A “pasalo” property refers to a real estate unit where the original buyer transfers the ownership and financial responsibility of an ongoing mortgage or loan to another party. This is commonly seen in pre-selling condominiums, townhouses, or house-and-lot units where the initial buyer has made down payments but has not yet completed full payment.
The “Pasalo” Concept
“Pasalo” (from the Filipino word for “take over” or “assume”) is a common practice in the Philippine real estate market. It allows an original buyer to transfer their rights and obligations under a Contract to Sell to a new buyer. This can be a convenient way for the original buyer to exit the transaction and for the new buyer to acquire a property without going through the developer directly.
Key Considerations for Pasalo Transactions
Developer’s Consent is Crucial
Most developers have specific policies regarding the transfer of pre-selling units. Some allow the transfer with a transfer fee, while others may prohibit it entirely until the unit is fully paid and the title is issued. Before entering into a pasalo transaction, it is essential to check with the developer and obtain their consent in writing.
The Contract Remains with the Developer
The original buyer entered into a Contract to Sell with the developer. The new buyer is essentially taking over the original buyer’s rights and obligations, not creating a new contract with the developer. This means that the new buyer inherits the original buyer’s payment history, the new buyer must continue the remaining payments, and the developer may require the new buyer to qualify for the remaining balance.
Taxes and Fees
When transferring a preselling condo, expect to pay the following:
- Documentary Stamp Tax (DST) – approximately 1.5% of the transaction value
- Title transfer fees – fees charged by the Registry of Deeds
- Registration fees – fees for registering the transfer
- Notarial fees – fees for notarizing the documents
- Developer transfer fees – fees charged by the developer for approving the transfer
Risk of Cancellation
If the original buyer fails to fulfill their obligations under the Contract to Sell, the developer has the right to cancel the contract. The new buyer assumes this risk. If the developer cancels the contract, the new buyer may lose their investment.
Due Diligence Required
Before assuming a pasalo unit, verify the following:
- The original buyer’s payment history with the developer
- Whether the developer allows the transfer
- The remaining balance and payment schedule
- Any penalties or fees for late payments
- The status of the project (is it still under construction? is it on schedule?)
Is Pasalo a Good Investment?
Advantages of Pasalo:
- Often cheaper than buying directly from the developer
- May include the original buyer’s equity, which can be negotiated
- Can be a way to get into a desirable project that is already sold out
Disadvantages of Pasalo:
- Requires developer approval (which is not guaranteed)
- Higher risk if the developer has issues with the project
- Complex documentation process
- Potential for disputes between the original and new buyer
Important: Always consult a real estate lawyer before entering into a pasalo transaction to ensure your rights are protected and that the transaction is legally sound.
Author
John Paul Ybañez Paquibot
Licensed Real Estate Broker | PRC No. 00014132 | DHSUD No. CVRFO-B-03/18-2672
Bachelors Realty and Brokerage, Inc. Cebu
G/F Cap Building, Brgy. Corner, Osmeña Blvd.
Arlington Pond St. Extension, Cebu City, 6000 Cebu
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