• Buyer of land with adverse claim is bound by such encumbrance, caveat emptor

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    dearpao

    Dear PAO,
    I have a question regarding the lot and rest house that I wish to purchase. The title has an annotation of an adverse claim of the grandchildren of the owner of the property. The wife of the owner is the one who is selling the property to me. Her name also appears in the title. Will I have a problem if I buy the land?
    Mario

    Dear Mario,
    An annotation of adverse claim in a certificate of title signifies that another person has a claim or interest in the registered land which is adverse to the registered owner arising subsequent to date of original registration (Section 70 of Presidential Decree [P.D.] No. 1529 otherwise known as the Property Registration Decree). The said annotation is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act, and serves as a notice and warning to third parties dealing with this property that someone is claiming an interest on the same or a better right than the registered owner. Thus, one who buys a registered land with an annotation of adverse claim shall be bound by said encumbrance (Gardner v. CA, 131 SCRA 585 [1984]). The property may still be sold even with the presence of an adverse claim. The sale would be valid and the property may be registered under the name of the new owner. However, the owner is bound and is obliged to respect the adverse claim until the same is cancelled. Under Section 70 of P.D. No. 1529, adverse claim shall be effective for a period of thirty (30) days from the date of registration, after which it may be cancelled through the filing of a verified petition. On the other hand, the claimant who caused the annotation of adverse claim may file for an appropriate case in court to prove ownership of the registered land or part thereof. In the said case, the parties may cause the filling of notice of lis pendens, which constitute a constructive notice to any purchaser or vendee of a lien upon the real property in litigation or that the registered property is the subject of a pending court case.

    In your case, your may buy the lot and the rest house, which title has an annotation of adverse claim. However, buying the land may put you in a difficult situation because of the possibility of being a party-defendant in a case which may be initiated by the same person who caused the annotation respecting their claim to the land. If you really want to buy the property, it is suggested that you speak with the registered owner/s or all his/their heirs in case one of them is already dead for the cancellation of the adverse claim and/or to settle their differences regarding their respective claims before entering into sale.

    Please be reminded that the above legal opinion is solely based on our appreciation of the problem that you have stated. The opinion may vary when other facts are stated.

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    1 Comment

    1. Dear PAO,

      I’m planning to buy a house & lot with an annotation of adverse claim. The claimant is the creditor where the creditor & debtor had executed a real estate mortgage notarized which was not annotated at the back of title instead the creditor annotated the adverse claim. how can this affect the sale? can the adverse claim be cancelled only thru court hearing?or is it also acceptable to execute an affidavit or just like cancellation of mortgage? thank you very much.