Q.Years before we immigrated to Canada, our family was able to buy a residential lot in Las Pinas , Metro Manila, consisting of about 250 square meters. Our family did not put up any improvements in the property and over the years left the lot unattended. Except for my married brother, who still lives in the Philippines, everyone in the family is now in Ontario.
My brother who has a job in Laguna and he lives in the area with his family. Because of this far distance and his other commitments, he is unable to visit our said property as often as possible.
Lately, when my brother visited our property he was shocked to see that there were 3 houses occupying the lot. These occupants are plain squatters. When my brothers confronted these people, they claimed that they are renting the lot from certain individual purporting to be the administrator of the property.
My brother showed them our land title to prove that our family is the true owner of the lot. Convinced that they were taken for a ride by the person they have dealt before, they have signified their intention to buy the property by installments as they cannot afford to pay it in cash.
My family would like to sell the lot, but we are concerned how we are going to do it, since the sale is by installments. Certainly, we cannot entrust to them the title of the property or affect the transfer of the lot to their ownership until we are fully paid.
Through your column, could you please guide us how are we going to affect the sale and protect ourselves in case the prospective buyers are unable to pay. My second concern is in case, the sale will not materialize, how can we ask them to remove their houses and leave the premises ?And what if they refuse to leave? Thank you and God bless. Bernie.
Ans. There are generally two ways of selling your property by installments to protect your interest in the event of default by the buyer. You may take any of the following :
1. Sale with Real Estate Mortgage: In this scheme, the owner of the property executes a Deed of Sale in favour of the buyer for a certain down payment that may be agreed upon by the parties . The ownership of the land is transferred to the buyer upon the execution of the Deed. The title of the land is then delivered to the buyer. The remaining balance will be paid according to the agreed period or by installments between the parties.
The buyer on the other hand , as and by way of securing the remaining balance, shall convey in favour of the Seller the same property by way of mortgage , condition that upon failure of the mortgagor to pay the agreed installments and such other conditions agreed upon by the parties , will result in the foreclosure of the property. This mortgage will have to be registered and annotated in the title of the property to make the transactions binding and enforceable against third persons and the whole world.
In the event of default on the part of the buyer-mortgagor, the subject property will be foreclosed and then sold through public auction , and the proceeds thereof will be paid to the mortgagee (Seller of the property). The residue of the proceeds , if any, will accrue to the mortgagor/Seller. Under the law , the mortgagor, shall have one(1) year redemption period from the date of the execution sale to redeem the property.
2. Contract to Sell: Under this mode, the owner of the property enters into a Contract to sell the property subject to certain conditions with the prospective buyer(s) . In consideration of this contract , the buyer pays an agreed down payment and installment amounts over the agreed period of time . The installment could be monthly, quarterly or annually depending upon the agreement between the Seller and the Buyer.
What is being conveyed here to the buyer is only the “right” to purchase the property upon the happening of the condition … that is upon the full payment of the purchase price by the buyer. In short, title and ownership of the property remained with the owner of the land until full payment thereof and the execution and delivery of Deed of Absolute Sale and title thereto in favour of the buyer.
Thus, if the buyer is unable to pay the agreed purchase price or is in default in complying with the terms and obligations under the contract to sell , the owner of the property has a legal recourse to rescind the contract and free him/her from further conveying or selling the property to the prospective buyer(s).
As to your second concern, whether the sale being proposed will materialize or not, your family has the right to full possession and enjoyment of your property which is being unlawfully occupied by strangers.
Considering that the occupants of your property are plain squatters, or occupying the same by tolerance on the part of the lawful owner, your family you can institute an ejectment suit or forcible entry cases against the occupants before the Metropolitan Trial Court(MTC).
You can likewise demand for the payment of rentals over the property as compensation for its use and enjoyment, reckoned from their occupancy until your property is completely vacated by them . Other form of damages such as cost of suit, legal interest, and attorney’s fees may also be awarded to you by the court.
Thank you for writing and you may find the above in order.