Bank Guarantee as payment

Would appreciate your advice on this - a company is interested in acquiring our property in Gen Santos and has proposed to pay P500K cash and the balance covered by a bank guarantee on the balance when we present (to the bank) the title of the property already transferred to the name of the buyer (the bank's client). How can I protect our interests in this transaction, considering I have to execute an absolute deed of sale to transfer the title to the buyers name but have received only P500K in cash? The bank guarantee proforma is letter of assurance of payment of the balance only upon transfer of title to the buyer (the bank's client).

cbotc wrote:Would appreciate your advice on this - a company is interested in acquiring our property in Gen Santos and has proposed to pay P500K cash and the balance covered by a bank guarantee on the balance when we present (to the bank) the title of the property already transferred to the name of the buyer (the bank's client). How can I protect our interests in this transaction, considering I have to execute an absolute deed of sale to transfer the title to the buyers name but have received only P500K in cash? The bank guarantee proforma is letter of assurance of payment of the balance only upon transfer of title to the buyer (the bank's client).

Hi, CBOTC (first FYI: the same procedure is observed at PAG-IBIG). As you stated, the bank guaranty will be paid only upon transfer of title to the buyer that is because it is a condition prior to the release of the amount of the bank guaranty. That is the nature of a bank guaranty, by itself it is your assurance that you will be paid by the bank upon transfer of ownership to the buyer and at the same time, it is also an assurance for the bank that your property has no issue whatsoever.

TiagoMontiero wrote:

cbotc wrote:Would appreciate your advice on this - a company is interested in acquiring our property in Gen Santos and has proposed to pay P500K cash and the balance covered by a bank guarantee on the balance when we present (to the bank) the title of the property already transferred to the name of the buyer (the bank's client). How can I protect our interests in this transaction, considering I have to execute an absolute deed of sale to transfer the title to the buyers name but have received only P500K in cash? The bank guarantee proforma is letter of assurance of payment of the balance only upon transfer of title to the buyer (the bank's client).

Hi, CBOTC (first FYI: the same procedure is observed at PAG-IBIG). As you stated, the bank guaranty will be paid only upon transfer of title to the buyer that is because it is a condition prior to the release of the amount of the bank guaranty. That is the nature of a bank guaranty, by itself it is your assurance that you will be paid by the bank upon transfer of ownership to the buyer and at the same time, it is also an assurance for the bank that your property has no issue whatsoever.

Salamat po Sir TiagoMontiero for your reply. So this is procedure also at PAG-IBIG.

Hi we are planing to buy a property from a bank (Bank A -Vendor) the payment will be in the form of 25% downpayment and balance is a letter of guarantee from (bank B). The bank A is requiring us to sign a deed of conditional sale. Conditions i'm questioning are:
3. That after receipt, evaluation, conformity with and approval by the SELLER of the aforesaid Letter of Guarantee of (Bank B) and compliance by the BUYER and (bank B) with all other requirements of the SELLER and the terms and conditions of its reply to the said Letter of Guarantee, the SELLER shall issue the corresponding Deed of Absolute Sale in order to process the transfer of the registration of the subject property in the name of the BUYER;

4. That taxes such as expanded withholding tax and real estate tax up to March 31, 2011 shall be shouldered by the VENDOR, while documentary stamp tax, transfer fees, registration fees and all other taxes, fees and/or expenses in connection with the sale and transfer of the properties shall be shouldered by the VENDEES.

5. That the BUYERS shall be allowed to take the possession of the Real property upon execution and delivery of this Deed of Conditional Sale and the payment to the SELLER of PESOS: (the downpayment amount) on the purchase price set forth in Section 1 hereof, provided that until the full amount of the purchase price of the subject real property shall have been paid in full, such possession of the BUYERS shall be in the concept of lessees or tenants only.

6. That the BUYERS shall insure at their expense the improvements on the subject property now existing and/or to be built thereon against fire with such insurance company, in such amount and under such terms and conditions acceptable to the SELLER, policies thereof duly endorsed to the latter.

Please advise if these conditions set is fair and makes sense.
The bank guarantee states that the bank will pay the vendor the balance after the vendor has transfered the title to my name.
Thanks

^the terms and conditions of the conditional deed of sale are valid and fair. Dont worry on the bank guarantee as it is a transaction between the seller-bank and the guarantor bank, for the parties protection.