authorities.
Asking how the property ended up with the current owner, whether through sale, inheritance or donation, is important to remove doubts from future claimants.
Sale of properties owned by corporations, partnerships, etc. must also be accompanied by board resolutions to establish the rightful authority to dispose of the property concerned.
A doubtful title, then what?
Adverse findings will affect the sale or purchase in many respects. Some buyers may be turned off and no longer proceed with the contemplated transaction because of concerns found.
While inexperienced buyers should refrain from buying these properties until it is cleaned, the transaction may still proceed nevertheless, provided the parties agree to address the issues found. The seller could be given more time to correct the problems, commit more warranties or mutually consent to discount the selling price to cover the potential risks that the would-be buyer needs to address in the course to making the title good.
Buyers, beware and be in control!
Henry L. Yap is an Architect, Environmental Planner, Real Estate Practitioner and former Professorial Lecturer.