It’s not impossible to own property in the Philippines as a foreigner, but it’s a well-known fact that the process of doing so can be quite complicated. Local law, after all, restricts land ownership for foreigners. Still, there are legal ways to invest in property and secure real estate in the country, and you can thoroughly explore these options with the help of a trusted law firm in the Philippines. At the same time, it helps to have a general understanding of these legal paths so you can avoid legal issues and make informed decisions when purchasing property in the country.
Can Foreigners Own Land in the Philippines?
Under Philippine law, foreigners are generally prohibited from owning land. This restriction is rooted in the Philippine Constitution, which limits land ownership to Filipino citizens and corporations with at least 60% Filipino ownership.
It’s worth noting that there are a few exceptions. If you inherit land from a Filipino spouse or parent, you can retain ownership of the property. But even then, there are legal steps you need to follow to formalize your ownership rights. Additionally, while you cannot directly own land, you can legally own other types of property, such as buildings and condominium units, through specific channels.
What Are the Legal Ways in which Foreigners Can Own Property in the Philippines?
Although direct land ownership isn’t allowed for foreigners, there are several legal ways you can invest in property in the Philippines. These include the following:
Condominium Units
Under the Condominium Act (Republic Act No. 4726), foreigners can own up to 40% of the total units in a condominium project. This makes condominiums one of the easiest and most common property investment options for foreigners. For instance, if a condo building has 100 units, up to 40 of them can be owned by foreigners. When choosing a condominium, it’s important to check if the foreign ownership cap has already been reached.
Corporations
Foreigners can also invest in a Philippine-registered corporation that owns land. However, at least 60% of the corporation’s shares must be held by Filipino citizens. This means that while you can’t control the corporation outright, you can still benefit from the property through profit-sharing or dividends. This setup is common among foreign investors involved in commercial or industrial properties.
Lease Agreements
If you want to use land but don’t want to deal with corporate structures or condominium restrictions, leasing is an option. Foreigners can lease land for up to 50 years, with the option to renew for an additional 25 years. This arrangement allows you to build on and use the land without the complexities of ownership. Leases are often used for residential or business purposes, especially in tourist areas.
How Do You Inherit Property as a Foreigner?
Foreigners can inherit land from a Filipino spouse or parent, but there are limitations. While inheritance is allowed, you cannot legally acquire new land through inheritance beyond what is transferred directly to you.
For example, if your Filipino spouse passes away and leaves you a piece of land, you can inherit and keep that land. However, if the land was not directly passed down to you through inheritance (e.g., it was acquired by purchase), you might face legal challenges retaining ownership. It’s crucial to work with a lawyer to handle the inheritance process properly.
Is It Possible to Buy Property Through a Filipino Spouse?
If you are married to a Filipino citizen, you can purchase land through your spouse. However, the land title will be under your spouse’s name, not yours. However, if you divorce or legally separate from your spouse, you may lose your claim to the land. It’s important to clarify property agreements with a lawyer to protect your financial interests in case the relationship changes.
Practical Considerations and Restrictions When Investing in Properties in the Philippines
Even if you find a legal pathway to own property, there are still some restrictions to keep in mind:
- Foreigners cannot own agricultural land, even through marriage or inheritance.
- Foreigners cannot own land in rural areas unless it’s part of a government-approved development project.
- Building permits, property taxes, and zoning regulations must be complied with, even if you lease or inherit the property.
It’s also important to work with both a reliable real estate agent and a lawyer to confirm that the property has a clean title and that there are no outstanding tax or legal issues attached to it.
The Role of the Condominium Act and Other Relevant Laws
The Condominium Act is the key law that allows foreigners to own property in the form of condominium units. It ensures that foreign ownership in a condominium project cannot exceed 40%, which protects local interests while allowing foreign investment.
Other important laws include the Anti-Dummy Law, which prohibits foreigners from using Filipino citizens or corporations as “dummies” to bypass ownership restrictions. Violating this law can result in fines, imprisonment, or the forfeiture of the property involved.
It’s best to consult with a lawyer experienced in Philippine real estate law to avoid costly mistakes and legal troubles. A legal professional can help you draft contracts and ensure that all transactions comply with Philippine law. Their expert advice can help you no matter if you’re planning on setting up a corporation, arranging a lease agreement, or handling inheritance issues. With their assistance and understanding of the legal framework, you can make informed property investments in the Philippines that are aligned to your goals.
