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Right To Own
Philippine Real Property
Non-Filipinos do not have the right to
acquire real estate properties in the
Philippines. The easiest way for a
foreigner to acquire real estate
properties is to have a Filipino spouse
purchase the property. Having a Filipino
partner is also another alternative when
acquiring a property. Either both share
the property with equal rights, or the
partner owns 51% or more and the
remainder is owned by the foreigner.
Special visas are available for
foreigners who want complete and total
control of a property. (More information
on special visas).
Only Filipino citizens and corporations
(at least 60% Philippine-owned) are
entitled to acquire land in the
Philippines. As an exception to this
rule, a foreign acquisition of a
Philippine real estate is allowed in the
following cases:
* Acquisition before the 1935
constitution.
* Acquisition thru hereditary succession
if the foreign acquire is a legal or
natural heir.
This simply means that when your married
to a Filipino citizen and your
husband/wife dies, you as the natural
heir will become the legal owner of
his/her property. The same is true for
the children. Every natural child
(legitimate or illegitimate) can inherit
the property of his/her Filipino
father/mother even if he/she does not
any Filipino citizenship.
* Purchase of not more than 40% interest
in a condominium project.
* Purchase by a former natural-born
Filipino citizen subject to the
limitations prescribed by law.
* Filipinos who are married to aliens
who retain their Filipino citizenship,
unless by their act or omission they
have renounced their Filipino
citizenship.
Owning of houses or buildings is
possible as long as the foreigner does
not own the land on which the house is
build. The land can be leased by the
foreigner on a long term contract, and
the house can be legally his. (More
information on foreign leasing).
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Special Visas for
Foreigners Allowing 100% Condo and
Townhouse Ownership
Special visas are available to
foreigners that allow complete ownership
and control of Philippine condo and
townhouse units. Qualifications for this
visa are as follows:
* You must be at least 35 years old.
* You should meet the bank deposit
requirements which can be withdrawn at a
later date for your investments.
The processing fee and the amount of the
deposit/investment needed depends on
whether or not you are married to a
Filipino or former Filipino. This allows
you almost all of the investment
privileges of a Filipino citizen. For
specifics on the program, check out the
Philippine Retirement Authority website.
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New Dual Citizenship
Laws Affecting Property Ownership
Dual citizenship means having two
citizenships and passports from two
different countries. Dual citizenship is
now available for the following:
* Former Filipino citizens born in the
Philippines, but have immigrated to
another country and obtained citizenship
of that country.
* A foreign spouse married to a Filipino
citizen.
Dual citizenship allows the citizenship
holder full rights of possession of
Philippine real property. This is a new
law and it is still unclear as to the
procedures involved to implement it.
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Foreigner Married to a
Filipino Citizen
If holding title as an individual, a
typical situation would be that a
foreigner married to a Filipino citizen
would hold title in the Filipino
spouse's name. The foreign spouse's name
cannot be on the Title but can be on the
contract to buy the property. In the
event of death of the Filipino spouse,
the foreign spouse is allowed a
reasonable amount of time to dispose of
the property and collect the proceeds or
the property will pass to any Filipino
heirs and or relatives.
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Foreign Ownership as a
Philippine Corporation
Foreign nationals or corporations may
completely own a condominium or
townhouse. To take ownership of a
private land, residential house and lot,
and commercial building and lot, foreign
nationals or corporations forms a
Philippine corporation. The corporation
is to be 40% foreign-owned (maximum) and
60% Filipino-owned (minimum), and with
at least five [5] incorporators. Upon
incorporation, a main bank account
should be tied to it. A foreign national
may be the sole person in the bank
account, allowing him/her total control
over the funds derived from the
corporation and the income or sale of
the asset or property.
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Former Filipino
Citizens
A former natural-born Filipino citizen,
also known as a "Balikbayan", is entitled to own
a maximum of 1,000 square meters of
residential land and one hectare of
agricultural or farm land. For business
purposes, a maximum of 5,000 square
meters of urban land or three hectares
of rural land is allowed. In the case of
married couples, one or both of them may
avail of the privilege provided that if
both avail, the total area acquired
shall not exceed the maximum.
In the case of a transferee already
owning an urban or rural land for
business or other purposes, he/she shall
still be entitled to be a transferee
provided that when added to those
already owned by him/her shall not
exceed the maximum.
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Foreign Leasing of
Philippine Real Estate Property
A foreign national and or corporation
may enter into a lease agreement with
Filipino landowners for an initial
period of up to 50 years, and renewable
for another 25 years.
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Taking Title to
Philippine Real Estate
The "Deed of Sale" is the document
showing legal transfer of real estate
property ownership. The deed of sale is
then taken to the Registry of Deeds to
be officially recorded. "Tax
Declarations" are sometimes used but are
not very enforceable in court because
there may be many others with a tax
declaration claiming ownership to the
same property. A property may be Titled
by taking the Tax Declaration to the
Registry of Deeds to process to be
officially titled. Always purchase
property with a proper deed of sale if
possible, and if there is not one, a tax
declaration is your last choice. Owners
must be active in enforcing their
property rights. Possession is 90
percent ownership. If the property owner
can only show a tax declaration as an
evidence of ownership, that means the
land is untitled and not registered
under the Torrens system, the buyer will
not get as much protection, as his title
will not be absolute and can yield to
one who has a better right, like the
person actually possessing and occupying
or tilling the land, and who
subsequently applies for the titling of
the land in his name. It is possible for
two or more tax declarations issued to
different persons with exactly the same
technical description, or referring to
the same property.
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Philippine Law Real
Estate Acquisition and Disposition
Definitions
Acquisition is the act of procuring
or getting a hold of real estate
property. Disposition is the manner of
alienation, transfer of possession and
ownership thereof as prescribed by the
Philippine law. The acquisition and
disposition of real estate is embodied
in written agreements or contracts
voluntarily entered into and subscribed
by the selling and buying parties
thereof, before a public officer
designated as the Notary Public of the
City or Province where the subject
property is located. Thereafter, the
instrument embodying the particular real
estate transaction is required by law to
be recorded in the Registry of Deeds in
the City or Province where the real
estate property
is involved and located. The Philippines
uses the "Torrens" system of real estate
ownership. See below for more
information.
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Torrens System of
Real Estate Ownership
An adapted form of the "Torrens"
system of land registration is used in
the
Philippines. The system was adapted to
assure a buyer that if he buys a land
covered by an Original Certificate of
Title (OCT) or the more familiar
Transfer Certificate of Title (TCT)
issued by the Registry of Deeds, the
same will be absolute, indefeasible and
imprescriptibly. The registered owner
will never lose his ownership to
squatters no matter how long such land
was illegally occupied.
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Condominium
Residential Commercial Development
Ownership Law
Presidential Decree No. 957, which
regulates the sale of subdivision and
condominium developments, and providing
penalties for violations thereof. The
National Housing Authority has exclusive
jurisdiction to regulate real estate
trade and business, a function, which is
presently exercised by the Housing and
Land Use Regulatory Board (HLURB).
Certain conditions are required before a
license to sell condominium development
units and or subdivision development
lots and homes is issued to a Filipino
or foreign-owned individual or
corporation. The requirements include a
certificate of registration, a
performance bond, and an approval of the
building plans and specifications.
Violation of these rules could mean
fines, cancellation of license and or
imprisonment.
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Typical Transaction
Costs - Purchases from Individuals
* Capital gains tax - 6% of actual
sale price. This is paid by the seller.
But, in
some cases, it might be expected that the
buyer pays. This percentage could differ
if the property assessed is being used
by a business or is a title- owned by a
corporation, in this case the percentage
is 7.5%
* Document stamp tax - 1.5% of the
actual sale price. This is paid by the
seller. But, in some cases, it might be expected
that the buyer pays.
* Transfer tax - 0.5% of the actual
sale price.
* Registration fee - 0.25% of the
actual sale price.
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Typical Transaction
Costs - Purchases from Developers
* Capital gains tax - 10% of actual
sale price. This value might be
expressed as part of the sale price.
* Document stamp tax - 1.5% of the
actual sale price.
* Transfer tax - 0.5% of the actual
sale price.
* Registration fee - 0.25% of the
actual sale price.
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