Can foreigners own real estate in the Philippines?
Generally, only Filipinos are allowed by Philippine laws to acquire by
purchase, transfer or assignment any lands in the Philippines. However
Foreigners may be able to acquire properties in the Philippines by any
of the following:
- Lease the Property
-- You can lease public and private land for 25 years with an automatic
renewal for 25 years, (just enough time for return on investments).
This is also a cheap alternative, but it makes it difficult to make any
sort of investment return on a property. However, it is ideal for those
thinking of retiring here. Unlike many countries such as Thailand or
Indonesia, a lease on property for a foreigner is a very easy and
straightforward step to take in the Philippines. This is the easiest,
least time-consuming, and safest way for a foreigner to purchase small
areas of land within the Philippines. It can be done directly with the
owner.
- Through a Filipino Trustee or wife
– Have a Filipino (you can trust) where you can put the title or
ownership of property in his/her name. This is the most common way for
small-scale investors to buy property here.
- Purchase land as a Balikbayan
– The Government of the Philippines has recently passed the Dual
Citizenship Act which gives all former Filipinos the right to purchase
land within the Philippines.
- Buy A Condominium Unit -- You can own 100% of the unit but not more than 40% of the entire condominium project.
- Form a Corporation
– You can form a corporation with Filipino partners with the sharing of
40% foreign - 60% Filipino capital. This is the most iron-clad form of
property ownership for foreign investors, and definitely the preferred
form of property ownership for those thinking of establishing a resort,
or tourism facility. In fact, the majority of existing resorts and
businesses owned by foreigners are using this form of ownership.
- Inherit the land if your Spouse dies:
This simply means, when your Filipina wife dies, you as the compulsory
heir, together with your children if you have any, will become the
legal owners of her property.
Is it safe to buy land in the Philippines?
Yes, the Central Registration of documents ensures that you can buy
with complete confidence. We can provide certified copies of documents
evidencing title to and/or rightful possession over properties. If you
want a certified copy of the title, we charge a small fee.
Can I form my own Land Holding Corporation?
Yes, provided that the foreigner (you) shall own a maximum of 40% and
give away the other 60% to Filipino incorporators.
When I buy a beach, how much of the beach do I own?
The shoreline of the whole Philippines belongs to the government. When
you buy a piece of beachfront lot you have to obtain a “Foreshore
Lease” from the government which shall afford you possession and
control of the beach from the High Tide – to the Low Tide mark as
lessee thereof. This law was promulgated to prevent squatters living on
beaches within the Philippines, and to protect the environment. No
development is allowed on any beach closer than 30 m to the high tide
mark.
What sort of land titles are used in the Philippines?
There are different kinds of evidences of title for lands in the
Philippines. Titles under the Torrens System are absolute proof of
ownership. Tax Declarations are proof of lawful possession and affords
possessory rights under the law.
- Certificate
of Stewardship CSA (Certificate of Stewardship Agreement) - A document
issued by the government to qualified individual occupants pursuant to
Stewardship Agreement (SA). A Stewardship Agreement is a 50-year
contract entered into by and between an individual forest occupant or
forest community association, or cooperative and the government
allowing the former the right to peaceful occupation, possession, and
sustainable management over the designated area. This is awarded by the
State to individuals possessing properties that are in State
Reservations. This certificate is transferable and it can even be used
as loan instrument or collateral.
- Tax Declared -
“Tax Declared” Properties are owned by the State but you have the right
to possess, use, develop and dispose of it. With proper Leasehold
Agreement and/or Land Use Agreement with the Government you can pursue
construction and development of this kind of properties. A Tax
Declaration is granted by the Philippines Government in lieu of
freehold land. This is similar to all lands sold in strategic
waterfront properties in Sydney and Melbourne (Australia), also much of
the land sold in England, particularly London. They cannot be rescinded
by the Government except in (very rare) cases of National Interest. Tax
Declarations cannot be used as loan instruments or collateral. While
Tax Declarations do not provide the absolute security of indefeasible
title provided by a Torrens Title, it is however, the next best thing.
Tax Declarations are universally recognized in Philippine jurisprudence
as evidence of possession.
- Titled – The present
land titling system of the Philippines was instituted just after the
Americans colonized the Philippines in 1898. Act 496, or the “Land
Registration Law of 1903” placed all public and private lands in the
Philippines under the Torrens System. The law is almost a verbatim copy
of the Massachusetts Land Registration Act of 1898, which, in turn,
followed the principles and procedure of the Torrens System of
registration formulated by Sir Robert Torrens who patterned it after
the Merchant Shipping Acts in South Australia.
The
Torrens System requires that the government issues an official
certificate of title attesting to the fact that the person named is the
owner of the property described therein, subject to such liens and
encumbrances as thereon noted or the law warrants or reserves. The
certificate of title is indefeasible and imprescriptible and all claims
to the parcel of land are quieted upon issuance of said certificate.
If I buy a “Tax Declared” property can I get it “Titled or something to make me feel "safer"?
Yes. With the recent lifting of the moratorium on the disposition and
granting of any title, concession, permit or lease on all small islands
nationwide by virtue of Administrative Order No. 2003-06 of the
Department of Environment and Natural Resources, certain islands that
are tax declared can now be titled for as long as they are classified
as alienable and disposable. However, certain types of land may never
be titled.
What are the disadvantages of a Tax Declared vs. Titled property?
Tax Declarations are proof of possession, but they are not deemed as
desirable or 100% secure as a Titled property. That's because there
exists the possibility of disputes of property boundaries and ownership
with tax declarations, especially if the property is not held by a
single owner, but by the “Heirs”. Because of this we extensively
research our Tax Declared properties to ensure they are free of
problems. It would be counter-productive for us to sell properties that
later have troubles when the sale is taking place.
In general it is easier to commercially develop Titled properties than
Tax Declared, but there is very little difference involved and not
having title is no prohibition on development. It is simply that a bit
more process must be completed to commercially develop a Tax Declared
property. However, in the instance of the property being used to locate
a residence there is virtually no difference between the two.
How can I be certain that these properties are legitimate?
Prior to your arrival we can send certified copies of title for any of the properties you inquire about.
Upon your arrival we can arrange you to have a meeting with our lawyer,
and can also take you to an independent lawyer who specializes in real
estate laws of the Philippines. We are registered Real Estate Agents,
certified by the State, and can (if needed) supply contact details of
happy clients who will verify their satisfaction with our service.
In
the event of my death, can the property be transferred to my husband or
children or both, who are all natural born American (or other)
citizens?
Yes. Under Section 7, Article XII of the Philippine Constitution, foreigners can inherit land."
Are there limitations on hereditary succession?
No. There are no limitations on hereditary succession both with respect to citizenship and size of the property.
SEC. 7. "Save in cases of hereditary succession, no private lands shall
be transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain."
What are the terms of the sale?
Financing is available, but not common in the Philippines. The most
common form of payment is 20% deposit and then the balance when the
title is changed over. This payment must be paid in cash, at the time
of the sale. Philippine Pesos or U.S. dollars are accepted. Taxes and
associated closing costs will amount to about 7.5% of reported price of
your property.
