The Philippines, with its stunning landscapes, warm climate, and friendly people, has become an attractive destination for foreigners looking to purchase property, whether for investment, vacation homes, or retirement. However, foreign ownership of land and property in the Philippines is subject to specific legal restrictions. This article will provide an insightful and helpful guide on how foreigners can acquire property in the Philippines, highlighting the key legal pathways and considerations.
1.) Married to a Filipino Citizen
One of the most common ways for a foreigner to acquire property in the Philippines is by marrying a Filipino citizen. While Philippine law prohibits foreigners from directly owning land, they can own property indirectly through their Filipino spouse. Here’s how it works:
- Property Title: The title of the property must be under the name of the Filipino spouse. This means that the Filipino spouse is the legal owner of the property.
- Foreign Spouse’s Rights: While the foreigner cannot have the title in their name, they can still legally reside in the property and enjoy the benefits of ownership as long as the marriage subsists.
- Inheritance: In the event of the Filipino spouse’s death, the foreign spouse may inherit the property, but this is subject to certain limitations. The foreign spouse may need to sell the land to a Filipino citizen or entity to comply with ownership laws.
Relevant Law: The 1987 Philippine Constitution, Article XII, Section 7, stipulates that land ownership is reserved for Filipino citizens and corporations or associations owned by Filipinos.
2.) Purchasing a Condominium Unit
Another legal avenue for foreigners to acquire property in the Philippines is through purchasing a condominium unit. The Philippine Condominium Act (RA 4726) provides a special provision for foreign ownership:
- Foreign Ownership Cap: Under the Philippine Condominium Act, foreigners are allowed to own up to 40% of the units in a condominium project, with the remaining 60% reserved for Filipino citizens.
- Ownership Structure: A foreigner can fully own a condominium unit, but ownership is limited to the unit itself. The land on which the condominium stands is owned collectively by all unit owners through the condominium corporation.
Relevant Law: Republic Act No. 4726, known as “The Condominium Act“, governs the ownership of condominium units in the Philippines, including the stipulation on foreign ownership.
3.) Buying Property Through a Corporation
Foreigners can also acquire property in the Philippines by setting up or investing in a corporation that purchases the property. The following are key points regarding this approach:
- Corporation Ownership Structure: Under Philippine law, a corporation can own land in the Philippines if at least 60% of its capital is owned by Filipino citizens. The remaining 40% can be owned by foreign partners.
- Control and Management: Despite the ownership cap, foreigners can still have significant control over the corporation and, by extension, the property, as long as they comply with the 60-40 ownership rule.
- Corporate Structure: This option is particularly attractive for those looking to invest in larger properties, such as commercial real estate, agricultural land, or multiple residential properties.
Relevant Law: The Corporation Code of the Philippines (Batas Pambansa Blg. 68) and the Foreign Investments Act under R.A. 7042 as amended by R.A. 8179, outlines the rules and regulations for corporate ownership in the country, including the foreign ownership.
Additional Considerations
If a foreigner is unable or unwilling to marry a Filipino citizen, invest in a condominium, or establish a corporation, they may consider entering into a long-term lease agreement. Philippine law allows foreigners to lease land for up to 50 years, with the possibility of renewing for another 25 years.
It is highly recommended that foreigners seeking to acquire property in the Philippines consult with a legal professional who specializes in Philippine real estate law. This will ensure that all transactions are conducted in compliance with the law and that the foreigner’s interests are adequately protected.
While there are restrictions on foreign ownership of land in the Philippines, there are still several legal pathways for foreigners to acquire property in the country. Whether through marriage, purchasing a condominium, or investing in a corporation, each option comes with its own set of rules and requirements. By understanding these legal frameworks and seeking professional advice, foreigners can successfully navigate the process of acquiring property in the Philippines and enjoy all the benefits of owning a piece of paradise.