A Guide to Home Buying Terms, from Amortization to Zonal Value
Before closing any deal, make sure you understand the terms used by sellers and brokers
Buying a home, whether it is a condominium unit or a multi-storey dream house, involves a lot of processes and a ton of paperwork. While you may have a trustworthy broker or seller, don’t simply sign on the dotted line without reading the contract first. Based on phone interviews conducted with the Housing and Land Use Regulatory Board, and the Land Registration Authority, and research from the US Legal System, and retalkasia.com, Real Living breaks down and explains some of the terms you come across when you’re in the market for a home.
Amortization
It’s a payment scheme wherein you pay a certain amount on a monthly basis, and the amount includes interest.
Association dues
This is more often than not paid during the start of the year, or towards the end of the year. Association dues are much like taxes—the money given is used for improvement of your building, village, or compound. This is computed according to the size of your property—the bigger it is in square meters, the bigger the amount.
Balloon Payment
Also called “lump sum” and other terms, a balloon payment is included in the amortization of your property. It is done sometimes on an annual, biannual, or quarterly basis—it depends on your agreement with the seller.
Bank financing
Availing of a loan from the bank comes with a handful of requirements, and banks usually just loan 70% or 80% of the property value, at the most.
Broker
A broker is one who helps sell or lease the property in behalf of the owner. Deal with licensed real estate brokers, because they are registered with the Professional Regulation Commission (PRC) and the Housing and Land Use Regulatory Board (HLURB)—meaning, you have the option to go through the legal system just in case things go south.
READ: How to Find A Real Estate Broker You Can Trust
Certificate of Registration
Under order of a presidential decree, all condominium projects must be registered with the Housing and Land Use Regulatory Board. Only projects that pass the HLURB’s building standards are given a CoR.
Completion Date
Not to be confused with Turnover, a Completion Date is when the property, like a condominium building or house, will finish with construction.
Contract of Sale
Not to be confused with a Contract to Sell, a Contract of Sale is an agreement where the seller has a ready piece of property, the buyer pays for the said property, and the transfer of ownership is given to the buyer as soon as the payment has been fulfilled.
Contract to Sell
The difference between a Contract to Sell and a Contract of Sale is with a Contract to Sell, the piece of property to be purchased is not ready—either it’s still being built, being vacated of its current tenants, or other circumstances—so there’s only a promise to sell, and a promise to pay. The transfer of ownership is only given once the property is ready, and the full payment has been fulfilled.
CCT
Short for Condominium Certificate of Title, a CCT is a condo owner’s proof of ownership of their unit. This is usually given once the payment for the unit is complete, and a Deed of Absolute Sale has been filed with the Land Registry Authority. If you’re in doubt with the CCT’s authenticity, you can proceed to the Land Registry Authority where your building is registered to ask to take a look at the CCT in question.
Deed of Absolute Sale
The Deed of Absolute Sale is made once the piece of property is fully paid. The Deed of Absolute sale is filed with the Land Registration Authority, and is needed for you to get your title, either a TCT or CCT.
Downpayment
This is the first amount given when purchasing a property, followed by monthly payments, depending on your payment terms. The amount of your downpayment will depend on the agreement you have with the seller.
Housing and Land Use Regulatory Board
The HLURB is the government agency in charge of protecting condominium buyers. It’s important to know if the condominium you’re eyeing has the license to sell and a certificate of registration with the HLURB, and you’ll find that information on their website. If you’re dealing with a licensed real estate broker, they will also be able to present their own HLURB number, guaranteeing that they are licensed to sell condominium properties. Take note that property specialists or sales agents can also be authorized to sell, as long as they are registered under the HLURB number of a licensed real estate broker.
In-house Financing
In-house financing is offered by some property developers, and much like bank loans, there are monthly payments to be made throughout a certain number of months or years, given to the property developer.
Land Registration Authority
Also known as the Registry of Deeds, the LRA is in charge of the registration of all real estate titles. All titles all over the Philippines are kept in the LRA, and the government agency has several locations in the country. Because of the rampant proliferation of fake titles, the LRA is in charge of protecting the authentic titles, and in detecting the fake ones. “E-titles” are already available at the LRA, but it’s best to check with your local office if they have a hard copy of your deed available.
License to Sell
Once a condominium project has received their Certificate of Registration from the HLURB, they can apply for their license to sell. Without a license to sell, your property seller will incur penalties.
Maceda Law
The gist of the lengthy Republic Act 6552, or Maceda Law, is to give buyers more time to give their monthly installment without incurring added interest or penalties. Not all buyers are protected by the Maceda Law, though. The Maceda Law states that the buyer must have given at least two years’ worth of payments, and if they for one reason or another default from a payment, they are given a certain grace period (usually around 60 days) to be able to pay. The Act is not applicable to buyers who opted for bank financing, though.
Real Property Tax
The owner pays the Real Property Tax, or RPT, on a yearly or quarterly basis. To compute for your property’s RPT, you multiply the RPT rate (Metro Manila—2%, provinces – 1%) with the property’s assessed value. To compute for this, it would be best to contact the Treasurer’s office of the location of your property.
READ: How Do You Protect Your Inheritance from Taxes?
Tax Declaration
Also known as the Declaration of Real Property, the Tax Declaration is a property record stating to the local Assessor’s Office that taxes have been paid.
TCT
Short for Transfer Certificate of Title, a TCT is your proof of ownership of a property. The predecessor of the CCT, you may also proceed to the local LRA if ever you'd want to double-check the owner or the authenticity of TCT that you have received.
Turnover
The turnover of your condominium unit or piece of property means that the construction has been completed, has passed all inspections, and is ready for occupancy. The turnover date may be as far back as a few months after its completion date.
Zonal Value
This differs per municipality in the Philippines, but the Zonal Value of a property is basically how much a piece of property is in a certain area of the Philippines. It differs per “zone” or municipality, and you’ll need to zonal value of your property if you’re looking into selling it.
READ: How to Compute a Property's Market Value
Looking for a home-buying term that’s not listed here? Let us know! It never hurts to ask before making such a big purchase such as your first home—you deserve to be informed!
