Deed of Assignment of Rights on a Pre-Selling Unit Philippines
A condominium buyer has paid ₱1,500,000 of a ₱5,000,000 unit over two years, loses a job abroad, and offers to pass the unit to someone who will pay ₱1,200,000 for the rights and take over the remaining ₱3,500,000.
That transfer is not a sale of a condominium, because no title exists yet. What passes from one buyer to another is the right to buy the unit under the developer's contract, and the document that transfers it is a deed of assignment of rights. It looks simple, and it is where many second-hand pre-selling purchases go wrong. This guide covers what a deed of assignment is, why it is not a deed of sale, the documents to demand, the developer's consent and fees, the steps, how to structure payment, the taxes, the Maceda Law, and what goes wrong.
What a Deed of Assignment of Rights Is
A pre-selling buyer usually holds a contract to sell with the developer. That contract gives the buyer the right to receive the unit, and eventually the title, once the full price is paid. Until then the developer still owns the unit and the title stays in the developer's name.
An assignment of rights is a transfer of the buyer's position under that contract. The original buyer, the assignor, passes the rights and obligations to a new buyer, the assignee. The assignee steps into the contract and takes over the remaining payments.
An assignor can only pass what the assignor has. If the contract has been cancelled, or the account is in default, there is nothing valid to assign.
Why It Is Not a Deed of Sale
A deed of absolute sale transfers ownership of a property the seller owns. That is the right document when the seller already holds a title in the seller's own name. A deed of assignment is the right document when the seller is still paying the developer and does not yet hold a title.
Using the wrong document creates confusion at the developer's office and later at the Registry of Deeds. A deed of sale for a unit that the seller does not yet own can be challenged, and a developer may refuse to recognize it.
Some developers have their own form for the transfer, sometimes called an assignment, a transfer of rights, or an assumption. If the developer prescribes a form, use it, and have the deed between the parties follow the same terms.
The Developer's Consent
The contract to sell often says that the buyer cannot assign without the developer's written consent. Even where it does not, the developer is the party who will issue the title and who must recognize the new buyer.
The practical advice from law firms is firm: get the developer's approval in writing before you pay, or at the same time. A buyer who pays the assignor and then asks the developer for consent can find the developer saying no, or asking for amounts the assignor never mentioned.
Developers commonly ask for some or all of the following:
- Payment of arrears. Missed amortizations and penalties must be cleared before the transfer.
- A transfer or assignment fee. The amount depends on the developer, so ask for it in writing.
- Documents from the new buyer. Identification, proof of income, and, where the developer requires it, a credit review.
- Cancellation of the old contract and issuance of a new one in the assignee's name.
- Compliance with foreign ownership limits, where the new buyer is not a Filipino.
- New payment arrangements, such as updated post-dated checks.
Documents to Ask the Seller For
- The contract to sell and any reservation agreement or addenda.
- Official receipts for every payment made to the developer.
- A statement of account from the developer showing the balance, the next due date, and any penalties.
- The unit details. Project, tower, floor, unit number, and any parking slot, matching the contract.
- A condominium corporation or association clearance, where the project is already turned over and dues apply.
- Proof of the seller's authority. A special power of attorney if the seller is abroad, or a secretary's certificate for a corporate seller.
- The seller's spouse's consent, where the contract was entered into during the marriage.
One law-firm guide makes the point that no single document is enough. Cross-check them against each other, and trust the developer's statement of account over the seller's claim about the balance.
The Process, Step by Step
- Confirm who the seller is. The seller should be the buyer named in the contract, and the account should be active and not cancelled.
- Get the developer's statement of account. Compare the balance with what the seller told you.
- Ask the developer how assignments are handled. Get the requirements, the fee, and the timeline in writing.
- Negotiate the price of the rights. The amount you pay the assignor is separate from what you owe the developer.
- Sign the deed of assignment. Both parties sign, and a notary acknowledges it. The deed should describe the unit, the contract, the amounts paid, and the balance.
- Obtain the developer's written consent and the new contract or acknowledgment in your name.
- Update the records. Make sure the developer's system, the condominium corporation, and any bank or Pag-IBIG financing show you as the buyer.
How to Structure the Payment
The usual risk is that the buyer pays the seller in full and then learns of a problem. Structure the payment so that the money moves with the documents.
Where there are arrears, pay them directly to the developer and deduct the amount from what you pay the seller. Where there is a balance on a bank or Pag-IBIG loan, ask the lender how a transfer works.
Consider paying the seller in stages. A common structure is a deposit on signing, the main payment when the developer gives written consent, and the last part when the new contract or acknowledgment is issued. Escrow with a lawyer or another neutral party can hold the funds meanwhile.
Take the example from one guide. A unit has a contract price of ₱5,000,000, the seller has paid ₱1,500,000, and the balance is ₱3,500,000. The seller asks for ₱1,200,000 for the rights. The buyer then owes the seller ₱1,200,000 and the developer ₱3,500,000, which together are ₱4,700,000 for a unit with a contract price of ₱5,000,000. Whether that is a good deal depends on the market price of the unit, which should be checked independently.
Taxes and Fees
A transfer of rights can trigger taxes, and the answer depends on what exactly is being transferred and who the parties are. Costs that law firms list for property transfers include capital gains tax, documentary stamp tax, transfer tax, registration fees, notarial fees, the developer's fees, and in some cases the broker's commission.
For an assignment made before a title exists, the tax treatment may differ from that of a sale of a titled unit, and the guides reviewed for this article give no rates for the assignment case. Ask a tax adviser or the BIR before you assume that no tax is due, and agree in writing who pays what.
The condominium's own fees count too. Association dues, special assessments, and transfer or move-in fees can apply when the unit is turned over.
The Maceda Law and Installment Buyers
The Maceda Law protects buyers of residential real estate who pay in installments. It matters in an assignment for two reasons.
First, it affects the seller's position. A seller who has paid for some time may have grace period and refund rights if the developer cancels, and those rights can be part of what is being assigned. Check how many years have been paid and whether any cancellation notice has been issued.
Second, it affects the buyer's risk. A seller cannot validly assign rights that have already been cancelled, and a buyer who takes an assignment after a cancellation notice can end up with nothing.
Bank and Pag-IBIG Financing
If the unit is financed through a bank or Pag-IBIG, the original borrower stays liable unless the lender approves a change. A private deed of assignment between two individuals does not bind the lender.
Ask the lender whether it allows the transfer or an assumption of the loan, what the new borrower must qualify for, and what documents are needed. Until the lender agrees in writing, the assignee does not stand in the borrower's shoes.
What Goes Wrong
- No written consent from the developer. The developer may refuse to recognize the new buyer or deal only with the original one.
- Hidden arrears. The assignee finds penalties, dues, or missed payments after signing.
- A cancelled contract. The seller assigns something that no longer exists.
- A missing spouse's consent. The assignment can be challenged.
- A double assignment. The seller assigns the same rights to two people, and the one with the developer's recognition prevails.
- Paying everything to the seller. The money leaves and the documents do not follow.
- Treating the deed as a transfer of title. The assignee still has to pay the balance and wait for the developer to issue the title.
For Buyers Before Signing
Ask the developer first. Find out whether it allows assignments, what it charges, and what it needs, and get the answers in writing before you discuss price with the seller.
Check the balance against the developer's own statement and pay arrears straight to the developer. Keep the seller's payments tied to the developer's consent.
Confirm the details with a lawyer for anything material. Developers' requirements differ, contracts differ, and the tax treatment of an assignment can depend on the facts.
A deed of assignment passes the right to buy a unit, and the developer's consent makes it real. You can explore property listings across the Philippines, with terms and records visible before you enquire, at The Grid Property Ventures, the Philippines' smartest real estate platform.
