When a person buys a property in the Philippines through financing and the condominium title or land title is used as a collateral, the interest of the lender, in the form of real estate mortgage, will need to be reflected on the condominium title or the land title. This is called annotation of the title. The real estate mortgage is annotated on the condominium title right after the title transfer has been completed. This way, the newly transferred title will have the mortgage annotated on the condominium or land title.
There are other interests of third parties that require annotation. This can be the master deed of restrictions which the developer annotates on all the condominium titles prior to the release of these titles to the unit owners. This can also cover extrajudicial settlement of estate under Rule 74 of the rules of court of the Philippines, in case the transfer is by death or hereditary succession. It can also be a long term lease whereby the lessor builds an improvement or building on the land, and the interest of the lessee is annotated on the land title to ensure that the lease agreement shall be protected during the duration of the long term lease.
Once these annotations are entered on the condominium title or land title, these will not be canceled despite the change in ownership of the property. Thus, these annotations must be canceled. For example, the mortgage, once fully paid, can be canceled by submitting the certificate of cancellation of mortgage with the Registry of Deeds. In the same way, once the lease contract has expired, this annotation on the land title can also be canceled before the Registry of Deeds. If these are not canceled, your potential buyer or lessor may not be keen on purchasing the condominium or leasing the property as there are other 3rd party interests that they may have to deal with.
In summary here is what you need to know about annotations:
What is an annotation of a title?
An annotation in the title is considered as a constructive notice to third persons that a property is subject to a lien or an encumbrance. Voluntary annotation or the removal thereof may be done by requesting the Registry of Deeds to record a certain transaction concerning the property. For voluntary annotations, while there is no title transfer involved, the owner’s duplicate copy will need to be presented so that the annotation can be done and entered on the condominium title or land title of the owner.
What are the common annotations in title?
Common annotations: mortgage, lease, easements, and Section 4, Rule 74 (transfer by succession or Extrajudicial Settlement), deed of assignment.
Unless this is an annotation under rule 74 (extrajudicial settlement or self adjudication) usually certificate authorizing registration or eCAR is not required. However, if there is any incomplete title transfer e.g. one of the sellers sold his interest in the property but not all of them agreed to sell, the certificate authorizing registration would be required as there are taxes that need to be paid.
How do I remove annotations on the previous owner’s title?
If there are existing annotations during the transfer, such annotations are carried over on the new title issued to the owner. It will only be removed once the obligation concerning the property has been discharged, or once you have the complete requirements for its removal.
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