Real Estate for Foreign Nationals of Filipino Citizens
Documentary Changes to Deeds of Sale for Foreign nationals who jointly purchase real easte with Filipino Citizens
Bob mentioned recently some really good news about visa issues, I just wanted to tell you about something I saw recently, I was only just made aware of this, the documents for our land title have recently been completed, and before my wife signed them, We went to see our attorney to go through the documentation, she explained to me, that there had been some slight changes to title documentation when the property was being purchased by a Filipino Citizen and a Foreign national, changes which i think the authorities in the Philippines are trying their level best to help Foreign nationals.
As we all know Foreign nationals may not actually own land, but if you read the small print, it appears to me the Filipino authorities are going out of their way to accomodate Foreign nationals, this is really pleasing, and I take my hat off to the Filipino authorities for at least trying to make it more palatable for foreign nationals to own land.
On the title document it reads something like this
xxxxx (name) a Filipino citizen married to xxxxxxx (name) a Citizen of xxxxxxx agree to purchase xxxxxx house and lot etc for xxxxx price.
Signed xxxxxxx Filipino Citizen.
Signedxxxxxxxx with my marital consent.
intersting new phrase isnt it ? with my marital consent, the attorney told us, that the Filipino authorities are well aware of ownership problems should any Foreign spouse survive their Filipino citizen partner, in that case, they wanted to ensure that the property is considered conjugal property even if one party to the agreemen is not entitled to own land.
She also told us, that although the constitution of the Philippines forbids the ownership of land by non-filipinos, it means that the rights of the spouse in matters of conjugal property are respected, thats the one thing i love and respect about the Philippines, the judicial and legal system actually works, and the supreme court of the Philippines has absolute jurisdiction over all such matters.
So in conclusion, I was happy to sign the transfer of title, to be honest I felt a part of it, things are heading in the right direction now, I hope I am not asking for too much, maybe in the future, the congress of the Philippines will seek to amend the constitution to allow spouses of Filipino citizens to actually be joint purchasers, but to be truthful on inspecting the document, it kind of looked as though everyone connected with real estate purchase is trying to make it look that way as best they can, well done the Philippines.
Pete, that does sound good, and I’m glad to here it. However I don’t think that the Philippines will ever go so far as to let us foreigners really own land there out right.
The reason I say this (and I hope nobody takes this wrong, but……) I was stationed in Japan (and I loved being there) there are quite a few filipinas married to Japanese and compared to the filippinos they are very well off (and I’m sure there are other countries also well off). It’s easy to see that a filipina and japanese couple could buy a lot of land and then the japanese man (at not fault of his own) could end up owning a lot philippine land, islands, or area and if it were large enough it could foreseeably cause problems.
I’m not sure but I think we did the same thing in Haiwaii, so that someone very wealthy wouldn’t just outright buy their own lsland and make their own state or country. You lease land there, not outright buy it like you do on the mainland.
It is a good thing that they are doing, but I wouldn’t expect it to go much or any further than that.
Hello Ed, yes I think you have been spot on with your comments, its unlikely the Philippine authorities will go any further than they have but I am impressed with the lengths they are going to to accomodate foreign nationals, of course they have a right to be worried, if foreign nationals were allowed to own lands, they would simply buy lots of it and start a inflationary price war.
Hi Pete
Nice blog. I look forward to maybe meeting you this December
All the best
Malcolm
The problem: the Philippines is poor and would be better off from greater foreign investment and development, but foreign ownership might “price” Filipinos out of being able to own their own country. What to do?
Mexico has had the same problem. Their constitution forbids foreign ownership within 50km of any coast, 100km from any border. What have they done to solve the problem? Answer: a special Real Estate Trust called “fideicomiso” invented about ten years ago.
The fideicomiso has allowed Mexico to retain ownership of its land while allowing foreigners the ability to bring their money and get the land developed and protect their property rights. Win/win. With both sides protected, development takes off and the local people climb the ladder of prosperity.
If a region can attract 1000 foreigners per year, and they stay and bring in $25,000 per year from the outside that they spend there, after 15 years they would be spending $375,000,000.00 per year in that region. If that money circulated through the local economy 3 times per year, that would be more than a billion dollars in additional wealth in the hands of the local people PER YEAR. And that doesn’t count any of the money spent on on acquiring the land or its development/construction.
I don’t think this will happen in the Philippines though.
The foreign spouse should always have his(her) name upon the need. This has bee common practice for years. The current (1987) Constitution provides for the husband to inherit the land if his9her) wife should predecease. I’m not clear what new the “the authorites” are doing, except following the exisitng law (which is of course a good thing)
Senator Dick Gordon introduced a bill more than a year ago to allow foreign nationals to purchase limited land, such as a lot for a personal home, a hectare ot two for a family subsistence farm. It has gone nowhere and Gordon is about the only congressman or senator who I have seen show any interest in this issue.
The problem … and the reason Kevin’s excellent analysis menas nothing is … the existing law is strongly supported byt the 6 or so “ruling families” who are rish mainly because of their land ownership. The Philippines is certainly _not_ a poor country to Mike Aroyyo, Lucis Tan, et al.
If one wants to build a multi-million dollar beach resort land is no problem … check out the many investment programs which do allow foreign-controlled corporations to control land …. and these sorts of deals are announced frequently … there’s a lot of foreign investment in the Philippines … China building railroads and expressways, South Korea building a hige shipyard in Subic, etc. But not much visible at our level.
And the the second-last sentence in Kevin’s comment seals the fate of the idea … the ruling families do _not_ want control of billions of dollars in local hands and they are going to fight iniatives to make it happen … it’s the way things are.
i’m sorry no. They will do there own thing sorry
Hi Dave,
I agree with you. Filipinos have a saint-like ability to endure hardships and mistreatment. The man on the street talks about “colonial mentality” but just accepts it as his lot in life. Back room deals between the country’s “royalty” and the legislators to ensure that they prop up each other to continue the status quo is something that will probably continue.
Pete,
interesting, my wif eis a filipina and we plan on retiring there early in a few years ( from USA) I have been inthe property investment biz for 18 yrs and woul dlike to build a small apartment building there , mostly to keep me occupied a few hours a week, it had not occured to me the implications if my wife passed away before I . What in your opinion woul d happen to my investment if such a thing occured ( I also have a 8 yr old daughter ).
Hi Brian, well in my humble opinion, you would have nothing to worry about, if you did build something in your wifes name, it would be termed conjugal property therefore the property would automatically pass to you on her death, and also of course your daughter is born to a Filipino citizen so you are protected both ways, in any event the property would pass to your daughter, my understanding is that the property would be classed as conjugal and therefore be yours, Im not quite sure what the position is about having certain time to sell the property and recover the proceeds, I couldnt seem to get a straight answer to this question when I asked the attorney, she seemed vague about it, saying “Oh dont worry about that’ ” it might in law but it wont happen in practice” not reassuring I agree, but it seems they dont push the hard and fast law, in other words, she gave me the impression, again I say the impression that it would not be enforced.
Hardly a satisfactory answer I agree…but the best I could get at the time and not wishing to labour the point and my wife pulling me out of the attorneys office cos she wants to go shopping, I hope someone might have clarification on it.
understand Pete, thanks for the response.
Unrelated issue, but have you all noticed the exchange rates shot up in the last few days from 45.2 to 46.7 today? That’s 3%. That means our assets went up 3%. I hope this is mostly to do with foreign remittance from U.S. to Philippines starting to dry up. Did you know that U.S. remittance to Mexico dropped 30% over 1 year period, mainly due to the real estate construction industry in the U.S. tanking? Philippines is possibly similar to U.S./Mexico situation in terms of OFW. And OFWs have been sending money to Phil to buy much hyped real estate developments (notice all the empty lots in all the subdivisions. They are all sold, but is not being developed because the lots are mostly purchased for investment purposes only, mainly by OFWs). With the bursting of easy credit/subprime thingy in the U.S., it could infect Philippines exactly the same way (more so than U.S., because in Phil, the terms are just so ridiculous as ALL morgage terms are subprime, it’s so easy to walk away from without losing much money, and it doesn’t affect your credit rating whatsoever!). If this is reflected in U.S. remittance to Philippines, we, the foreigners living here, should be able to enjoy 50p+ exchange rates once again! Not only that, it should be coupled with the bursting of real estate prices, which means we can rent/buy our lots and houses on the cheap! Oh, how I wish and hope!
Sorry filipinos, but being selfish is totally biologically natural.
Hi Jae I really enjoyed reading your post, i noted currently the dollar is trading at 46.28 naturally any currency fluctuation in favour of the dollar is going to be welcomed by those living in Philippines who rely on the dollar remittances, the sterling is trading at 91.72 which is slightly down on last few days, we would have preferred 94.50 or 94, anything above 95 is a bonus, I have seen rates of as much as 105, but not recently.
I tend to work on a sterling buy price of P90.00 to £1.00 it seems to make currency conversions easier when buying anything, that way if the mid market rate is higher, then its always looking at it from a slightly lower prospective, in the UK foreign remittances account or £10 Million a day, in the Philippines inward remittances is expected to rise to 8 Billion Dollars in 2008, wow thats some remittances, so much so, that the Banko central ng Pilipinas relies on these remitances in balancing the economy, so as you say Jae, what happens in the U.S. markets affects the Philippines big time.
I can go along with what you said, I noticed so many sub divisions that have no houses on, I always remark to my wife, “Where are all the houses ?” there was paticular sub division with the most immaculate gate house, lovely roads, lots of lots beautifully cut down and maintained and rather oddly looking 1 house on the whole sub division.
My wife sort of confirmed what you said Jae, she said, most of the lots will be sold to OFW’s who buy them for investment purposes, have no real intention of building houses on the land, they are hoping that at some stage in the future, they can sell, pawn or rent out the land for some other purpose.
Interestingly enough Jae, I noted the Philippine bank mortgage rates last month, boy they are definately sub prime rates, 10 to 11 per cent, and savings rates appear to be lower than other countries, with the sub prime market in the U.S.A. suffering somewhat at present, there will naturally be a huge nock on effect, and even here in the UK we are seeing some of that now.
What happens in the worlds largest market place always affects and has nock on fall outs to other countries, none more so than the Philippines, if OFW’s in the USA are struggling with their mortgage repayments, then there remittances will also suffer, its a never ending cycle, of course in time it will pass, it just seems like a crisis at the time.
Thanks Jae for a great post.
Hi Pete,
Stumbled upon your web site by accident during some related google searches. Great site!
I am in a similar situation being married to a Filipina and recently completed the sale of house + lot. All the advice offered on your site regarding foreign spouses has been very valuable.
Throughout your blogs there has been no mention of any legal waivers that you were requested to sign during the purchase of your home. The lawyer from the real estate company has request me to sign a document which states that I agree that I have no legal claims to the ownership of the property and that the house+lot were purchased using only the funds of my spouse. I am a little concerned about this document as I’ve not read about this requirement on your site or any other sites which deal with Philippine property ownership.
I would be grateful if you or any of the other readers here could provide some insight into the legalities of this document and whether this is a mandatory requirement.
Ed.
Hi Ed, if you are referring to this blog, Bob is the host, your probably referring to my own website, Im glad you found the real estate chapter quite helpful, I havent heard of this legal waiver, and I would not sign such a document if it were pushed in front of me, that document is probably not part of Fiilipino legislation, be wary, it may be a rouse to induce you to give up any conjugal rights to your property, and anyway, why would they stick a document in front of you asking you to sign away a condition that states ” The funds were totally provided by my spouse” under the Philipine Family code, check your rights about conjugal property, on my house and lot sale, I was not asked to sign such a waiver, and the said purchase was with my marital consent.
Its my understanding that the property whilst not being owned under Philippine law by yourself, that is the rights to land ownership, the house and lot are still technically conjugal property under the laws of the Philippins regarding matrimonial matters, I dont like the sound of this document you have been asked to sign, my advice to you, is to go back to this lawyer and ask for a precedent or the relevant form of Philippine law showing you why this is required, if they cannot produce it, then tell them it is not valid or legal, then you will see how whether it is ?
I have never heard anyone having to sign such a waiver, it sounds to me like you are being induced into signing away your marital rights in the Philippines, another point of good advice for you, I am suprised you are allowing a lawyer from the real estate company to act for you, this is not in your interests as a buyer, you must remember that the lawyer who acts for the real estate company is not there to act in your best interests, he or she represents them.
My advice to you is to appoint your own lawyer, to handle matters on your behalf, if you pay them, they will act in your best interests and not the real estate company, a word of warning also:
Many times foreigners have been tricked into signing documents which have no basis under Philippine law, such as the Escalation clause in real estate contracts, the Escalation clause is often used by real estate developers to extort money out of buyers when the pesos is doing badly against the dollar, if you read the Supreme Court rulings on cases involving this clause, you will find the Supreme court has ruled several times against developers who do this.
Some waivers such as the waiver you are being asked to sign, may be used against you in the future, if you admit its use into your contract of sale, it may not have a mandatory basis under philippine law, but should you sign it, it may prove difficult for you to exercise your right to conjugal property, in other words your house and lot, you are paying for ( I presume you are paying for it) may not be counted as a marital asset should your marriage for any reason terminate.
Don’t rush into this, take your time, get your own lawyer, and get this waiver checked out, best wishes Ed.
PETE
Hi Pete,
Thanks for the advice. I will be getting my own lawyer onto the case now.
Ed.
Always the best way Ed, good luck with it, and come back to us with your own lawyers legal advice on this, I am sure other foreigners in your position would like to know what you find out, including myself.
Pete,
My wife and I are in the process of purchasing land in the Philippines (Batangas) and I find this thread very interesting and relevant. Her father gave us one lot and we have made the handshake deals on two adjacent lots. What remains on one is for the seller to get the title cleared, after that to get the paperwork in order and the deals done. I have a great many questions. If you have a website that really helps with this process I’d be thrilled. Otherwise I am going to ask lots of naive questions
I am especially interested in the language for conjugal rights in contracts, deeds etc…since I cannot directly purchase land there.
Hello Mike, its nice to be of help on this one, have a read of my real estate guide, thats a good starting point its at http://www.british-filipino.com/realestate.html and as far as community property is concerned fire away.
Hello Gentlemen,
I am a Filipina married to a German national.
We are presently based in Germany.
But we intend to retire soon in sunny Davao too.
On the issue of ownership of real estate in the Philippines, please be assured that if you are legally married to your Filipina spouse, and you bought real properties in the Philippines, this is automatically considered as community property under Philippine civil law.
This means, all properties that the other spouse owns, regardless of whose funds paid for it, is considered jointly owned by the married partners.
That is the legal truth. But enforcing the law can be expensive and
cumbersome. It is best to be forearmed with the right instruments.
In the real world, the operational situation can be different.
The marriage can sometimes go wrong and things can be far from civil.
The Filipina spouse whose name is on the property´s Certificate Title may be at an advantage. Or, what happens if the Filipina spouse dies and there are other kids from a previous marriage considered compulsory heirs, or, even if there are no children involved, perhaps, she has “less than honorable parents” who by law are also considered ascendant heirs of the Filipina spouse under Philippine law of succession. These potential situations can put you as the foreign husband who cannot own land directly at a possible disadvantage.
I deeply love my husband and I believe we both will honor our “till death do us part vow”. And I am certain that my parents and siblings are honest and decent people and they really love my dear husband like family.
However, in my more than four decades of existence, I have seen a lot of less than ideal situations happening to be pragmatic, and to discuss these openly with my husband when we jointly bought our future retirement land in Davao. To protect him and to be fair to him, I thus prepared the following:
1.) A written Joint Agreement which we mutally agreed and signed, detailing what we are to do about the property should certain situations and conditions arise. We will have this notarized later by a Philippine notary.
2.) A notarized Power of Attorney in his favor in the event I am fully incapacitated or is deceased to sell the subject property and receive all its payments, or dispose of it in any form or manner.
3.) Since, we do not have any child, each of us is specifically made the heir to this Philippine property in our holographic will to prevent any potential unwarranted claims from other relatives or heirs.
With the spadework done, let us focus on living the good and happy life in my dear country, the Philippines!
Cheers,
IMEE