If you’re buying a secondhand vehicle, then you’d need a Deed of Sale for Motor Vehicles. Other than the money, you need this document to prove that you are, indeed, buying or selling the car. It’s a contract of sale and is quite a useful piece of paper, too, especially when problems occur in the future.
The Deed of Sale for Motor Vehicles is one of the many types of legal documents required by the Land Transportation Office (LTO). It is part of the paperworks involved in the car-buying experience. While most people would not think twice about signing such a document to get it out of the way, it is important to check and understand what it actually is for before affixing your signature on the dotted line reserved for it.
What is a deed of sale for a motor vehicle?
A deed of sale is, in its most basic form, a contract of sale. Like any other contract, the Philippine law says that it needs all of its three elements: the consent of the contracting parties, an object that will serve as the subject matter of the contract, and the cause of the obligation that is established. In a contract of sale or deed of sale, the consummation of the contract when both parties agree on the price of the motor vehicle.
The Deed of Sale also needs to be notarized, otherwise, the transaction is considered invalid. When the transaction is considered invalid, even the signed contract of sale is considered nothing better than a tissue paper. Useless. Null and void.
What details are included in the deed of sale?
Like any other legal document like an Affidavit of Loss, the Deed of Sale almost always generally require the following information:
- Names and identity of the parties
- Addresses of both parties
- Details of the vehicle
- General details in the certificate of registration
- Vehicle make
- Vehicle series
- Vehicle type
- Vehicle year model
- motor and chassis numbers
- plate number
- LTO MV file number
- Certificate of registration number
- Date of the sale: The date of the sale should be included in the document.
- Warranty and representations: The document should include representations and warranties made by the seller, such as the property is free from liens, mortgages, and encumbrances, or that the property is in good condition.
- Notice of rights and obligations: The document should include any notice of rights and obligations that the buyer or the seller may have, such as taxes and insurance.
- Special instructions: The document may include any special instructions, such as the transfer of utilities, or any other matter that the parties have agreed upon.
- Amount paid for the vehicle, and
- Acknowledgment statement (notarization)
The notarization turns the Deed of Sale into a public legal document which makes proving its authenticity and making its execution easier. The acknowledgement statement makes it easier to prove the transaction in courts of law.
Deeds of Sale are also generally submitted along with the following:
- Two (2) photocopies of valid government-issued identification cards or identification documents
- Three (3) specimen signatures
When used at the LTO to facilitate transfer of vehicle ownership, the Deed of Sale is usually submitted along with the following requirements:
- Notarized Statement of Assumption of Car Mortgage
- Release of Chattel Mortgage
- Original Office Receipt and Certificate of Registration (OR/CR)
- Original Official Receipt for payment of the Motor Vehicle User’s Charge (MVUC) issued by the LTO
- Philippine National Police – Highway Patrol Group (PNP-HPG) MV Clearance Certificate
- Compulsory Motor Vehicle Liability Insurance or CTPL
- An accomplished and approved Motor Vehicle Inspection Report or MVIR
- Tax Identification Number (TIN)
- If the vehicle was owned by a corporation or a company: A secretary’s certificate
Why is the deed of sale for a motor vehicle important?
A deed of sale for a motor vehicle is the evidence of the sale of the motor vehicle. Sure, verbal agreement of sale can result in a successful purchase. However, it can be retracted at any time and not even the highest courts can do anything if either one of the parties involved change their mind and claim otherwise.
Some of the benefits of having a notarized and signed deed of sale for motor vehicles include:
- The contract of sale is enforceable.
- With a valid deed of sale, either party can no longer change their mind about the transaction.
- Liabilities that come with the motor vehicle would fall on the shoulder of the responsible person, as stated in the deed of sale.
- It serves as proof of sale, effectively completing the transfer of ownership and responsibility from seller to buyer.
- It can be used as one of the requirements when registering the motor vehicle with the LTO.
- Legal proof of ownership: A Deed of Sale serves as legal proof of ownership of a motor vehicle, and can be used to update the property records.
- Clear statement of ownership: It is typically used when a clear motor vehicle statement of ownership and it is a way for the parties to transfer ownership even if there are liens or encumbrances .
- Flexibility: It can be customized to include specific terms and conditions that suit the needs of the buyer and the seller.
- Protection for both parties: A Deed of Sale can protect the interests of both parties by including warranties and representations by the seller, such as the motor vehicle is free from liens, mortgages, and encumbrances, and by including contingencies for the buyer, such as the completion of certain repairs or improvements to the motor vehicle before the sale is considered final.
- Simplicity: A Deed of Sale is a simple and straightforward legal document that transfers ownership of the property without any contingencies or conditions that must be met before the sale is considered final.
What are the consequences of not having this document?
Some of the drawbacks or consequences of not having a Deed of Sale of Motor Vehicles include:
- There would not be proper evidence of the sale of the motor vehicle.
- The LTO would not let you transfer the vehicle to or from your name to the buyer.
- An improperly registered vehicle is also considered a traffic law violation.
- There’s always the risk of being held responsible for accidents, crimes, or violations committed using the vehicle.
- There won’t be a legal and binding agreement on who will be responsible for completion of certain repairs, improvements, liens, mortgages, or other encumberance to the motor vehicle before the sale is considered final.
When is a deed of sale needed and who prepares it?
A deed of sale for motor vehicles is necessary when you sell or purchase a secondhand or used motor vehicle. It is generally prepared by the seller because they have more to lose, but it doesn’t mean that the buyer cannot facilitate the preparation and execution of one.
How to prepare a Deed of Sale of Motor Vehicles?
The Deed of Sale of a Motor Vehicle is just like that of an Affidavit of Change Color, with the exception of the actual document. Hence, you can refer to this guide on executing an Affidavit of Change Color for the procedures of getting a Deed of Sale executed.
Note that the documents used for executing an affidavit of change color is different from the document used as Deed of Sale though. Also, while the Affidavit of Change Color is a joint one, signed by both the owner and the painter, the Deed of Sale isn’t a joint affidavit but a contract, signed by both the buyer and the seller to signify their agreement on all the terms stated in the document.
How much does it cost to prepare a Deed of Sale?
Preparing a deed of sale or securing one from the LTO doesn’t cost anything, but since the document needs to be notarized like any other legal document, then there’s the notarial fee to worry about. Unlike the affidavit documents which costs around P100.00 to P800.00 to get notarized, the notarial fee for a Deed of Sale, regardless if it’s for a property or a motor vehicle, ranges between 1-2% of the property value. That said, the cost of this document may change depending upon the price of the motor vehicle being sold.
Where to get a Deed of Sale of Motor Vehicle notarized?
As there are no LTO-accredited notary public in existence, sellers or buyers of secondhand or used motor vehicles may get their Deed of Sale of Motor Vehicle notarized at any notary public anywhere in the country. However, do note that the location and prestige of the notary public may affect the price of the notarial fees.
Deed of Sale for Motor Vehicle Sample
If you have no idea about what Deed of Sale for Motor Vehicles looks like on paper, this sample Deed of Sale can help you write one without starting from scratch.
Deed of Sale of Motor Vehicle
KNOW ALL MEN BY THESE PRESENTS:
This Deed of Sale of Motor Vehicle, made and executed this ___ th day of February 2011, by and between: ___________________, Filipino, of legal age, single/married, and a resident of _______________________________________, hereinafter referred to as “VENDOR”; ___________________, Filipino, married, and a resident of ____________________________hereinaer referred to as the “VENDEE”.
WHEREAS, the VENDOR is selling in an “as is where is” basis a second hand vehicle, hereinafter described as follows:
PLATE NO: ___________________
MV FILE NUMBER: ___________________
MOTOR NUMBER: ___________________
SERIAL/CHASSIS NUMBER: ___________________
WHEREAS, the VENDOR agreed to sell, and the VENDEE agreed to buy, the VENDOR’S rights, interests and title to the afore-described motor vehicle;
NOW THEREFORE, for and in consideration of the above-mentioned premises and the sum of PESOS: THREE HUNDRED THOUSAND (Php 300,000.00), Philippine currency, the VENDOR does hereby sell, transfer, assign and convey to the said VENDEE, all her rights, title and interest over the afore-described motor vehicle.
The VENDOR hereby warrants that the vehicle is free from liens and other encumbrances.
THE VENDEE hereby acknowledges that it has fully inspected the said vehicle and has bought the same in an “as is where is basis.”
IN WITNESS WHEREOF, the parties have hereunto axed their signatures this ____ day of February 2011, in the City of ___________________, Philippines.
Republic of the Philippines)
BEFORE ME, a NOTARY PUBLIC, for and in the city of _____________, Philippines, this ___ day of February 2011, personally appeared the following who presented the following valid identification cards:
ID NO.: ___________________
DATE OF ISSUE/EXPIRY: ___________________
PLACE OF ISSUE: ___________________
known to me to be the same persons who executed the foregoing instrument, which consists of two (2) pages including the page wherein this acknowledgment is written, and they both acknowledged to me that the same is their voluntary act and deed.
WITNESS MY HAND AND SEAL ON THE DATE AND PLACE ABOVE-WRITTEN.
Doc. No. _____;
Page No. _____;
Book No. _____;
Series of 20____.
When selling or buying a used car, you will most definitely need a signed and notarized Deed of Sale. Before you get one prepared, here are some things worth taking note of:
- While a Deed of Sale of Motor Vehicle is generally prepared by the seller, this is not a hard and fast rule mandated from everyone.
- Nothing in the law or anywhere else says that it is the seller who should prepare it, so the buyer is free to make one if he so desires.
- Sellers usually prepare the Deed of Sale of Motor Vehicles because they generally have more to lose when it comes to the timely and proper execution of the deed of sale.
- Ensuring that the deed of sale is prepared properly helps facilitate the LTO transfer of ownership.
- Ensuring that the deed of sale is prepared properly serves as evidence that the motor vehicle is no longer in the seller’s possession.
- Motor vehicles are subject to the registered owner rule, which means that in case of doubt when there is an accident, the presumption of liability falls upon the registered owner.
- The new owner must register the car at the Land Transportation Office (LTO).
- The deed of sale does not cover registration at the LTO as it only proves that the car was sold and bought by the parties reflected in the document.
- The person registered on the LTO certificate of registration can be held liable should the driver of the vehicle get involved in an accident, that is why a transfer of ownership is strongly advised after the sale.
- Never proceed with the transaction of buying a car from a seller that does not have or refuses to execute a deed of sale.
- If the seller fails to show the car’s official receipt (OR) and certificate of ownership (OR), it can be considered a red flag too so it’s best not to pursue the transaction.
Video: Deed of Sale of Motor Vehicle #LTO
Learn more about what a Deed of Sale of Motor Vehicle is, as well as what is is for and some tips and tricks on how to get it processed by watching this video from KamoteG4ming Tips:
Frequently Asked Questions (FAQs)
For your reference, here are some common questions and answers relevant to the Deed of Sale of Motor Vehicles:
1. What is the registered owner rule?
The registered owner rule is one of the reasons for executing a Deed of Sale when buying or selling a motor vehicle. This rule entails that the legal and actual owner of a vehicle is the one whose name appears on the registration papers issued by the Land Transportation Office (LTO). This means that the one named on the car’s OR/CR will be held responsible when the car is involved in an accident or any other injury-causing situation, giving the victims someone to turn to when asking for damages. This liability even extends to something as simple as parking violations. With an executed deed of sale, the buyer/new owner can get the ownership of the vehicle transferred to his/her name and avoid this problem from ever arising for the previous owner.
2. What is an Open Deed of Sale?
An open deed of sale of Motor Vehicle refers to a deed of sale for cars or motorcycles where the name of the buyer and his/her signature are left blank.
3. What is the difference between Deed of Absolute Sale and a regular Deed of Sale?
A Deed of Absolute Sale and a Deed of Sale are both legal documents used to transfer ownership, but there is a key difference between the two. While a Deed of Absolute Sale transfers full and complete and permanent ownership of a motor vehicle from the seller to the buyer with no strings attached, a regular deed of sale of motor vehicle transfers ownership of a motor vehicle from the seller to the buyer but with certain conditions or contingencies that must be met before the sale is considered final. A good example of a regular Deed of Sale is a “Deed of Sale with Right to Repurchase,” in which the seller retains the right to buy back the property within a certain period of time.
4. What will happen if no Deed of Sale of Motor Vehicle is executed?
When no Deed of Sale of Motor Vehicle is processed, then the sale would continue but there won’t be any proper evidence of the sale of the motor vehicle. This means that in cases of problems or accidents, the seller will remain the registered owner and the one who will be held liable since the LTO would not allow the transfer of ownership of the vehicle to or from your name to the buyer without a notarized Deed of Sale.
5. Should the Deed of Sale of Motor Vehicles be notarized?
Yes. As a legal document, a Deed of Sale of Motor Vehicle must be notarized. If it isn’t notarized, then it’s as good as tissue paper—worthless—in any court of law.
6. How much is the notarial fee for a deed of sale?
The buyer pays for the notarial fee which is a negotiable cost that hovers around 1-2% of the property value. The buyer also needs to pay for the transfer tax and the documentary stamp tax.
7. How long is the notary valid?
Forever. A notarized document never expires which means the document will be acceptable for use forever. However, it is only valid for single use and for specific instances only so that’s the only thing you need to consider. In cases of sales of an LTO-registered motor vehicle, reselling it means a new Deed of Sale will need to be executed as the old one wouldn’t work.
8. How many copies of the Deed of Sale do I need to prepare?
For your convenience, you might want to print out four (4) copies of the Deed of Sale after filling it out to provide copies for notarization and the other entities who need it, including both the buyer and seller, as well as the notary public.
9. Can I prepare my own Deed of Sale or does it need to be prepared by a licensed lawyer?
Yes. Like most other affidavit documents, you have the option to download pro forma templates or make your own Deed of Sale or have a lawyer prepare one. As an affiant, you only need to make sure that the affidavit includes all the necessary details, like the full legal name and address of the buyer and seller, date of transaction, details of the motor vehicle being sold, the price of the motor vehicle, and a statement declaring that the vehicle is being sold from the seller to the buyer for a certain amount, etc. Also, you must also notarize the document.
A Deed of Sale of a Motor Vehicle is a simple legal document. However, one should never underestimate the power of one. After all, the simple execution and processing of the Deed of Sale may cause problems and a lot of liabilities for sellers of used cars. It does not only cause problems for the buyer as the LTO will not allow the transfer of ownership for the motor vehicle without a signed and notarized Deed of Sale, but it will also hold the seller liable in cases of accidents and damages.