Introduction
This article serves as a basic introduction to the Authority to Sell, explaining what it is, why it is needed, and the pros and cons of an Exclusive Authority to Sell versus a Non-Exclusive Authority to Sell.
What is an Authority to Sell?
The Authority to Sell, also known as Authority to Offer to Sell or Authority to Negotiate for Sale, is a written approval by an owner/seller for a property to be marketed and sold.
Importance of an Authority to Sell
A written, valid Authority to Sell is crucial for mutual protection of both the owner/seller and the Licensed Real Estate Broker. The Civil Code of the Philippines and the Professional Regulatory Board of Real Estate Service (PRBRES) mandate it.
Legal Basis
Republic Act No. 386 – The Civil Code of the Philippines
- Article 1874: When a piece of land or any interest therein is sold through an agent, the authority must be in writing, or the sale is void.
PRBRES Memorandum – June 19, 2019
- PRBRES issued a memorandum requiring all Licensed Real Estate Brokers to secure a written Authority to Negotiate for Sale or Authority to Sell before selling any property.
Mandatory Compliance
- All licensed Real Estate Brokers must secure written authority from the registered owner(s) or their Attorney-in-Fact before selling property. Failure to comply results in administrative sanctions, including license suspension or revocation after due process.
Components of the Authority to Sell
The Authority to Sell should contain the following:
- Date of Signing: The date when the Authority was signed.
- Property Details: Location, address, title number, land area, floor area, inclusions, selling price, and other pertinent details.
- Responsibility Allocation: Specify who is responsible for notarial fees, taxes payable to the Bureau of Internal Revenue (BIR), transfer tax to the Local Government Unit, title registration cost, etc.
- Broker’s Commission: The Broker’s professional fees or commission.
- Expiry Date: The expiry date of the Authority.
- Hold-Over Clause: Recognizes buyers registered with the owner/seller during the authority period who proceed with a purchase after expiry. Typically granted for six months from the authority’s expiry.
- Seller’s Signature: Proves the granting of authority.
Exclusive vs. Non-Exclusive Authority to Sell
Non-Exclusive Authority to Sell
A Non-Exclusive Authority to Sell is used when a listing is shared with two or more Licensed Real Estate Brokers. This approach is often referred to as a “Listing ng Bayan.”
Pros
- Increased Exposure: More potential eyes on the property.
Cons
- Multiple Brokers: Sellers must deal with many brokers.
- Less Effort and Investment: Brokers may not invest much effort and marketing funds since there is no exclusivity.
Exclusive Authority to Sell
An Exclusive Authority to Sell grants only one Licensed Real Estate Broker the authority to sell the property on an exclusive basis.
Pros
- Single Point of Contact: The owner/seller only needs to talk to one broker, avoiding multiple calls and confusion.
- Broker Network Collaboration: Established brokers often belong to professional organizations and private networking groups that share listings, ensuring wide exposure even with one broker.
- Incentivized Marketing: The broker is incentivized to spend on advertising and promoting the property due to the exclusivity.
- Secure Information Sharing: Exclusivity allows brokers to share property details freely, speeding up the information flow and potentially leading to a faster sale.
Cons
- Risk of Choosing the Wrong Broker: If the selected broker is inappropriate, there’s no assurance that the property will be marketed properly.
Conclusion
Begin the sales process of your property correctly by finding the right Licensed Real Estate Broker, executing an Authority to Sell, and opting for an Exclusive authority. Talk to the broker, ask how they will market your property, and check their background and credentials. This approach ensures a smooth, efficient, and legally sound property sale.
