Purchase of Real Property

What are the rules in the purchase of the leased property?

This article of the New Civil Code may be followed in the purchase of a leased property:

Art. 1676. The purchaser of a piece of land which is under a lease that is not recorded in the Registry of Property may terminate the lease, save when there is a stipulation to the contrary in the contract of sale, or when the purchaser knows of the existence of the lease.

If the buyer makes use of this right, the lessee may demand that he be allowed to gather the fruits of the harvest which corresponds to the current agricultural year and that the vendor indemnify him for damages suffered.
If the sale is fictitious, for the purpose of extinguishing the lease, the supposed vendee cannot make use of the right granted in the first paragraph of this article. The sale is presumed to be fictitious if at the time the supposed vendee demands the termination of the lease, the sale is not recorded in the Registry of Property. (1571a)

*As a general rule, the purchaser of thing leased can terminate the lease except if the lease is recorded in Registry of Property, there is stipulation in the contract of sale that purchaser shall respect the lease, the purchaser knows the existence of the lease, the sale is fictitious or the sale is made with right of repurchase.


F.S. DivinaGracia Agro Commercial V. Court of Appeals, G.R. No. L-47350, April 21, 1981

Jurado, D. (1999). Civil Law Reviewer. Quezon City: Rex Printing Company, Inc.

The New Civil Code

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