OFFICE OF THE PRESIDENT • REPUBLIC OF THE PHILIPPINES
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Philippine Housing Laws


A Buyer’s Guide on Philippine Laws on Real Property Ownership
  1. Who can acquire land in the Philippines for housing purposes?
  2. Are foreigners absolutely prohibited from owning real property?
  3. What is a deed of sale?
  4. What is a contract to sell (CTS)?
  5. Should one deal only with licensed real estate brokers?
  6. What about sales agents / salesperson?
  7. What are the rights of home buyers?
  8. If I miss paying my monthly amortization, will I automatically lose rights to the property I’ve brought?
  9. What if I paid less than two years of installments?
  10. What is Mortgage Redemption Insurance?
  11. Aside from the sales price of the property, what other fees/charges should I prepare for?
  12. If I buy a unit in a subdivision or a condo unit, do I have to be a member of the homeowners’ association?
  13. What are the rights and obligations of members of homeowners’ association?

 

q

Who can acquire land in the Philippines for housing purposes?

a

Only Filipino citizens can acquire land in the Philippines for housing purposes.

However, a natural-born Filipino citizen who has lost his Philippine citizenship may be a transferee of private lands. Under the Batas Pambansa Blg. 185, he/she may acquire a maximum of 1,000 square meters of urban land and one (1) hectare of rural land which must be used exclusively as his/her residence.

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q

Are foreigners absolutely prohibited from owning real property?

a

No. A foreigner may still own real property in the following instances:

  • Acquisition of a real property under the 1935 Philippine Constitution.
  • Acquisition of a real property by hereditary succession.
  • Purchase of not more than 40% of the units in a condominium project.

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q

What is a deed of sale?

a

A deed of sale is a document executed by the seller and the buyer upon payment of the agreed price by the buyer. The title and ownership to property is formally transferred to the buyer through the execution of this document. It contains the names of the parties, the Transfer Certificate of Title number, the land area, the technical description and the selling price. A deed of sale must be notarized.

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q

What is a contract to sell (CTS)?

a

A contract to sell is a bilateral contract whereby the seller retains the title and ownership to the property until the full payment of the purchase price by the buyer. The seller is bound to sell the property exclusively to the buyer upon full payment. In some instances, the physical possession of the property is transferred to the buyer, subject to terms and conditions. Upon full payment, a deed of sale will be executed by the buyer and the seller. Most condominium unit buyers execute this kind of contract with developers.

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q

Should one deal only with licensed real estate brokers?

a

Yes. A real estate buyer should deal only with licensed real estate brokers. Practicing or advertising real estate service without the necessary license is prohibited under the Real Estate Service Act. This is to protect buyers of real estate and to regulate the real estate industry.

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q

What about sales agents / salesperson?

a

Real estate sales agents or salespersons are not required to be licensed. However, they must be Registered.

The Real Estate Service Act defines a real estate salesperson as a “duly Registered natural person who performs service for, and in behalf of a real estate broker who is registered and licensed by the Professional Regulatory Board of Real Estate Service for or in expectation of a share in the commission, professional fee, compensation or other valuable consideration.”

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q

What are the rights of home buyers?

a

Under the Subdivision and Condominium Buyers Protective Decree, a home buyer has the right to demand from the developer the delivery of the title of the lot or unit to him/her upon full payment of the lot or unit.

In the event that the owner or the developer fails to develop the subdivision or condominium project according to the approved plans and within the time limit, a buyer may choose to be reimbursed the total amount paid including amortization interests. No installment payment made by the buyer shall be forfeited in favor of the owner or developer

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q

If I miss paying my monthly amortization, will I automatically lose rights to the property I’ve brought?

a

No. You are still entitled to some rights. Under the Realty Installment Buyer Protection Act, a buyer of real property on installment who has paid at least two (2) years of installments has the following rights in case he defaults in the payment of succeeding installments:

  • To pay, without additional interest, the unpaid installments due within the total grace period. A one (1) month grace period is given for every one (1) year of installment payments. This right can only be exercised by the buyer only once in every five (5) years of the life of the contract and its extensions, if any.
  • If the contract is cancelled, the buyer is entitled to be refunded by the seller the cash surrender value (CSV) of the payments on the property equivalent to 50% of the total payments made. If more than five (5) years of installments was paid, an additional 5% every year but not to exceed 90% of the total payments must be returned. The actual cancellation of the contract shall take place after 30 days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the CSV to the buyer.

Further, you shall have the right to sell your rights or assign it to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

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q

What if I paid less than two years of installments?

a

If you’ve paid less than two years of installments, the seller has the obligation to give you a grace period of not less than 60 days from the date the installment became due.

If you fail to pay the installments due at the expiration of the grace period, the seller may cancel the contract after 30 days from your receipt of the notice of cancellation or the demand for rescission of the contract by a notarial act.

You have the right to sell your rights or assign it to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

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q

What is Mortgage Redemption Insurance?

a

Mortgage Redemption Insurance (MRI) is a form of life insurance which pays for the mortgage of the insured in case of death. Housing loan borrowers are required to have a MRI. An existing life insurance policy may be assigned as a housing loan borrower’s MRI.

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q

Aside from the sales price of the property, what other fees/charges should I prepare for?

a

Here is a list of other fees and charges that you must pay aside from the sale price:

  • Documentary Stamp Tax – 1.5% of the selling price or zonal value or fair market value, whichever is higher.
  • Transfer Tax – 0.5% of the selling price or zonal value or fair market value, whichever is higher.
  • Registration fee – 0.25% of the selling price or zonal value or fair market value, whichever is higher.

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q

If I buy a unit in a subdivision or a condo unit, do I have to be a member of the homeowners’ association?

a

Under the Magna Carta for Homeowners and Homeowners’ Association, a homeowner could not be compelled to join a homeowners’ association. However, the law states that the prohibition on non-compulsion is without prejudice to the provisions of the deed of restrictions as approved by the majority vote of the members or as annotated on the title of the property, the contract for the purchase of a lot in the subdivision project or an award under a Community Mortgage Program (CMP) or a similar tenurial agreement.

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q

What are the rights and obligations of members of homeowners’ association?

a

Every member has the right to enjoy the basic community services and facilities, provided that he/she the necessary fees that is imposed by the home owners’ association. Further, he/she may inspect association books and records, participate in meetings, and enjoy all other rights as may be provided for in the association bylaws. He has the right vote and be elected in the homeowners’ association. The Magna Carta for Homeowners and Homeowners’ Association enumerates the rights of home owners.

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