What is a deed of sale and how is it connected to cars?

Feb 03, 2020 | Same topic: Automotive FYIs
Here's a short but useful guide on what a deed of sale and deed of sale for cars. Make sure you get the terms right!

Cars. Be it sedan, hatchback, SUV, truck, MPV, etc., its THE favored means of transport here in the Philippines and especially on urban jungles like Metro Manila, Cebu, and Davao.

Mass public transport, after all, is far from classified as reliable and riding on your very own air-conditioned, cushy vehicle, with all the necessary comfort features beats taking the bus every day. Due to our preference for cars, well car sales, both brand-new and used are at an all-time high. 

A picture of a large car dealership lot

Buying a used car can be a fun but stressful time. But it doesn't have to be stressful

In connection to that though, there are many documents that you should be aware of when buying a 2nd-hand vehicle and MOST especially when selling a car.

There are things like LTO Law Enforcement Clearance, maintenance records, the original OR and CR, insurance papers, the plate number, and of course, there's the deed of sale. 

But what is a deed of sale exactly?

Deed of sale for cars: What are they?

The deed of sale documents proving that you've indeed bought or sold a car. It functions as a record and it's also a useful piece of paper when future problems occur in the future. 

Being a legal document, a deed of sale should be notarized but in terms of the act of writing the thing, then that responsibility falls to the seller of a vehicle.

If it isn't notarized, then it's as good as tissue paper. If you bought or sold a vehicle without a notarized deed of sale of motor vehicle, then that transaction didn't happen. Null and void. Nil. Nada.

a form

Find a trustworthy notary. You'll be thankful to have one's number in your phone. Trust me

>>> Have you known key terms and lingo you need to know as a car buyer?

Deed of sale for cars: What's written on the deed of sale form?

A deed of sale contains relevant information about the item that is being sold, in this case, a car.

As such, no need to mention any other information in the deed of sale car but the car's make (brand) model, color, plate number, body type, chassis number, and engine number should be indicated. 

Also included are details about the seller like his/her name, address, and the price of the vehicle being sold. Likewise, personal information about the buyer should also be included. 

A picture of Itsuki and the Toyota AE85

This prevents cases like when Itsuki thought he was buying an AE86 but in fact it was an 85

>>> Check out 6 things you need to know when having a car broker to buy your car

In general, the deed of sale functions like a report of the transaction, a proof that the indicated object (car) was sold and to whom, and in agreed terms.

The bottom of the article should also be signed both by the seller and the buyer.

Here's a sample of a deed of sale;

deed of sale sample

Here's a deed of sale of motor vehicle sample

Deed of sale for cars: It doesn't transfer ownership

As the heading of this part states, the deed of sale of car doesn't automatically transfer the ownership of the car to the buyer. 

So to transfer a vehicle's ownership, the buyer must head to the nearest Land Transportation Office or LTO as soon as the car is handed over. The then provides a transfer of ownership process which requires these documents;

  1. A clearance from the PNP-HPG
  2. The original OR and CR
  3. The original copy of the deed of sale form
  4. A copy of the car's insurance details
  5. Your Tax Identification Number
  6. An accomplished and approved Motor Vehicle Inspection Report or MVIR

>>> Recommended for you: Complete list of LTO branches in Metro Manila

man driving

The deed of sale of car doesn't automatically transfer the ownership of the car to the buyer

We know its an arduous process and the first documentary requirement does have it's own set of required documents. So click here for a detailed guide on car ownership transfer in the Philippines.

So, you think you're ready to sell/buy that used car you're lusting for? Well, not quite. Because there are more things in connection to the deed of sale you should know about.

Dead of sale: The registered owner rule

As defined by the Land Transportation and Traffic code, the owner is the legal and actual owner of a vehicle whose name appears on the registration papers issued by the Land Transportation Office. 

In connection to that, when a particular car is involved in an accident and the one driving it is some other person, then the sole responsibility falls to the registered owner. 

This rule kind of fixes that situation where vehicles that are involved in injury-causing accidents whose drivers are unidentifiable. On the other side of the coin, it also protects the victims and ensures that they have someone to turn to when asking for damages.

Takumi driving Bunta's Subaru Impreza WRX STI

Just like when Bunta and made his son drive his Subaru Impreza WRX STI

However, if the driver of a vehicle that has been been involved in an accident can be identified, the registered only, in some cases, is still liable because he/she cannot just pass on the blame to the driver of the vehicle.

In addition, if you didn't transfer the ownership of the car you've just brought, it'll only cause more trouble for the registered owner (the seller) if ever you decide to plow through a residential area while drunk. 

Driving a car under the name of a different person implies that he/she trusts you. But in this case, where you're driving a vehicle registered under the name of the seller, then it's just plain irresponsibility on your part.

>>> Make sure you know

deed of sale for cars

This is especially true with the no-contact apprehension policy

This liability even extends to something as simple as parking violations. Why? Well if you didn't transfer the ownership of the vehicle to you (the buyer) then guess whose name is still on the certificate of registration which is one of the first things that a traffic enforcer will ask for when issuing a ticket. 

Also, this is especially true with the no-contact apprehension policy. In most cases, however, car sellers will prioritize a vehicle's transfer of ownership.

2nd-hand car dealerships will even help you in processing the transfer of ownership. Sometimes for free. It that's the case, then don't hesitate to avail of that service.

Deed of sale: Open deed of sale

Now you've probably read this somewhere when browsing for used cars, right? But what does this mean?

Well, it's a deed of sale for car where the name of the buyer and his/her signature are left blank. But this does entail some disadvantages on the side of the seller which we'll talk about in another article. 

A picture of a car salesman

An open deed of sale is one document 2nd-hand car dealerships use a lot

Deed of sale for cars: Conclusion

As a reminder to you guys who're on the brink of buying a car, list down all the documentary requirements needed, including of course the details on the deed of sale of cars.

We get that you're excited but you should be aware of several red flags when it comes to buying used cars. It pays to be keen on details and it's to your advantage to do some research and ask questions.

client transfer

List down all the documentary requirements needed, including of course the details on the car's deed of sale

For more guides like this one, keep reading on Philkotse.com

Author

Cesar G.B. Miguel

Cesar learned how to drive a car years before he got his license. Today, he's still looking for that perfect '90s Japanese coupe to drive into the sunset while listening to Crazy Little Love by Nuage. Also has a thing for badass off-road vehicles and weird engine swaps.