It’s pretty common knowledge. at least among the readers here of LiP (they do tend to be of well established intelligence and awareness) that foreigners are NOT allowed to buy property (that is land) here in the Philippines.
This does tend to irritate many among the foreigner community, and of course, it’s easy to see why. The laws in the two countries are completely different. For example, a Filipino can come to the USA and buy any piece of property he or she desires … no issue at all.
But the current law of the Philippines, the 1987 Philippine Constitution (also known as the “Cory” constitution specifically restricts any “non-natural born” Filipinos from own property (land). Foreigners can buy property in the legal form of a condominium (that is where the land under a dwelling unit or units is owned by a Philippine corporation (at least 60% Filipino owned, but the foreigner can not own the land itself.
This little fact of life has probably caused as much whining. dissent, outright anger and schemes to defy the law itself as any three aspects of living in the Philippines, bar none.
Foreigners try to openly defy the law by any number of ill-advised schemes. Most common that I have seen are:
- Dummy Corporations: That is the foreigner will pay Filipinos to set up a corporation (the foreigner can legally own up to 40% of that corporation), and the corporation will take title to the land, supposedly letting the foreigner occupy the land happily. Of course, setting up a dummy corporation in itself is a serious breach of the law and even if that little detail can be overcome, the Filipino members of the corporation still own at least 60% … and last time I checked, 60% outvotes 40% every time.
- Another really popular scheme is to get a girlfriend or other close acquaintance to secretly take the foreigner’s money and then buy the land in a regular real estate transaction, the foreigner’s name appearing no where in the documentation. I really shouldn’t have to say how risky and unsound this seems to me, but a lot of foreigners line up, year after year to put their money into such schemes. Not recommended.
- The last “trick” I ant to mention today is an old, old scam and troublesome area of the law here … the Open Title gambit. Thousands and thousands of Filipino citizens themselves fall into variations of this film-flam themselves every year, so little wonder than many of us foreigners do as well.
I know in advance a lot of people won’t care for this article. They have this idea that they, somehow, are not going to have to subject themselves to following the laws of the Philippines and they often get really annoyed when some “upstart foreigner” reminds them that the law is the law … or in more flowery language … dura lex sed lex … my free, non legal practitioner’s definition of that is, “The law Is Hard But It Is The Law.”
I can sum up my personal opinion of the foreigners (and Filipinos as well) who fall into the “Open Title” scams in a way my daddy would have described it.
There are basically three ways men learn how to get through life:
- Some men learn by reading and studying what others have written.
- Some men learn by carefully observing and copying what experts do.
- The rest? Well they just have to learn for themselves by pissing on the electric fence until they figure it out.
How Do “Open Title” Scams Work?
Basically it’s quite simple. A person looking to make a fast buck notices some land .. often building lots in desirable subdivisions , prime units in retail areas and such. The scam artist then makes representation that he or she either owns the property or is a licensed real estate agent, offering the property up for sale. Often the asking price is way lower than one would think the asking price should be … a real “steal of a deal” and who can miss out on that, eh?
Then, just as if you and the scam artist were ‘fated” to meet, you just happen to get together and then the story unfolds.
There’s sickness in the family, someone has to go off to college in the USA, something is happening in the owner’s life that puts the owner “over a a barrel” so to speak. There he or she is, a great big fat tuna, in distress, just waiting for a foreigner “sushi chef” to come along and carve out the prime “belly” cuts really cheap. A deal too good to pass up.
And then the scam artists springs the best part of the “velvet trap” scheme.
When you buy property in the Philippines there are a number of taxes and transfer fees that have to get paid. Often this adds up to quite a bit, can easily come up to 12%, 15% or more of the purchase price.
But Guess What?
Your new-found friend has a great solution for you. 0% tax, zero paperwork at all, transfer can take place as early as tomorrow, or next week, or whenever you the “mark” .. I mean new owner, can produce the cash. It seems your friend already has the title in hand, and the name on the title is someone like that of his paternal grandfather, or his mother’s great aunt Tillie or some such “voice from the past”. You see these people, being smart, “tipid” Filipinos, never bothered with all those outrageous taxes and fees and paperwork. They just passed the title, with the “sellers” information filled out and signed, and the “Buyer’s Information” left “open”.
It’s So Simple It It Almost Sounds Too Good To Be True
Ummm, maybe perhaps because it is? Let’s review this procedure for a sanity check, shall we?
- Knowing that you are trying to do something illegal, you press on anyway, because you “want To”.
- Knowing that proper recording of the title is the only true, legal possibility of proving the title over the years, you choose to ignore the facts.
- You dig deep and pony up hundreds of thousands, even millions of Pesos in cash to someone whom you don’t really know.
- Knowing that buying a forgery of a title is ridiculously easy, you chose (apparently) that the one your new friend has found for you happens to be real.
- Knowing that under the law, the way you are proceeding, with no rights or recourse under the law is the right thing to do.
- With no true legal holding in the property, you perhaps even go out and spend millions on a building project which you can never actually own.
- And then you kind of hurt yourself, contorting your shoulder to enable yourself for being so much smarter than those “sheep” who actually follow the law.
- And, especially after a few drinks, you routinely tell how you are carrying this phony title around in your pocket, not even caring (or knowing) who else knows your secret.
When this is all laid out in black and white, doesn’t this look like a ridiculous position to be in? I think so. Yet I see time and time again, the same people who are way too smart to, say, buy shaky looking stock, who would never play poker for high stakes, who won’t even drive recklessly or smoke cigarettes because that’s dangerous, will reach right into their bank accounts and hand over money for “Open Tittles” and even brag about how they “beat the system”.
Don’t do it, folks. Trust me, you can take my word for it. Peeing on the electric fence will sting like you can’t believe. You really don’t have to try it for yourself … unless you enjoy pain.