Condo Ownership Rules In The Philippines

[Ferdzter]

I am not sure where you are getting your information but my husband and I just assisted a friend to make a purchase where the builder financed the unit but in this case since sales are now getting stronger in Cebu again the terms were lowered now to only 3 years with no interest with a 30% down deposit and our friend was given the key to the unit as soon as the papers were signed and he wrote the 36 post dated checks and one check for the 30% down and he can now start occupying it immediately. Possibly not all builders may offer this and we (my husband and I) do not think it is a good idea to buy in a building that has not been completed in case the builder goes bankrupt as I believe was the case of Tower Palace in Cebu which was now taken over by Avalon and is still not completed. In our friends case the purchase was made in Winland Towers in Cebu City, so we can assure you that this scheme is available at least at this development and we have heard of others who offer similar terms. Bank financing is usually not possible for a foreigner so since that is what you are referring to maybe you are correct if that is the scheme, since the banks here probably wish to be extra careful and therefore possibly not allow occupancy but we have not seen the scheme you wrote about in the develpments we looked at.

The scheme I mentioned, you would usually see here in Manila, Pre-selling scheme. But the main idea is, whether it is pre-selling (not yet build) or ready for occupancy condos, the developer/seller demands a downpayment as equity. Downpayment compose only 20-30%.Wherein, if its still on pre-selling stage, the downpayment is spread over months until before the condo is build, whereas if its ready for occupancy, then the buyer will have to pay the downpayment in full.Now for the remaining balance of 70-80%, this can either be bank finance or builder finance.As with your post.I assumed that the condo your friend bought is ready for occupancy. So full downpayment is necessary to be allowed to occupy the condo.30% downpayment (this allows one to get the key)70% balance spread over 36mos or 3years w/o interest payable Post Date Checks. (this is in-house finance or builder financed)Let me know if I got it right.

[Ferdzter]

First the condo rule as I understand it is that 60% of a building has to be owned by Filipinos and no more than 40% can be foreigner owned. The problem usually does not come in to play when a person buys a new condo because most of the units are being sold to Filipino investors who rent them out. The only problem could possibly come into play if a person like myself were to want to sell our units down the road and at that time there happened to already be 40% foreign ownership in our building, then we would be forced to sell only to a Filipino and that would no doubt put them in a bargaining position if they knew about it, but up until that point it is the building owner/developer who is responsible to make sure that no more than 40% get sold to foreigners and not something a buyer has to worry about. In our case our units are in my wife's name first and then mine so while jointly owned they are technology sold to a Filipino since she has dual citizenship and the units are for her future and not for me anyway, so I really did not care. That was my choice and not hers and she forced me to put my name on them in case something happened to her even though I did not wish to because our home in the states is also jointly owned but is my responsibility to take care of, and anything we have in the Philippines is her responsibility to take care of and manage or I would end up on overload since I only have a pea brain and I cannot handle too much stress.I personally do not see that many foreign investors buying up condos and I do see or hear of Filipinos who have bought up blocks of units and are renting them out. There does not seem to be any safe place for a richer Filipino to put their money that will earn them income except buying rentable homes or condos and while land is also a good investment vehicle for their future generations, it does not bring in immediate income while also growing in value which condos usually do for both Filipinos and foreigner investors. The other problem with land is that once it is sold, an investor is back where they started with a bunch of pisos/pesos and no safe place to put it. So to the foreigners, if you wish to buy a condo, only do so full well knowing that if you want to, or have to sell it right away then you will no doubt lose money because the builders can, and does offer terms of up to 5 years interest free with 30% down that you would have a hard time offering and then collecting your money if you leave the country might also be a real problem, so do not buy unless you intend to keep something for a number of years before even thinking about selling it, or just keep it and rent it out and let a reliable rental agent handle it and go about your life or do not buy it at all and rent.

Please refer to the highlightedNot really the case here. (Unless there are builders offering terms of 5years and buyers can occupy the place).Here's why:Downpayments usually signals that the buyer can now occupy the property, unless it is still being built.This means that banks usually loans out 70-80 percent to a buyer and pays the developer that 70-80.Developers/Sellers need to have the DP 20-30% completely paid before occupancy, it serves as their leverage and control of the property. That 5 years interest free 30%DP, means at the end of the 5th year only the buyer can occupy the place. Developers usually have the downpayments spread for as long as it is less than the turnover date. Now if we consider the condo is up and running and a foreigner plans to sell it, he can sell it right away with a motivated buyer w/o fear of competition from the 5years interest free 30%DP.... because whoever buys his unit, means that buyer can occupy that place right there and then, whereas those buyers availing of the DP spread out can't occupy the place until DP is fully paid.Its easy to sell for condos ready for occupancy?1. its ready for occupancy - a lot of buyers are into it.2. after paying the DP, the seller can have the balance bank loan out against the buyer. Banks pays the seller upfront once the buyer is approve. Seller gets the DP as a whole from the buyer, likewise gets paid whole by the bank. The foreigner now can move out of the country completely paid.

I am not sure where you are getting your information but my husband and I just assisted a friend to make a purchase where the builder financed the unit but in this case since sales are now getting stronger in Cebu again the terms were lowered now to only 3 years with no interest with a 30% down deposit and our friend was given the key to the unit as soon as the papers were signed and he wrote the 36 post dated checks and one check for the 30% down and he can now start occupying it immediately. Possibly not all builders may offer this and we (my husband and I) do not think it is a good idea to buy in a building that has not been completed in case the builder goes bankrupt as I believe was the case of Tower Palace in Cebu which was now taken over by Avalon and is still not completed. In our friends case the purchase was made in Winland Towers in Cebu City, so we can assure you that this scheme is available at least at this development and we have heard of others who offer similar terms. Bank financing is usually not possible for a foreigner so since that is what you are referring to maybe you are correct if that is the scheme, since the banks here probably wish to be extra careful and therefore possibly not allow occupancy but we have not seen the scheme you wrote about in the develpments we looked at.

As a rule, it is not really a good idea when buying condo which is not yet built. But there is always an exception to the rule, as they say....and that is to invest on reputable developer whose experience is already proven.Case in point is Ayala... premier developer in the Philippines. Successful projects (Serendra) in Bonifacio Global City in Manila and other projects.This case, if you buy a condo at pre-selling stage, you already earn. You earn when you buy, not when you sell. Why? the property appreciates... in this case Ayala projects appreciates rapidly than any other developers. A lot of investors buy at pre-selling stage.. once the condo is build, 90-100% of units are sold out. Thats when they sell, or they can prolong further.A few developers here in Manila where that is the trend for some investors... Ayala Land, Rockwell Land.Ayala is building the next Makati in Laguna named Nuvali. A lot at pre-selling is costs 9k/sqm 2years ago but the lots now (development can be seen) costs 15k/sqm. When houses can be seen in the area... prices per lot should skyrocket 20k/sqm in probably 5yrs time. This is how Ayala projects appreciates fast in a short period of time. Ayala is somehow synonymous to quality.Just sharing my thoughts.

[Mr Lee]

I am not sure where you are getting your information but my husband and I just assisted a friend to make a purchase where the builder financed the unit but in this case since sales are now getting stronger in Cebu again the terms were lowered now to only 3 years with no interest with a 30% down deposit and our friend was given the key to the unit as soon as the papers were signed and he wrote the 36 post dated checks and one check for the 30% down and he can now start occupying it immediately. Possibly not all builders may offer this and we (my husband and I) do not think it is a good idea to buy in a building that has not been completed in case the builder goes bankrupt as I believe was the case of Tower Palace in Cebu which was now taken over by Avalon and is still not completed. In our friends case the purchase was made in Winland Towers in Cebu City, so we can assure you that this scheme is available at least at this development and we have heard of others who offer similar terms. Bank financing is usually not possible for a foreigner so since that is what you are referring to maybe you are correct if that is the scheme, since the banks here probably wish to be extra careful and therefore possibly not allow occupancy but we have not seen the scheme you wrote about in the develpments we looked at.

The scheme I mentioned, you would usually see here in Manila, Pre-selling scheme. But the main idea is, whether it is pre-selling (not yet build) or ready for occupancy condos, the developer/seller demands a downpayment as equity. Downpayment compose only 20-30%.Wherein, if its still on pre-selling stage, the downpayment is spread over months until before the condo is build, whereas if its ready for occupancy, then the buyer will have to pay the downpayment in full.Now for the remaining balance of 70-80%, this can either be bank finance or builder finance.As with your post.I assumed that the condo your friend bought is ready for occupancy. So full downpayment is necessary to be allowed to occupy the condo.30% downpayment (this allows one to get the key)70% balance spread over 36mos or 3years w/o interest payable Post Date Checks. (this is in-house finance or builder financed)Let me know if I got it right.

Yes this is the correct, this was builder financing. The builder gave my friend his key upon the 30% downpayment check and he was able to begin having his upgrades done and he will make 3 years of no interest payments by him having written post dated checks for the next 36 months and he will not get the title until the last check is cashed in 3 years from now. The main problem that I see with this is that one never knows if they will ever get the title after making their payments, but in this case I made 2 years of payments on a unit we purchased and we got the title after our payments and I know a number of other people who also did the same thing and they got their titles as well. The building we live in is the second of three and the plans are now underway to get govt approval to build the third building so I am fairly confident that my friend will get his title in this building but everything that any of us do in the Philippines of this nature can be a gamble and we can only go with a developers reputation and hope for the best.