Know Your
Philippine Real Estate Law

Not well versed in Philippine real estate law? No problem. We understand. That’s why we’ve included this section. Here's a quick and easy lesson.

Get your sense of self-confidence up on Philippine real estate law issues. Our aim is to ground you in the fundamental ideas and to help you interact with the professionals. We try to anticipate your questions … because we have been where you are now … and answer them in language that you can understand.

Don’t let the legal issues deter you from enjoying the life you want to lead … conquer your legal fears. Arm yourself with knowledge and go confidently in the direction of your dreams.

RIGHT TO OWN PHILIPPINE PROPERTY:

• General Rule - Philippine real estate law states that only Filipino Citizens and corporations or partnerships at least 60% of the capital of which is owned by Filipinos are entitled to acquire land in the Philippines.

• As exception to the general rule, alien acquisition of real estate in the Philippines is allowed in the following cases:

  a. Acquisition before the 1935 Constitution;
  b. Acquisition thru hereditary succession. If foreign acquiree is a legal heir;
  c. Purchase of not more than 40% interest in a condominium project;
  d. Purchase by a former natural-born Filipino citizen subject to the limitations prescribed by Law (Batas Pambansa 185 and R.A. 8179)

• A Filipino who married an alien retains her Philippine citizenship (unless by her act or ommision, she is deed to have renounced her Philippine citizenship) and may therefore acquire property under the Philippine real estate law.

ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZEN

• Mode of acquision is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds (such as tax sale, foreclosure sale, or execution sale).

• Maximum area that may be allowed is as follows:
  a. For residential purpose - 1,000 square meters of urban land or one (1) hectare of rural land (BP 185)
  b. For business or other purpose - 5,000 square meters of urban land or three hectares of rural land. "Business or other purpose" refers to the use of the land primarily, directly and actually in the conduct of business or commercial activities in the broad areas of agriculture, industry and services, including the lease of land, but excluding the buying or selling thereof."

• In case of married couple, one or both of them may avail of the privilege, provided that the total acquisition shall not exceed the maximum area allowed.

• A transferee of residential land under BP 185 may still avail of the privilege granted under RA 8179.

• A transferee who already owns urban or rural land for residential purpose, may acquire additional urban or rural land for residential purpose which, when added to that already owned by him shall not exceed the maximum area allowed by law.

  The same priviledge applies to a transferee who already owns urban or rural land for business purposes.

• A transferee may not acquire more than two urban or two rural lands which should be located in different cities or municipalities.

• A transferee who has already acquired urban land for residential purpose shall be disqualified to acquire rural land for residential purpose and vice versa. The same Philippine real estate law applies to a transferee of land for business purpose.

SPECIAL VISAS FOR FOREIGNERS ALLOWING 100% CONDO & TOWNHOUSE OWNERSHIP:

• Special visas are available to foreigners that allow complete ownership and control of Philippine condo and townhouse units. Qualifications for this visa are as follows:

  a. You must be at least 35 years old.
  b. You should meet the bank deposit requirements which can be withdrawn at a later date for your investments.

• The processing fee and the amount of the deposit/investment needed depends on whether or not you are married to a Filipino or former Filipino. This allows you almost all of the investment privileges of a Filipino citizen. For specifics on the program, check out the Philippine Retirement Authority website.

NEW DUAL CITIZENSHIP LAWS ON PROPERTY OWNERSHIP:

• Dual citizenship is now newly available for the following. Dual citizenship means having two citizenships and passports from two different countries. Under the Philippine real estate law, they are former Philippine citizens born in the Philippines, but that have immigrated to another country and obtained citizenship of that country. Dual citizenship allows the citizenship holder full rights of possession of Philippine real estate property.

FOREIGNER MARRIED TO PHILIPPINE CITIZEN:

• If holding title as an individual, a typical situation would be that a foreigner married to a Philippine spouse citizen would hold title in the Philippine spouse's name. The foreign spouse name cannot be on the property title but can be on the contract to buy the property, and should be to document the process taken to obtain such asset. In the event of death of the Philippine spouse, the foreign spouse is allowed a "reasonable" amount of time from the Philippine government to dispose of the property and collect the proceeds or the property will pass to any Philippine heirs and or relatives. As a foreign investor caution should be taken upon considering and taking title to Philippine real estate in this manner. In the event of problems with the Philippine spouse and the investment assets in the Philippine spouse name, the foreign national may not have many rights to the assets or any at all.

SALES AND TRANSACTION COSTS:

• Buyers transaction or closing costs under the Philippine real estate law include the following: Documentary Stamp Tax - P5.00 per P1,000 of contract price, or zonal value or fair market value, which ever is higher. Transfer Tax - P5.00 per P1,000 of contract price, or zonal value or fair market value, which ever is higher. Registration Fee - P1.50 per P1,000 of contract price, or zonal value or fair market value, which ever is higher. The seller is responsible for transaction closing cost of capital gains tax.

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