Foreigners Can Protect Their Philippine Real Estate Purchase

[JJReyes]

If married to a Philippine citizen, the foreign spouse cannot be on title. However, the contract should document the process on how the property was acquired as in, "Who paid for it?" In the event of death of the Philippine spouse, the foreigner is given a reasonal amount of time by the Philippine government to dispose of the property and collect the proceeds. Otherwise, the property will pass on to any Philippine heirs and/or relatives of the spouse.

 

In the event there is a split in the relationship, the Philippine spouse takes possession of the land. This is the main concern. The law is silent on who owns the improvements on the property. It can be contractually written that the foreigners paid for and owns what was built requiring the Philippine spouse to pay fair market value. In other words, she can't kick you out and move her new boyfriend in.

 

The other option is a lease agreement with a Filipino landowner for an initial period of up to 50 years, and renewable for another 25 years. Another way is a Philippine corporation to lease the property for an unlimited period of time. This way, the Philippine spouse does not even appear on title. You can sell, barter or trade your ownership in the Philippine corporation.

 

The above is general information. You need to hire a lawyer to help prepare the documentation.

[Genius]

Very useful overview

[Dave Hounddriver]

I would not rely on all that information, JJ.  The reason is that I have seen the practical implications of foreigners who think they can 'protect their Philippine real estate purchase.

 

Foreigners can have their names put on the property title.  The house I live in has that.  But in court that is meaningless.  In event of a death, the title can be contested by heirs the same as any other country.  Fortunately that seldom seems to happen.

 

Foreigners are entitled to half the proceeds in the event of a marriage break up, as in many countries.  But the ex wife is allowed to live in the house until sold (never) and must agree to the price (outrageously high if she is going to agree and a 'price increase' if someone looks like they may come up with the money).  So there is a good chance you will never get anything back from your 'protected Philippine real estate').  BUT, a lot of relationships (more than half perhaps) are great, long term marriages so you never need to contemplate what will happen in the event of property dilemmas.

 

Lease agreements are flawed.  There are too many ways for the filipino landowner to cheat the lessee.

 

In all of these cases it comes down to knowing who you are dealing with and being aware of the possible pitfalls.  Good luck to all who buy property.  Don't assume anything!  Know that a large number of foreign 'property owners' never have problems but it comes down to the people they are dealing with and involved with more than the laws or tricks to get around the laws.

[JJReyes]

I am actually in the process of selling all properties in the Philippines in my name, including the farm which is jointly owned through inheritance. The posting is based on a theoretical question I asked my lawyer in the Philippines via email. This is in the event the potential buyer is a foreign national and they ask me about Philippine real estate law. Anyone can contest land ownership and in a fight no one wins because of the expenses incurred by both sides for legal fees. But as Dave pointed out, you don't have to worry too much because at least 50% of the relationships work out. 

 

As a lessor I can probably find a way to cheat a lessee. But why? And if the lessee fights back, do you want to spend years going back & forth to courthouses? Two years ago, I found a wallet in the Costco parking lot and with the help of their staff, telephoned the rightful owner. (They got the number from computer records about his Costco membership.) He came driving back. I was shocked when he proceeded to count the money in the wallet in our presence and to make sure all the credit cards were still there. It never occurred to me that someone could be that suspicious of his fellow human beings. It's his loss, and I am not referring to the wallet.

[Dave Hounddriver]

The posting is based on a theoretical question I asked my lawyer in the Philippines via email

 

Ahh, that explains it for me.  I have seen more false information coming from Philippine lawyers who think they know how to get around the system than from any normal person.  Interestingly, each lawyer has different advice and yet no one seems to ask:  How can they all be right?  Answer is they are not but lawyers get rich here.

 

Yes, I am negative at times.  I find people who are too 'enthusiastic' in the Philippines tend to wander around looking at how beautiful everything is and fail to notice the hole in the sidewalk that they fall in (just a metaphor folks, but one that actually does happen.)

[Old55]

Philippines has no rules. Not bashing, just sayin.

[Mike S]

Philippines has no rules. Not bashing, just sayin.

 Exactly .... what works for one doesn't necessarily work for another ..... I know someone who is fond of saying ... "the law is the law" ..... well it maybe in some countries but definitely not here in the Philippines ..... not trying to be negative here either but for those that have lived here for any length of time know exactly what I'm talking about .....  even high profile crimes eventually just disappear into the woodwork ..... remember you only have one person presiding over all the different laws and rules .... instead of a jury ..... except for the SC only a single person will be ruling on your case ...... now I know there are many fine and honest judges here in the Phils but as elsewhere there are those who are out to make a quick buck .... or is that peso ..... :hystery:  .... JMHO

:cheersty:

[jon1]

the foreigner is given a reasonal amount of time by the Philippine government to dispose of the property and collect the proceeds.

This would be my biggest concern. What is the definition of "Reasonable"? As a foreigner, if you split up you can write off that property/investment.

 

A friend of mine was married to a filipina for 25 years. They jointly own 3 lots just north of Subic. They recently divorced and she gave him the property. I will bet 500p that he will have to pay someone off to sell the property as her name is on the titles.

 

I agree with Dave. Lawyers are just legal crooks to take your money. There are some honest ones but are hard to find. 

 

The only way to 100% protect yourself is to have the property leased in your name. I have known fellows that buy a lot in their girl's name and as she is signing the purchase paperwork, she also signs a 50 year lease with full development rights to the foreigner. This could work out well for both. The foreigner has a house in his name and can't be kicked out. The only problem is, if he breaks up with the girl, he is now a target as he will be worth more dead than alive to her. A bullet for 5000p will take care of that and she will get a house.

 

As a foreigner in the Philippines, there is very little (if any) justice. You have zero rights...

[JJReyes]

The point I was trying to make is there is an existing legal framework to protect a foreign national's rights in a real estate transaction. I am sure there are horror stories out there, but they might be the exception rather than the norm. If someone believes real estate purchases are problematic, then stick to rental properties.

 

In the illustration I used about the lost wallet, how could the owner even think that the two Costco employees and I would take a few dollars? Yet the gentleman was so suspicious about our motive, which was to return the wallet to its rightful owner, the first thing he did was count the money. If the premise is a wife, her family and other Pilipinos are out there to steal, then go elsewhere.

 

Sure. Other countries are more perfect with better laws and an excellent justice system to enforce the laws. The American justice system is probably the best. Hah! Okay, the American lawyers are better than Philippine lawyers, but who can afford to pay $300 to $400 a hour? I am talking about the cheap ones in Honolulu. The Washington, D.C. and New York lawyers are now charging at the $700 an hour level with senior partners billing at $1,000 an hour.     

Edited June 13, 2013 by JJReyes

[Dave Hounddriver]

The point I was trying to make is there is an existing legal framework to protect a foreign national's rights in a real estate transaction. I

 

I appreciate that you are trying to make that point.  My point is that there is an existing legal framework to DENY foreign nationals any rights to property control or ownership in the Philippines and any attempt to circumvent that is defined in the law as illegal.

 

Now I now you will want sources but you have to realize I have linked to that so many times that it has to be searchable and besides . .  no one listens, everyone thinks they have a way to work around the law, even the lawyers hold that out like a carrot.  For me, the bottom line is that any property a foreigner 'owns' or 'controls' is done so by the good graces of the Philippine citizens he is married to and does business with.  That and a little luck will see you 'owning' the property until you pass on.