The importance of your real property documents

Since we sold a property a few weeks ago, I came to the realization that you really can learn a great deal about the documentation that is needed to transfer a property title. I have never really spent a great deal of time looking over these documents, but they say a lot when you do study them. It gives you an overview of what these lawyers/brokers/notaries really do when they transfer over a Title over to your name.

They usually give you all the necessary signed doc's and papers when you have acquired your Title, so you can go over it. To begin with, if you own a house and lot, you need to have of each a Declaration of Real Property document of the house and lot (same as with condominiums). On the document of the lot, it states the Assessor's findings with the Area size, price per sq/m (Unit Value) and the Market Value. They calculate this by multiplying the Unit Value with the Area of the lot.

On the house (not the lot), you find the description of the Building and Other Improvements, and that is where they go from when you have a house on the lot. That is at the back of the Declaration of Real Property document for the house.

Also at the back of the Declaration of Real Property document states the Assessment by Board of Assessment Appeals where you will find the Market Value, the Assessment Level and the Assessed Value for both your house and lot. The Assessment LEVEL, which is stipulated in percentage (%), is the most important to see how much you have to pay for your yearly Property (Real Estate) Tax, as many municipalities have different percentage levels. It can be as high as 60% or maybe more, all depends in what city or town you live in the Philippines. Most of them are in the range of 20% to 35%.

The Market Value seems also important, as you then can see how much your house or lot is actually worth. One should actually want to see the Declaration of Real Property first "before" one buys a house and lot, as you can see on the document what the Market Value of your future property is, as many salespeople or sellers will have a much higher asking price for their property than actually the market value states on this document. So, buyers, be aware.

I assume also that many lots have not been re-assessed for many, many years, and that is why you sometimes see a very low Unit Value (price per sq/m) on the document. Some may go back as in the sixties or even earlier. New subdivisions are more updated, as they are usually surveyed at a recent time, so a higher Unit Value for the lot.

As we go from the Assessed Value, one can calculate how much you will have to pay for your yearly Property Tax at the Treasure's Office of the city where the property is located. For one city, they calculate 1% of your property's Assessed Value, which you have to pay for your Basic property tax payment. In another city, it's 1.5% for Basic (and 1% for a Special Education Fund) payment in many cases of condominiums for example.

It can really make a big difference in what city in Metro Manila you live, as some really charge a lot in property taxes and others really very little, and the area of your property can be even in a more desirable neighborhood in the city where you pay very little tax as opposed to the one where you pay over your head. Depends who is sitting at City Council and the Mayor, where they decide how high the percentage is of the Assessment Level.