Things you need to know about Contract to Sell Vehicle.
Last updated on 14 December 2023
1. What is a Contract to Sell?
A Contract to Sell is an agreement between the seller and buyer for the seller to sell property to the buyer; and the buyer to buy said property.
In a Contract to Sell, the seller can sell the property on an as-is basis (i.e. with no warranties) or with warranties to encourage the buyer to buy. A warranty is a legally enforceable promise that certain facts and representations about the property are true. This means the seller represents a certain fact as true or makes a representation regarding the product. A common warranty is the seller’s promise to repair the product for any manufacturing defects within a period of 1-year from purchase.
On the other hand, a property sold on an as-is basis has no warranties and the buyer is purchasing the property in its present condition, with all its defects either apparent or not.
If you are selling immovable property (e.g. land house) or movable property (e.g. jewelry, painting), use the following Contract to Sell instead:
2. What is the difference between a Contract to Sell and a Deed of Sale?
In a Contract to Sell, the seller retains ownership over the property until the buyer fully pays the purchase price. Once the buyer fully pays the purchase price, the seller delivers the property to the buyer and transfers ownership over the same to the buyer by executing a Deed of Sale.
On the other hand, in a Deed of Sale the buyer acquires ownership over the property after the seller delivers the property to him. The parties execute the Deed of Sale after the conditions stated in the Contract to Sell have been complied with, such as full payment of the purchase price.
3. How can a Contract to Sell protect you?
A Contract to Sell protects both the seller and the buyer. For the buyer, the contract is proof that he bought the property from the seller and owns the same. The buyer can also enforce the warranties in the contract (if any) if there is a defect in the product or problems with the sale in general.
For the seller, the Contract to Sell gives the seller the right to demand the buyer to pay the purchase price. If the buyer refuses to pay, the seller can file a complaint in court to either (a) enforce payment; or (b) cancel the sale, and claim damages from the buyer.
4. What information do you need to create the Contract to Sell?
To create your Contract to Sell you’ll need the following minimum information:
- The type of seller (i.e. individual or business) as well as name and details (i.e. nationality and address)
- The type of buyer (i.e. individual or business) as well as name and details (i.e. nationality and address)
- Brief description of the property to be sold
- Basic terms of the sale (i.e. purchase price, payment terms, warranties)
5. How much is the document?
The document costs PHP 350 for a one-time purchase. Once purchased, you have unlimited use and revisions of this type of document.
You can also avail of Premium subscription at PHP 1,000 and get (a) unlimited use of our growing library of documents (from affidavits to contracts); and (b) unlimited use of our “Ask an Attorney” service, which lets you consult an expert lawyer anytime for any legal concern you have.
