Errors in Supporting Sale Documentation
What happens if Human Errors are found in Standard Supporting Documents presented by the Vendor when a Sales is made?
Real Estate Sale Transactions may differ in nature but there are standard documents that are mandatory for closing the transaction. However, we do encounter instances where human error is detected in the documents and these must be corrected in order to successfully close the sale.
The Vendor is responsible for providing these standard documents in order to satisfy the closing requirements. They must be presented to the Attorney who is acting on behalf of the Purchaser and or the Lending Institution in the case where the purchaser is taking a mortgage. It is at this stage when errors are usually detected.
So what happens when an error is found? The Purchaser’s attorney will request that the necessary changes be effected before the transaction is allowed to close. Here is a list of standard documents for closing a sale.
Standard Supporting Documentation for a Sale
- Certified Copy of Title Deed
- Certificate of Title if RPA title is involved
- Proof of payment of Land & Building tax up to 2009 when it was last levied (subject to change when the new tax system comes into effect)
- Legible and relatively current copy of a Survey Plan – not mandatory in all cases
- T&C approval of construction depending on age of the house and if any recent changes were made to the structure.
- Completion Certificate depending on age of the house
- WASA Clearance and copy of last bill paid
- Consent to Sell (where applicable)
- Lease Rent (where applicable)
- Proof of up-to-date Payment on Maintenance Fees (where applicable)
- Presentation of Share Certificate (where applicable)
- T&TEC Bill to be paid immediately prior to closing and proof of same to be presented
Let us look at the kind of error that might be found in some of the above and how the Agent can help to guide the Vendor in addressing it , or at least know how it could or must be rectified by others.
Any typo or incorrectly noted name or apparent discrepancy in the size of the parcel could be put right by the Vendor creating a Deed of Rectification that corrects that error. But there may be other actions taken that do not involve a new Deed and registration with its Stamp Duty cost and therefore would be faster to achieve. For example, a discrepancy in the area of the land can be handled by commissioning a new survey and noting its findings in the Deed of Conveyance using a phrase like “now found to be one acre in survey dated Jan 1st 2020”.
Where an individual’s name is wrongly expressed or spelled, or their name is more commonly shown differently – “also known as….” it may be acceptable for the Vendor to sign a statement before a Commissioner of Affidavits that corrects the Deed.
Certificate of Title (CoT)
This form of title is handled in a similar way to the Title Deed but changes are made to the Registrar’ original as well as the owner’s duplicate original Certificate.
Board of Inland Revenue Payment of Taxes
It has been known for the Registrar General’s Department to incorrectly register new ownership and that mistake can be overlooked by an Attorney and passed to Inland Revenue creating an error in their records. For example, property owned by a company but the word “Limited” has been omitted. This type of error may only be spotted when the Directors are required to show documentation as part of WASA’s KYC/CDD procedure.
To correct it, WASA may accept a Statutory Declaration signed by the company’s Directors or Signatories thereby allowing the clearance to be issued and completion to take place, but the error will need to be corrected in time at the Land Registry and BIR.
Any suspected error or anomaly in a plan can be verified simply by doing a new survey. It is known that historical methods of surveying can give different readings from modern survey methods, and coastal land can erode over time, so it is expected that the latest plan would be accepted over an older version.
With some large properties, the land area may be difficult to ascertain due to lost or overgrown boundary irons, but most houses would have existing fences or walls. If there is doubt as to the position of the fence or wall, a survey can be done to establish if there is encroachment onto or over the supposed boundary. Any survey done during the sale transaction would be to the account of the Vendor whose responsibility it is to show the correct boundaries to the Buyer.
The reason a certificate of clearance has to be obtained prior to completion of a sale is because this utility company is government owned so water and sewerage rates are effectively taxes due to government, like BIR’s Land & Building tax. For this reason (and to deter fraud generally) the water authority is particularly careful to ensure that details on the application are accurate.
The application process begins with the submission of the BIR’s Certificate of Payment which shows the name of the current registered owner of the land. This name has to exactly match the identity of the person(s) applying for the clearance. If it does not, then the Vendor has to ensure that he is properly registered as the owner, submitting, if necessary, a Certified Copy of his Deed along with the return of Ownership Form to the local District Revenue Office to update their records. Quite often this action has to be taken due to the death of the previous owner or a joint owner, in which case a Death Certificate and Grant of Probate or similar document attesting to a change in ownership must be provided to effect the change. A new Certificate of Payment can then be requested for submission to WASA.
During a transaction, the Agent is not likely to be involved directly in any of these corrective measures, but may assist the Vendor if required. In the case of the WASA clearance, this process may have to be repeated if the first request for clearance is what uncovered the error in ownership.