Are You Eligible to Buy a Property in the Philippines?

As a US citizen, overseas investment is enticing due to the high exchange rate of dollars to another country's local currency. If you are considering to purchase a property in the Philippines, here are the things you need to know.

Owning a House

Good news, yes, a US citizen can own a house. Provided you have a valid visa, you may buy a property in the Philippines and allowed to own a residence. Unfortunately, as an individual, you cannot buy and own the land where it is built upon. You will need to enter in a long-term lease agreement with a Filipino landowner.

 

Buying the Land

How can a US citizen buy the land where the residential houses or buildings are situated? As covered by the Philippine law, land ownership is exclusive and limited to Filipinos only. However, there are various and legal ways to purchase the land.

  1. The property was acquired before the 1935 Constitution.
  2. Acquisition through hereditary succession.
    • The order of hereditary succession under Philippines law is covered below
      1. Legitimate children or descendants of the deceased;
      2. Legitimate parents or ascendants;
      3. Illegitimate children or descendants;
      4. Surviving spouse;
      5. Siblings, nephews, and nieces;
      6. Other collateral relatives within the fifth degree; and finally,
      7. The State (Philippines).
  3. Purchase of a condominium unit
    • Under the Condominium Act of the Philippines, foreign citizens are allowed to buy condo units in any condominium project, as long as foreign ownership of that project does not exceed 40%.
    • The land where the condominium unit is built is not owned as an individual but as a Condominium Corporation.
  4. Purchase of land by corporation
    • Creating a domestic corporation with 40% foreign ownership and with at least 60% Filipino ownership can be done.
    • This corporation must be registered and approved first by the Securities and Exchange Commission prior to acquiring any real estate property as an entity.
    • Upon dissolution of the corporation, the land may be sold and cash proceeds are distributed proportionately to the owners including the foreigner.
  5. Purchase by a foreigner married to a Filipino
    • The foreigner is allowed to buy land and his/her name is included in the Contract or Deed of Sale.
    • But only the Filipino spouse in registered in the Transfer Certificate of Title (TCT) or the land title.
    • In the event of death, the foreign spouse becomes the natural heir and still not allowed to own the land. Therefore the property has to be disposed within reasonable period and collect the proceeds of the sale, pass on ownership to the children or legal heirs, or if childless, pass on ownership to the Filipino spouse's relatives.
  6. Land ownership as a natural-born Filipino foreigner
    • Those who have dual citizenship
    • Those naturalized under the Philippines' Naturalization Law
      • There are limitations to land ownership as a natural-born citizen.
        1. For residential use: 1,000 sqm (10,764sqft) of urban land OR 1 hectare (24,710 acre) of rural land;
        2. For acquisition to be used for business or commerce: 5,000 sqm (53,819sqft) of urban land or 3 hectares (71,131acre) of rural land.

It is best to transact with a licensed real estate brokers or agent when buying a property. You also have the option to get a practicing real estate lawyer for legal matters.