Assignment of Rights in a Pre-Selling Condo: How Pasalo Property Sales Work

Assignment of rights — locally called “pasalo” — is the Maceda Law-protected right of an installment buyer to sell or transfer an unpaid Contract to Sell to another person before the developer actually cancels it. It is not the same as selling a titled property: what changes hands is the buyer’s contractual position under the Contract to Sell, not a Torrens title, so the process runs through a notarized deed, the developer’s own consent procedure, and — if a bank or Pag-IBIG loan is attached — a separate loan assumption approval from the lender (Republic Act No. 6552, Sec. 5, Supreme Court E-Library). Pasalo is common in Philippine pre-selling condo and subdivision sales, but skipping any of these steps is what turns a routine assignment into a dispute.

Decision Snapshot

• What it is: A transfer of the buyer’s rights and obligations under an existing Contract to Sell to a new buyer, before the unit is fully paid and titled.
• Where the right comes from: Section 5 of Republic Act No. 6552 (the Maceda Law), which covers installment sales of residential real estate, including condominium units.
• The key qualifying detail: The assignment must happen before actual cancellation of the Contract to Sell, and the law requires it be done “by notarial act.”
• The main rule to follow: A notarized Deed of Assignment of Rights (and Obligations), submitted to the developer for written consent and annotation, plus a separate lender-side assumption of mortgage if the unit is bank- or Pag-IBIG-financed.
• Important caveat: The original buyer typically remains liable to the developer or lender until the assignment is formally recognized — a private, unnotarized “pasalo” arrangement does not, by itself, release them.
• Next step: Before paying anything, request a current Statement of Account from the seller (and the lender, if financed) and confirm the project still carries a valid DHSUD Certificate of Registration and License to Sell.

What “Assignment of Rights” (Pasalo) Actually Means

When a buyer signs a Contract to Sell for a pre-selling condo unit or subdivision lot, they do not yet own the property in the way a titled owner does. They hold a personal, contractual right against the developer — the right to eventually receive a Deed of Absolute Sale and a title once the full purchase price is paid, under the terms of Presidential Decree No. 957, the Subdivision and Condominium Buyers’ Protective Decree (PD 957, Official Gazette). That contractual right is itself a transferable asset under the Civil Code’s rules on assignment of credits and other incorporeal rights (Civil Code, Book IV, Title VI, Chapter 8).

“Pasalo” is the market term for exactly this: the current buyer (the assignor) transfers their remaining rights and payment obligations under the Contract to Sell to a new buyer (the assignee), who then continues the amortization schedule and eventually receives the title once the contract is fully paid. It is distinct from a Deed of Absolute Sale, which conveys an already-completed, already-owned property, and from a straight resale of a titled unit, which follows the ordinary property-sale process rather than an assignment of contractual rights.

The Legal Basis: Section 5 of the Maceda Law

Pasalo is not just informal industry practice — it is a statutory right. Republic Act No. 6552, the Realty Installment Buyer Protection Act (commonly called the Maceda Law), governs sales of real estate on installment, including residential condominium units, while excluding industrial lots, commercial buildings, and sales to tenants under agrarian reform laws (RA 6552, Supreme Court E-Library). Section 5 of the law states that the buyer has the right to sell their rights or assign them to another person, or to reinstate the contract by updating the account, at any point during the applicable grace period and before actual cancellation of the contract — and it requires that this be done by notarial act.

This right applies whether the buyer has paid less than two years of installments (governed by Section 4 of the law) or two years or more (governed by Section 3), since Section 5 expressly extends to buyers covered by both sections. In practice, this means a buyer only a few months into a pre-selling condo’s payment schedule has the same statutory right to assign as one who has paid for several years — the difference lies in how much value (equity paid in) there is to transfer, not whether the right exists at all.

Assignment of Rights vs. Deed of Sale vs. Assumption of Mortgage

These three instruments are often confused because all three can be involved in the same pasalo transaction. Here is what each one actually transfers:

In-House Financed vs. Bank- or Pag-IBIG-Financed Pasalo

The process differs sharply depending on how the unit is financed. If the buyer is paying the developer directly under an in-house financing or straight-installment Contract to Sell, a pasalo generally requires only the developer’s consent: the assignee is vetted and substituted as the buyer of record, and future amortizations are billed in their name.

If a bank or Pag-IBIG loan was used to pay the developer in full at turnover (or the buyer took out a loan mid-way through a pre-selling contract), the property is mortgaged to that lender, not the developer. In that case, pasalo requires a separate assumption of mortgage application filed with the bank or Pag-IBIG, which underwrites the new buyer against its own credit criteria before releasing the original borrower from the loan. Until that approval is granted, the original buyer generally remains solidarily liable on the loan even after signing a private pasalo agreement with the new buyer — a risk many assignors overlook.

Step-by-Step: How a Pasalo Assignment Is Typically Done

1. Request a current Statement of Account from the developer (and the lender, if a loan is involved) showing total payments made, remaining balance, and whether the account is in good standing or in arrears.
2. Confirm the Contract to Sell has not lapsed or been cancelled. Under Section 5, the right to assign only exists before actual cancellation — an already-cancelled contract has nothing left to assign.
3. Verify the project’s DHSUD registration. A subdivision or condominium project must carry a valid Certificate of Registration and License to Sell from the Department of Human Settlements and Urban Development under PD 957; this protects the assignee’s eventual right to a title.
4. Negotiate and document the consideration. The assignee typically pays the assignor an amount covering the total equity already paid in, plus or minus a negotiated premium or discount, separate from the remaining balance the assignee will owe the developer or lender.
5. Execute a notarized Deed of Assignment of Rights (and Obligations). RA 6552 requires the assignment be done “by notarial act” to be valid under the law.
6. Submit the deed to the developer for written consent and annotation on its records, together with whatever processing or transfer fee and documentary requirements the developer’s own contract specifies.
7. File a separate assumption of mortgage application with the bank or Pag-IBIG if the unit is financed, since developer consent alone does not transfer a loan obligation held by a different creditor.
8. Confirm the developer has updated its buyer of record and that future billing statements, official receipts, and eventual turnover documents are issued in the assignee’s name.

The Developer Consent Question

A common point of confusion is whether a developer can refuse a pasalo outright. Section 5 gives the buyer a statutory right to assign, but most standard Contract to Sell forms also include a clause requiring the buyer to obtain the developer’s prior written consent before any assignment takes effect against the developer, often coupled with a processing or transfer fee. These two things are not necessarily in conflict: the buyer’s right to sell their rights is protected by law, but the developer’s own contractual requirement to be notified and to recognize a specific, vetted party as the new counterparty to its own contract is a separate, administrative matter — the developer still has to know who it is now dealing with, bill correctly, and eventually deliver title to the right person.

In practice, this means an assignor should not treat a private agreement with a new buyer as the end of the process. Until the developer (and lender, if applicable) formally consents and updates its records, the assignment is not enforceable against them, and the original buyer’s name — and potential liability — can remain on file.

Tax Treatment: What to Confirm Before You Sign

A notarized deed transferring rights over real property is commonly subjected by BIR field offices to documentary stamp tax on conveyances under the National Internal Revenue Code (NIRC provisions on documentary stamp tax, as amended by RA 7660, Supreme Court E-Library), similar in principle to the documentary stamp tax charged on an ordinary deed of sale. However, because what is being assigned is a contractual right rather than a titled property, the tax base (the contract price vs. the amount actually paid to the assignor) and whether any profit the assignor earns on the assignment is treated as taxable income can differ from a standard property sale, and practice can vary between Revenue District Offices. This is not a figure this guide can state with certainty for every case — confirm the specific tax treatment and computation with the RDO that has jurisdiction over the project, or with a tax professional, before executing the deed.

Common Pasalo Risks and Red Flags

• The account is already in arrears or the contract has lapsed. An assignee who pays an assignor without checking the Statement of Account can inherit missed payments or a contract already headed toward cancellation.
• No developer consent was ever obtained. A purely private, unnotarized handshake pasalo gives the assignee no enforceable standing with the developer.
• The project has no valid DHSUD License to Sell, or it lapsed, which weakens the buyer protections the Contract to Sell is supposed to carry under PD 957.
• A bank- or Pag-IBIG-financed loan was never formally assumed, leaving the original borrower solidarily liable for a loan on a unit they no longer control.
• The assignment premium is out of line with the remaining balance, current market value, and how much of the price has actually been paid in — a mismatch worth independently verifying rather than taking the assignor’s word for it.
• No notarized deed at all, which falls short of what Section 5 of RA 6552 requires and leaves the transfer legally exposed.

Worked Example: How a Pasalo Payment Typically Breaks Down

The figures below are a hypothetical illustration only — not a real project, not real pricing, and not tax or investment advice. They exist to show how the numbers typically fit together, not to predict any specific transaction.

• Setup: Buyer A signed a Contract to Sell for a pre-selling unit priced at ₱3,000,000, paying a reservation fee and equity of ₱600,000 plus roughly ₱600,000 in monthly amortizations over two years — a total of ₱1,200,000 paid in, with no bank loan involved (straight developer financing).
• Remaining balance: ₱1,800,000 still owed to the developer under the original payment schedule.
• Pasalo agreement: Buyer B agrees to pay Buyer A ₱1,400,000 — the ₱1,200,000 already paid in, plus a ₱200,000 premium — and to formally assume the remaining ₱1,800,000 balance directly with the developer going forward.
• Buyer B’s total acquisition cost: ₱1,400,000 (paid to Buyer A) + ₱1,800,000 (remaining balance to the developer) = ₱3,200,000, or ₱200,000 more than the original contract price — the premium Buyer A charged for the equity already built up and for skipping the project’s current reservation queue.

This is why an assignee should always compare the total all-in cost of a pasalo (amount paid to the assignor plus the remaining balance owed to the developer or lender) against buying directly from the developer’s current price list, rather than assuming a pasalo is automatically cheaper.

What to Verify Before You Rely on This

• Get a current Statement of Account directly from the developer (and lender, if financed) — not just the assignor’s own summary.
• Confirm the Contract to Sell is active and has not already been subject to a cancellation notice.
• Check the developer’s specific requirements for recognizing an assignment — required documents, processing fee, and turnaround time — since these vary by developer.
• If a loan is involved, confirm with the bank or Pag-IBIG what its assumption of mortgage process requires and how long it takes before the original borrower is released.
• Have the Deed of Assignment reviewed and notarized by a lawyer or notary rather than relying on a generic template, especially for higher-value units.
• Confirm the current tax treatment and computation with the BIR RDO or a tax professional before finalizing consideration, since documentary stamp tax and any income tax exposure can vary by case.

Frequently Asked Questions

Is pasalo legal in the Philippines?

Yes. Section 5 of the Maceda Law (RA 6552) expressly gives buyers of real estate on installment — including residential condominium units — the right to sell or assign their rights to another person before the contract is actually cancelled, provided it is done by notarial act.

Does the developer have to approve a pasalo?

The buyer’s right to assign comes from law, but most Contracts to Sell also require the developer’s written consent, supporting documents, and a processing fee before the developer will recognize the new buyer and bill them directly. Treat this developer-side process as a required step, not an optional courtesy.

Can I do a pasalo if I’ve paid less than two years of installments?

Yes. Section 5 extends the right to assign to buyers covered by both Section 3 (two years or more of installments paid) and Section 4 (less than two years), so the statutory right exists regardless of how long the buyer has been paying.

What if my unit has a Pag-IBIG or bank loan attached?

A pasalo on a financed unit needs a separate assumption of mortgage application with the bank or Pag-IBIG, since the loan and real estate mortgage are held by the lender, not the developer. The developer’s consent alone does not transfer that loan obligation.

What taxes apply to a pasalo transaction?

A notarized deed of assignment is commonly subject to documentary stamp tax, similar in principle to a deed of sale, though the computation for an assignment of contractual rights (rather than a titled property) can differ by case. Confirm the specific treatment with the BIR RDO handling the project or with a tax professional before finalizing the deed.

What happens if the deed of assignment isn’t notarized?

RA 6552 requires the assignment be done by notarial act. An unnotarized, private agreement falls short of that requirement and leaves the assignee without a solid legal basis to assert their rights against the developer or third parties.

Can the original buyer still be held liable after a pasalo?

Often, yes, until the developer or lender formally recognizes the assignee and updates its records. For a financed unit in particular, the original borrower typically remains solidarily liable on the loan until the lender approves the assumption of mortgage and releases them.

How is a pasalo different from buying a resale, titled unit?

A resale of a titled unit is a standard sale governed by a Deed of Absolute Sale, with the seller conveying ownership outright. A pasalo instead assigns an unpaid Contract to Sell, so the assignee takes over remaining payment obligations to the developer or lender and only receives title once those are fully settled.

What to Do Next

If you’re considering taking over someone else’s pre-selling contract, start by asking the current buyer for their latest developer Statement of Account and, if applicable, their loan statement from the bank or Pag-IBIG — then verify both directly with the developer or lender rather than relying on the assignor’s copies. If you’re the one assigning your rights, contact your developer’s accounts or documentation team early to confirm their specific requirements, since processing an assignment can take weeks and should be underway well before you hand over any money. Either way, have the Deed of Assignment of Rights drafted or reviewed by a lawyer or notary, and confirm the applicable documentary stamp tax and any other charges with the BIR RDO or a tax professional before signing.

Figures and legal citations in this article reflect Republic Act No. 6552 (Maceda Law), Presidential Decree No. 957, and related tax references as of September 16, 2026. The hypothetical example uses illustrative numbers only and is not a real transaction, valuation, or tax computation. Developer-specific consent requirements, lender assumption-of-mortgage processes, and BIR tax treatment can vary by project and case — confirm current requirements with the developer, lender, and a licensed lawyer or tax professional before relying on this guide for an actual pasalo transaction.