How can I transfer the ownership of a family-owned land to a corporation?
Changing the ownership of a land title from an individual or family name to a corporation in the Philippines involves a multi-step legal process that ensures the transfer is legitimate and recognized by the law. This guide outlines the key steps to accomplish this task.
1. Corporate Formation and Documentation
Before transferring the land title, the family must first establish a corporation if one does not already exist. The corporation must be duly registered with the Securities and Exchange Commission (SEC). During this process, it is essential to prepare and submit the Articles of Incorporation and By-laws, which will outline the corporation’s purpose, structure, and the inclusion of the property as part of its assets.
2. Board Resolution
Once the corporation is established, the next step is to obtain a Board Resolution. The Board of Directors must pass a resolution authorizing the corporation to acquire the property. This resolution should clearly state the intention to transfer the land title into the name of the corporation, including details about the property and the terms of the transfer.
3. Deed of Sale or Assignment
The family must then execute a Deed of Sale or Deed of Assignment. This legal document formalizes the transfer of ownership from the family or individual owners to the corporation. The deed should include all pertinent details such as the description of the property, the parties involved, and the consideration or payment, if any.
4. Payment of Taxes
Before the transfer can be completed, all applicable taxes must be settled. This includes the Capital Gains Tax (CGT) or the Donor’s Tax, depending on whether the property is being sold or donated to the corporation. Additionally, the Documentary Stamp Tax (DST) and Transfer Tax must be paid. The Bureau of Internal Revenue (BIR) will issue a Certificate Authorizing Registration (CAR) once these taxes are fully paid.
5. Submission to the Register of Deeds
With the CAR in hand, the next step is to submit the Deed of Sale or Deed of Assignment, along with other required documents such as the original land title, tax clearance, and the CAR, to the Register of Deeds. The Register of Deeds will then cancel the old title in the family’s name and issue a new title in the name of the corporation.
6. Issuance of a New Land Title
After processing, a new Transfer Certificate of Title (TCT) will be issued under the name of the corporation. This new title serves as proof of ownership by the corporation and is the final step in the transfer process.
7. Post-Transfer Obligations
Finally, the corporation must update the tax declaration with the local Assessor’s Office to reflect the change in ownership. The corporation will now be responsible for paying real property taxes on the land.
Conclusion
Transferring a land title from individual or family ownership to a corporation in the Philippines is a legally intricate process that requires careful attention to detail. By following these steps, the transfer can be executed smoothly, ensuring that the property is properly recorded under the corporation’s name. Consulting with a lawyer throughout this process is advisable to ensure compliance with all legal requirements.