What Is an Extrajudicial Settlement of Estate?

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This is a guest post from Braulio Giron Jr. of Lamudi Philippines

How to settle real estate inheritance outside courts

A super powered ceremonial wooden gavel with ornate twists – path included

The process of selling real estate is not always cut and dry, especially when the property being sold remains under the name of a deceased owner.

Yet, it continues to occur. Many real properties remain titled to a deceased parent, grandparent, or next of kin. This often occurs when an estate consists of solitary property that the heirs use and/or maintain together, and don’t feel the need to divide and transfer in an official capacity.

The non-transfers eventually prove to be cumbersome, particularly when the heirs finally wish to sell the property or receive their rightful share of an estate. Conventional thinking would suggest settling ownership through judicial proceedings, but the lengthier process can actually be foregone in favor of an extra-judicial settlement of estate instead.

What is an extrajudicial settlement of estate?

“Extrajudicial” means “outside of court”; hence, an extrajudicial settlement of estate means heirs do not need go to court to partition the properties left by a deceased decedent.

It is settling an estate by drafting a contract where the properties are divided among the heirs as they see fit. Enumerated in the contract are the properties left by the deceased, which is collectively recognized as the “estate.”

What are the requirements of an extrajudicial settlement of estate?

An extrajudicial settlement of estate is only possible if the decedent had left no will. In the event that there is one, extrajudicial settlement is only applicable to the properties not addressed in the will. The decedent’s estate must also not have any existing debts. Should there, these must first be satisfactorily paid, with the remainder being what is subject to division among heirs.

Speaking of heirs…

When heirs are not able to reach an agreement on the division of the properties, they are relegated to having to filing a standard action for partition instead.

All heirs must also be of legal age. Should one be a minor, he or she must be duly represented by judicial or legal representative.

Solitary heirs may adjudicate the entire estate to him or herself by means of an affidavit. Called an “Affidavit of Self Adjudication,” this is filed in the Register of Deeds of the locale where the decedent resided.

A group of heirs, on the other hand, must reach an agreement and subsequently divide the estate among themselves by way of a “Deed of Extrajudicial Settlement of Estate and Adjudication of Estate.” This must be signed by all heirs, notarized before a Notary Public, and contain the following information:

  • The decedent left no will and no debt
  • Each heir’s relationship to the decedent
  • That they are the decedent’s only surviving heirs
  • An inventory with individual descriptions of the decedent’s properties, both real and personal, that the heirs have agreed to divide among themselves
  • The exact manner which the properties are to be divided

The heirs then secure a bond from a reputable bonding company recognized by the Register of Deeds, and file it simultaneously with the registration of the notarized “Deed of Extrajudicial Settlement and Adjudication of Estate.”

Upon successful completion of notarized extrajudicial settlement of estate, legal owners can readily put their real estate properties up for sale with minimal difficulties, whether it be featuring it on a real estate listings website, having it attached to a particular broker, or transferring it to its eventual buyer.

About the author


Braulio Giron Jr. is a Content Writer for Lamudi, the Philippines’ largest and fastest growing online real estate platform. Braulio also writes for the blog The Pinoy Fighter, which publishes latest news about the local mixed martial arts scene.

 

Financial Freedom Advocate About the blogger

Louis Delos Angeles is a Certified Public Accountant, blogger behind Investing in Philippines, and author of Investing in Stocks: Preparing for the future small amount at a time. Check him out in Google+ Learn more about Louis and his financial freedom advocacy here.

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6 comments for “What Is an Extrajudicial Settlement of Estate?

  1. Ann
    August 2, 2016 at 6:08 pm

    My father inhereted property from his parents. He passed away without leaving a will. Now my father married twice. In the first family he had three children. And in his second wife he had three children also.

    • August 17, 2016 at 12:49 am

      Hi Ann,

      Thanks for sharing. That is really a very complicated situation. Hope you guys will sort it out.

    • Fred
      October 12, 2016 at 12:24 pm

      Hi Anne,

      My sincerest condolence.

      With or without a will, you can transfer/settle the estate of your late father. For a more detailed discussion of the estate settlement, you can email me at dy_frederick@yahoo.com

  2. Teresa Maligaya
    October 4, 2016 at 12:33 am

    Thank you for the valuable Information, we needed it at this time. Our property is in the name of both our parents but my father just died a year ago, and we are making a decision to sell the only property we have; of course, with the permission of our mother.

    So, do we really need this Extrajudicial settlement even though mother is still alive?

  3. Teresa Maligaya
    October 4, 2016 at 12:42 am

    Thanks for that valuable information. Father died a year ago, while Mom is still alive. The property is in their names, so that leaves my mother, my siblings and me as the survivors/heirs.

    Do we really have to execute this ESE even when one of the owner is still alive?

    We will appreciate it if you would advice us on this.

    God the Father bless!

    • October 21, 2016 at 12:15 am

      Hi Teresa,

      Just a disclaimer: I am not a lawyer and I might be giving the wrong advice. Please seek the advice of a lawyer. In your case I think, since your mother is still alive technically she owns the property now. “Mana” usually can only be given to heirs once the owner passes. Thereby your mother is the owner and I believe she has the sole power to decide what to do with the property. Unless there are issues that might affect how the law views the ownership pof the property that will include what is the property regime when you parents were married(that is Conjugal partnership of gains, Absolute Community, or would it be with Pre-nuptial agreements), if your father has other heirs(could be your half sibling, former wife, etc.), and many other issues that would questions your mothers role as the survivng administrator of the property/owner.

      Not sure if this help but in case better asks a lawyer to enlighten you on this. If you intend to divide it among of you and as the article mention, you can go to ESE as long as the requirements are met.

      Hope this helps Teresa.

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