Property Ownership

Introduction

As a general rule, foreigners are not allowed to own land in the Philippines. They may purchase condominiums and houses but they are not allowed to own land. Therefore, if you want to purchase, for example, a house, you’d be the owner of the house but you’d have to lease the land it sits on. Foreign nationals may enter into a lease agreement with Filipino landowners for an initial period of up to 50 years renewable once for an additional 25 years taking you to a total of up to 75 years. In summary, only Filipino citizens and corporations or partnerships with at least 60% of the shares owned by Filipinos are entitled to own or acquire land in the Philippines. Foreigners may, however, purchase condominiums, buildings, and enter into a long term land lease.

Detail

Ownership of land in the Philippines is strictly reserved for persons or entities considered Filipino. For this purpose, a corporation owned 60% by Filipino citizens is treated as Filipino. Foreigners interested in buying land or real estate property through “creative” ownership structures face action under the Philippines’ Anti-Dummy Law. A major restriction in the law, for example, is the restriction on the number of foreign members on the Board of Directors of a landholding company, which is limited to 40% foreign participation.

Exceptions to the restriction on foreigners’ acquisition of land in the Philippines

  • Acquisition before the 1935 constitution
  • Acquisition through hereditary succession if the foreigner is a legal or natural heir
  • Purchase of not more than 40% interest in a condominium project (i.e. 60% of the condo project must be Filipino owned, up to 40% can be foreign owned)
  • Purchase by a former natural-born Filipino citizen subject to the limitations prescribed by law. (natural born Filipinos who acquired foreign citizenship are entitled to own up to 1,000 sq.m. of residential land, and 1 hectare of agricultural or farm land)
  • Filipinos who are married to aliens who retain their Filipino citizenship, unless by their act or omission they have renounced their Filipino citizenship

Foreign ownership as a Philippines corporation

Foreign nationals or corporations may completely own a condo or townhouse in the Philippines. To have ownership of a private land, residential house and lot, and commercial building and lot foreigners may set up a Philippine corporation in the Philippines. However, the corporation that owns the land can only have up to 40% foreign equity.

Foreigners leasing real estate property

Leasing land in the Philippines on a long term basis is an option for foreigners or foreign corporations with more than 40 percent foreign equity. Under the Investor’s Lease Act of the Philippines a foreign national and or corporation may enter into a lease agreement with Filipino landowners for an initial period of up to 50 years renewable once for an additional 25 years.

Foreigners owning houses in the Philippines

Foreigners owning a house or building in the Philippines is legal as long as the foreigner does not own the land on which the house is build. You’d own the house but would have to enter into a lease agreement for the land.

Foreigners owning condominiums and townhouses with condo titles in the Philippines

The Condominium Act of the Philippines, R.A. 4726, expressly allows foreigners to acquire condominium units and shares in condominium corporations up to 40% of the total and outstanding capital stock of a Filipino owned or controlled condominium corporation. In other words, at least 60% of the condos in the project should be Filipino owned. As for townhouses, there are a very few townhouses with condo titles in the Philippines. Most condos are high rise buildings.

Foreigners married to a Filipino citizen

If holding a title as an individual, a typical situation would be that a foreigner married to a Filipino spouse would hold the title in the name of the Filipino spouse. The foreigner’s name cannot be on the property title but can be on the purchase contract. In the event of the death of the Filipino spouse, the foreign spouse is allowed a “reasonable” amount of time to dispose of the property. The proceeds or the property will pass to any Filipino heirs and/or relatives. Caution is advised; in the event of problems, e.g. a divorce, the foreign national will not have any rights to the property.

Note: This document is for information purposes only. The use of the information in this article is entirely at the user’s risk. For up-to-date information on Filipino property law, please contact your Filipino lawyer or a Licensed Real Estate Broker.

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