Barter of Lands: How to Go About It
Can you barter your land for goods and services or another land? Should you?
Members of a barter Facebook Group in Iloilo have recently seen proposals for the exchange of real properties for food items and other consumer products popping up on their News Feeds. Some found them interesting, others thought they were extraordinary. Such an eccentric trade proposal — real properties are commonly sold or leased — called for the question: Is that possible?
Short answer: Yes. But, just like ordinary real property transactions, it’s not simple.
If you are a member of any barter Facebook Group posting such trade proposal, you happen to have the goods that the proponent is looking for, and you are interested in such an exchange, hold your horses and ask yourself: are you willing to jump through hoops?
Goods for goods
Barter — the exchange of goods and services without the use of money — is the earliest system of trade in the Philippines. Filipinos already had healthy trade relations with China, Java, Borneo, Thailand, and other settlements long before Spaniards came to the country in 1521.
Filipinos’ barter trade relations with China in particular date as far back as 7th century AD. The Chinese would exchange China wares, iron, and lead, among others, with condiments, beeswax, betel nut, and pearls from the Philippines.
But in 2018 President Rodrigo Duterte institutionalized regulated barter in Mindanao as he planned to revive the ancient trade in the Philippines in a bid to address the soaring inflation.
Barter … on Facebook
Barter heaped attention from netizens and the media recently when the Iloilo Barter Community, a Facebook Group, was set up in May.
It was thought to be the Ilonggos’ smart way of satisfying their needs and creating a sense of community, with their movement restricted and cash flow impeded, amid the Covid-19 pandemic.
Homemade food, clothing, potted plants, gadgets, and furniture are among common items being bartered. But some go out of their way to trade their bicycle, a whole set of kitchen appliances, signature bags, cars, pieces of land.
Pieces of land. Hmmm.
So, you’re interested. What to do?
Trading real properties for a huge amount of consumer goods or other real properties is not as easy as exchanging potted aloe vera for cans of infant formula.
This transaction requires going over legal paperwork and doing research, visiting government offices, negotiating with owners, and hiring a real estate broker and a lawyer.
In essence, it is just like a normal sale or purchase of land properties.
But, first and foremost, you must lay down your cards. For such trade to be legitimate, there should be no room for deceit or shady intent.
Here are the things you should do for a successful land barter, whether you are offering a piece of land or looking to acquire such property in exchange for whatever valuable:
1. Be fully transparent
When offering a piece of land for barter, you must make sure that real property is yours.
You cannot trade a property of, say, your parents or grandparents just like that, all by yourself — unless you have a Special Power of Attorney authorizing you to offer it up for barter. (Someone representing an owner during a sale or lease agreement would also need an SPA.)
Disclose as much pertinent details as you can: proof of the title, the property’s current monetary value, its area, whether it is still under a bank or Pag-IBIG, the taxes you pay for it, among others. As the one offering, clearly state what you want in exchange: a car, a truckload of rice, a house and lot?
On the other hand, if you express interest in a real property barter offer, be just as specific and clear about your counteroffer.
The key is for both parties to be transparent.
2. Research extensively
Has this been done by others before?
Looking into precedents, or similar transactions, and how they transpired wouldn’t hurt — in fact, it will be beneficial, regardless which side you’re on in the barter trade.
From the looks of it, such a trade is very rare.
“As a broker, I haven’t personally encountered a (real estate) transaction with barter as the mode of exchange,” said Katherina Mayuga-Perez, a real estate broker, lawyer, and friend. “But I had at least two clients years ago who were open to the idea.
“They (the clients) had particular requirements but were not as liquid and [they] were willing to let go of an asset in exchange for their requirements.”
But she told me there is jurisprudence proving the existence of land barter in the 20th century. She said there is “at least one case that reached the Supreme Court: it was around 1963, between brothers, both members of a cultural minority.”
There are conditions covering barter, too. According to Mayuga-Perez, they are the “same conditions for the validity of any contract in general under the Law on Sales.”
“There must be a meeting of the minds between parties having legal capacity to give consent, there must be an object or subject matter of the contract, and consideration for the thing sold,” she said.
“Since barter involves a sale of real property, [the transaction] must also be reduced in writing to be enforceable under the Statute of Frauds (Article 1403 of the Civil Code),” she added.
Now that we’re mentioning laws, here are the ones covering barter in general under the Civil Code of the Philippines:
• Article 1638 to 1641 (Law on Obligations and Contracts)
• Article 1468 and 1638 to 1641 (Law on Sales)
Barter of lands per se may be covered by special laws, Mayuga-Perez said, like the Public Land Act, which carries a provision on conveyances made by illiterate non-Christians.
This is “similar to pertinent provisions of the 1917 Administrative Code of Mindanao and Sulu on agreements relating to real property involving any non-Christian inhabitant,” she said.
Check documents, too:
• Does the land title really exist? (Check the Registry of Deeds.)
• Are its real property taxes updated? (Check with the Bureau of Internal Revenue.)
• Where is the lot plan? (Check this, if possible, to know the shape, frontage, and depth of the property.)
And beyond poring over these documents, check their authenticity.
3. Negotiate
Communicate well: this is important if you want to get the best deal for a piece of land you’re offering up for barter or when trying to acquire such property.
Remember: Any property cannot be fully yours until it has been transferred under your name.
After doing research and validation, and you are 80-percent sure you want to offer a valuable in exchange for such property, make arrangements with the owner.
Say, the offer was 100 sqm of land, and you offer 100 sacks of rice in return. You may provide a portion of your end of the barter (50 sacks) during the process of naming you the new landowner — like a “down payment” — and deliver the rest once the property is fully under your name, complete with the necessary documents.
Execute the appropriate contracts. For a land-goods barter, it’s a Deed of Sale; for land-land, a Deed of Exchange. In addition, discuss the taxes and other fees — talk about who’s going to pay what, and under what terms.
All these are the hoops you’d have to jump through. The land-goods or land-land barter cannot be a “done deal” without all parties involved jumping through these hoops.
4. Consult or hire experts
Too much? Call out for help.
Perhaps, out of dire need, you find yourself considering a land barter, but you don’t have all the knowledge about how it goes or the time to negotiate and strike a deal, or you need advice on whether or not such trade is really what you need.
A real estate broker and a lawyer can help you out.
We at Iloilo Prime Properties listen to your concerns. We do the leg work — researching, visiting offices, negotiating, making arrangements — on your behalf. We work with legal experts to aid you with the contracts you need. We help you decide and get through such transaction.
Learning about lands being offered up for barter in a Facebook Group was such an eye-opening experience for me — the real property landscape is changing, evolving. But one thing has not changed: real properties are valuable assets.
So, should you barter your land for goods and services or another land? It’s not that simple. But there’s help available for you.
References: http://www.bsp.gov.ph/bspnotes/hist_curr.asp https://www.rappler.com/nation/215628-duterte-revives-barter-trade-mindanao-executive-order https://pia.gov.ph/news/articles/1022429 https://lawphil.net/judjuris/juri1988/jun1988/gr_l_39789_1988.html https://www.wipo.int/edocs/lexdocs/laws/en/ph/ph021en.pdf https://www.facebook.com/groups/iloilobartercommunity/