Understanding Contract to Sell vs Deed of Sale in Real Estate Transactions (Philippines)
- DP Law
- Jul 24
- 4 min read
When purchasing real estate in the Philippines—whether it’s a condo unit, house and lot, or vacant land—you’ll likely encounter two key legal documents: the Contract to Sell and the Deed of Sale.
At first glance, these may seem similar. Both relate to the sale of property. But in law, they have very different legal effects and are used at different stages of the transaction. Knowing the difference can help you protect your rights, avoid legal pitfalls, and ensure a smooth title transfer process.
In this guide, we explain the difference between a Contract to Sell vs Deed of Sale, the typical conditions they include, and when each one is properly used in real estate transactions.
What Is a Contract to Sell?
A Contract to Sell is a conditional agreement between a buyer and seller. In this arrangement, the seller agrees to transfer ownership only after the buyer has fulfilled certain obligations—usually full payment of the purchase price.
Key characteristics:
The seller retains ownership of the property until the condition (e.g., full payment) is met.
The buyer does not acquire ownership immediately.
It is commonly used for installment sales, such as in subdivisions, condominiums, or housing projects.
If the buyer fails to pay in full, the seller may cancel the contract, and no title is transferred.
This is not yet a sale in the strict legal sense—it’s a promise to sell, subject to a condition precedent.
Legal basis: Under Article 1475 of the Civil Code, a contract of sale is perfected by agreement on the object and price. A Contract to Sell, however, defers the actual sale until the agreed condition is met.
What Is a Deed of Sale?
A Deed of Absolute Sale (DOAS) is a final and binding contract that transfers ownership of the property from seller to buyer.
Key characteristics:
Ownership is transferred immediately upon signing and notarization.
The buyer has paid the full purchase price, or the contract explicitly waives any remaining condition.
The document is notarized and submitted to the Registry of Deeds to effect the title transfer.
Both the Bureau of Internal Revenue (BIR) and the local Treasurer’s Office will require the notarized DOAS for tax clearance and computation.
Once signed, the Deed of Sale becomes the legal basis for issuing a new title under the buyer’s name.
Legal basis: Governed by the Civil Code and the Property Registration Decree (PD 1529), the Deed of Sale is required for property registration with the RD.
Contract to Sell vs Deed of Sale: What’s the Difference?
Feature | Contract to Sell | Deed of Sale |
Legal Effect | Conditional promise to sell | Outright transfer of ownership |
Ownership Transfer | After full payment or condition fulfillment | Immediate upon signing and notarization |
Installment Terms | Commonly used; ownership deferred | Rare; generally used for lump sum or after full payment |
Buyer’s Obligation | Must pay in full to trigger title transfer | Payment typically already completed |
Seller’s Obligation | Must deliver title only after buyer complies | Must deliver title immediately |
Risk of Cancellation | Yes, if buyer fails to comply | No; completed contract unless challenged in court |
Document Type | Private contract (can be notarized but not registrable on its own) | Public document; registrable with BIR and Registry of Deeds |
Notarization Required | Optional but recommended | Mandatory for registration |
When Should You Use a Contract to Sell?
A Contract to Sell is appropriate in cases such as:
Pag-IBIG or bank-financed purchases
Installment-based sales for subdivisions or condos
Transactions where the buyer needs time to complete payments
When the seller wants to retain legal control of the title until full payment
Developers typically use a reservation agreement followed by a Contract to Sell as part of their structured sales process.
When Should You Use a Deed of Sale?
Use a Deed of Sale when:
The buyer is ready to pay in full
The seller agrees to transfer ownership immediately
The parties want to register the property title with the Registry of Deeds
You want to trigger the computation of Capital Gains Tax, DST, and other documentary requirements with the BIR
This is the document you need when you are ready to formally close the deal and legally take ownership.
Common Mistakes to Avoid
Signing a Deed of Sale before full payment is made, even if the seller promised flexibility. This may create tax obligations and ownership issues.
Failing to notarize the Deed of Sale, making it unenforceable for title registration.
Relying only on a Contract to Sell without a final Deed of Sale, especially in resale transactions.
Not understanding the seller’s warranty—a seller must guarantee that they own the property and that it’s free from encumbrances.
Summary: Contract to Sell vs Deed of Sale
A Contract to Sell is a conditional contract, useful for installment payments or developer-sold properties.
A Deed of Sale is a final and legally binding contract that transfers ownership upon signing and notarization.
Choose the correct document based on the status of payment and your intended legal protection.
Always ensure your contracts are notarized, complete, and reviewed by a legal professional.
Need Help Drafting or Reviewing a Real Estate Contract?
At DPASCUAL Law Office, we assist clients in Muntinlupa, Las Piñas, Cavite, and Laguna with legal guidance on property purchases, including Contract to Sell preparation, Deed of Sale notarization, and title transfer support. We ensure your documents are complete, compliant, and legally sound.
Book your online or onsite consultation today and protect your real estate investment with expert legal help.
Commenti