EJS WITH ABSOLUTE SALE

Once upon a time, a buyer stumbled upon a great deal—a lot in a prime subdivision priced 20% below market value.

Upon inquiring, he learned that the owner had passed away and the heirs had yet to transfer the title to their names.

Lacking the funds to settle their father’s estate taxes, the heirs hoped a buyer could advance the payment. Their broker suggested executing an Extra-Judicial Settlement (EJS) with Absolute Sale, a combined transaction that would allow the buyer to acquire the property while facilitating the estate settlement.

Wanting to ensure the deal was secure, the buyer consulted his contacts, who advised that an heirs' bond would provide protection.

Following this advice, the buyer proceeded with the purchase and deducted the estate tax from the heirs’ proceeds as an added safeguard. The heirs got their payment, and the buyer secured the property title—deal done.

However, when he submitted the documents to the BIR, the examiner discovered that the decedent owned multiple properties under the same TIN. Because of this, the examiner refused to process the transfer, requiring that the heirs settle the estate taxes for all properties, not just the one sold.

The buyer immediately informed the heirs, who were willing to help—but they needed additional funds to cover the taxes on the other properties.

Now, the buyer was stuck with a title he couldn’t transfer. Worse, the delay triggered penalties for unpaid taxes, putting him in an even more difficult position.

Lessons to be posted tomorrow.