Things You Need To Know About Philippine Real Estate Law

For a professional broker or real estate dealer, your knowledge in the most basic Philippine real estate laws should be somewhat acceptable. Because if you’re having a hard time answering questions from a prospect client regarding basic real estate law in the Philippines, then that will go against your credibility as a professional real estate agent or broker. That doesn’t mean that you need to continuously carry your own copy of these laws because there are so many of them that you’ll most likely be carrying a heavy book during transactions or meet-ups!

What you need to do, however, as a professional real estate broker is to be familiar with the most important Philippine real estate laws that apply towards everyone who is interested in purchasing property here in the Philippines. Normally, clients have a lot of questions and most of their answers can be traced back to basic Philippine real estate laws. If you want to impress this type of clientele, then you need to know the answers. Once you do so, then you’ve already won the battle. Or more like the transaction, in this case!

So as a real estate agent or broker, what exactly are the questions commonly asked by these people?

1. My foreigner  husband wishes to buy property in the Philippines. Is this something that he can do? 

According to our Philippine real estate laws, the foreigner himself/herself cannot own land due to not being a citizen of the Philippines. However, he/she can co-own the property via his wife/her husband. This is always the most common way for foreigners to buy property here in the Philippines and this is explained under the Batas Pambansa Blg. 185 of the Philippine Constitution.

There is also another way a foreigner can buy property. Under the Republic Act 8179 Amendments to the Foreign Investment Act of 1991, only a natural-born citizen can own or buy property in the Philippines, unless if the foreigner who wishes to buy the real estate property owns a company or corporation where 60% of the shares are owned by Filipinos.

There is an exception to this rule however; a foreigner can own the house that was built, but not the land where the house is built upon.

2. What are my specific rights as a real estate buyer/investor?

You may encounter a client who wishes to know this basic information, so in case you’ve forgotten what it is, you can simplify the excerpts that are found in the Presidential Decree No. 957 – Subdivision and Condominium Buyers Protective Decree:

The client has the right to demand the real estate developer the delivery of the title of the property upon completion of payment.
The client has the right to be reimbursed with the amount that was paid in lieu of the agreement. This includes the amortization payments too.
It is illegal for the developer to forfeit any installment payments in favor towards the real estate developer or owner.
The client has the right to complain should the property developers have a bad reputation or is rumored to be engaged in fraudulent activities.

3. What if I miss my monthly amortization and the amount of payments I’ve made are too few for the required installment, then will I automatically lose my rights for the property I’ve bought or invested?

This is a very common question among Filipino real estate investors, so as a professional broker, you should realize that the answer to this question can be found under the Republic Act No. 662 – Realty Installment Buyer Protection Act.

Now if the client has only paid around two years worth of the needed installment amount, then the client has the following rights in terms of default payment:

a.) The developer should allow the buyer to pay the unpaid installment amount without additional interest within the required grace period. However, there are conditions to this:
- Grace period is one month for every year that is worth of installments.
- This grace period can only be used once in every five years of the contract’s life and its extensions, should there be any.

b.) The developer should issue a refund if the contract was cancelled.

c.) The cancellation should take place 30 days from when your client gets the receipt of notice for the cancellation or a demand of rescission of the contract with the use of a notarial act from the developer.
- The refund should be a CSV (Cash Surrendered Value) of the payments of the property in question or should be equivalent to 50% of the total payments made to the property developer.

d.) If the client does not have the capacity to pay to make payments for the property in the future, then he or she can sell his/her rights or assign the responsibility to another person. The client can also ask for a reinstatement of the contract by updating his/her account within the allotted grace period and before the actual cancellation date for the contract.
- If the total amount of installment payments is less than 2 years worth, then the developer should give you around 60 days ahead of the installment date due to pay up the required amount.
- If the client can’t fulfill or pay the required amount within the given grace period, then the developer will have no choice but to cancel the sales contract after 30 days from the time that the client received the notice of cancellation.

e.) All the process above must be done with a notarial act.

4. I migrated to the United States a few years back, but I am now back in the Philippines. I want to buy a new townhouse for myself, but I am having second thoughts because of my dual citizenship. What should I do?

You can cite two Philippine real estate laws regarding this issue.

- According to Republic Act No. 9225, any Filipino who went out of the country and have acquired another citizenship retains their Filipino citizenship. Therefore, if your client have not legally lost his/her Filipino citizenship as citizens of a foreign country, then he/she can still buy and own property in the Philippines.
- However, should your client be a former Filipino citizen, Section 1 of the Batas Pambansa Blg. estates that any natural-born citizen who have lost his/her Philippine citizenship may become a transferee of a private land and should only be used for private purposes, such as his/her residence.
- Under Section 2, former citizens of the Philippines under a legal age can become a transferee to a private lot, provided that the land area is only up to a maximum of one thousand square metes in urban land.

To put it simply, anyone with dual citizenship can buy and own property, but for those who chose to discard their Philippine citizenship, there is a limitation for them unless they swear an oath of re-acquiring their Philippine citizenship.

5. Are there any laws that provide how much should be the rent for properties in certain parts of the Philippines?

It might be surprising for you, but yes, there are laws that govern how much exactly should be the rent for any particular property in highly-urbanized areas in the Philippines.

Under Section 3 of the Philippine Rental Law, beginning January 2002 and for the duration of 3 years, if the monthly rental for all residential units in the NCR and other highly-urbanized cities in the Philippines is at around Php 7500, while the rent for residential units in the other parts of the country is not exceeding at Ph 4,000, then there should be no annual increase for the rent with prejudice to existing contracts for more than 10%.

There is also a definition as to what a “residential unit” is. This means that the unit or apartment should be used only for daily living purposes and should not be used for commercial purposes.
These five questions are indeed too common, but if you could give an answer that is incredibly satisfactory for your prospective client, then he/she may soon trust you enough and become his/her exclusive property broker in the future. Therefore, learn everything that you can about the Philippine real estate laws and be familiar with them at all times.

Camella Homes
Camella Homes

Camella is the largest homebuilder in Philippines real estate industry. As builders of top quality yet affordable housing in the Philippines, Camella has an enviable reputation. With 40 years and counting, Camella has already built more than 400,000 homes in 39 provinces, and 104 cities and municipalities across the country.