Before signing the documents in buying a property, it is important to conduct due diligence on the land. Due diligence on the land may be very tedious, but it will save the buyer on future problems he/she may encounter. Note that this is the general procedure only. It would be best to get the expertise of lawyers or experts to make sure that due diligence on a property is done right.
First, inspect the property.
Make sure that the land area and the location indicated on the title are both accurate. You may need the services of a surveyor to check if the boundary markers are correct, etc.
For houses and improvements, check the structural, electrical, and architectural aspects of the house or building by having the services of an engineer/architect.
Check also if the area is prone to flooding and if there are easements of the right of way on the land
For the price, check the zonal value of the area where the property is located and the assessed market value not only of the subject property but also that of the neighboring properties as well.
Second, verify if the Title is clean.
Get the updated Certified True Copy of the Title from the Register of Deeds to check if the seller is the registered owner of the property. Make sure also that the description indicated on the title, such as the land area and the location are both accurate. Lastly, double-check if there are annotations in the title, such as liens, adverse claims, lis pendens, and other encumbrances.
Third, verify the name on the title and pertinent documents such as tax declarations and tax clearances.
A Tax Declaration shows the assessed and fair market values of the property which serves as the basis for the Real Property Tax. It will also show the property’s zonal value. The Tax Clearance, on the other hand, shows that the Real Property Taxes (RPT) are being paid by the owner on time. Note that not paying the RPT will risk the property being marked as delinquent and subject to levy and public auction.
Fourth, check if there is the possibility of expropriation (or eminent domain) by the Government.
Go to the municipality or city where the property is located to check if the government has plans to expropriate the property for government projects. Moreover, check if the property you are buying complies with the Zoning ordinances in the municipality/city.
Fifth, verify the seller’s identity.
You may ask your seller to show you his/her valid government IDs to verify if the seller is the registered owner of the property. It is important to note that you must only buy property from the owner. Only the owner can sell the land unless the seller is represented by his duly-authorized agent.
If the owner has an agent, verify the authenticity of the notarized Special Power of Attorney or the SPA and inquire on the reason why the owners opted to sell via an agent. Verify as well the identity of the agent by checking his/her government/issued IDs.
Sixth, check if the owner can sell the property.
If the owner is married and their property is governed by absolute community or conjugal partnership, it is very important to secure the consent of BOTH spouses. Better yet, make sure that the spouses will both sign the deed of sale. Note that buying property from a person without his/her spouse’s consent is void.
If the owner inherited the property he/she is selling, it must have a copy of the Judicial Order of Liquidation of Assets, or the Extra-Judicial Settlement of Property.
If the owner is a juridical person such as a corporation, a cooperative, a partnership, etc., the alienation must be approved by its respective board of directors.
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