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When buying property in the Philippines, Filipinos are mostly unaware of their legal rights as a real estate buyer. Contrary to public belief, the Philippines has a good number of laws that protects the homebuyer against unscrupulous people like unlicensed agents or outright scammers.

On the other hand, we see the growing trend of Filipinos being proactive in understanding real estate to ensure that the acquisition process goes smoothly. They start asking legal questions directly to their real estate agents or conduct their own research on the Web.

We compiled ten common legal questions homebuyers ask when purchasing a property:

Can a foreign husband / partner / family member acquire property in the Philippines?

The law dictates that only Filipino citizens are allowed to buy a home or a condo. A foreigner, however, can co-own the said property via his or her Filipino spouse. Another way to own property is if the foreigner first owns a corporation or a partnership that is at least 60% Filipino-owned. Otherwise, the homebuyer may be disqualified from the legal privilege of owning real estate. There are a few exceptions to the law, but a foreigner must not own the land in which the house was built, according to a Manila Standard Today report about foreign real estate ownership in the country.

Laws: Batas Pambansa Blg. 185 and Republic Act 8179 amendments to the Foreign Investment Act of 1991

What is a deed of sale, and what are my duties as a homebuyer in line with the document?

This important piece of document indicates that the transfer of property between the seller and the buyer has legally transpired. Earlier, we have listed tips on how to detect fake documents. Apart from authenticating the document, the deed of sale should also include the seller and the homebuyer’s names, the number of the transfer certificate of title, the technical description of the property, and the sale price that both parties agreed upon.

The document must also be notarized. Local law firm Domingo Munsaya and Associates explained in their blog that the deed of sale should be then taken to the registry of deeds to be recorded. The homebuyer will need to pay for documentary stamp tax, transfer tax, registration fees and other incidentals.

My real estate agent insists on a contract to sell (CTS) as oppose to issuing a deed of sale? Why is that? I have already made the down payment.

Since the sale has not been fully realized until you have completed payment for your real estate property, developers often issue a CTS to signify that the seller and buyer are bound to each other in an exclusive agreement. On the buyer’s side, there are instances wherein he can obtain the physical possession of the property from the seller and will gain full ownership and title upon completion of payment.

Help! I have dealt with an unlicensed real estate agent. What are my legal options?

The Real Estate Service Act requires homebuyers to buy properties from licensed real estate brokers only. If dealing with a licensed estate sales agent, the agent will be registered with the Professional Regulatory Board of Real Estate Service.

There is no recourse except filing fraud-related charges against the posing agent or broker with the authorities the same way you would when filing a crime report. If, however, you have dealt with a licensed broker or a registered agent who has been unprofessional with his duties, you may report to the Professional Regulation Commission (PRC) as necessary.

Meanwhile, you can check out this informative video courtesy Philippine Association of Real Estate Boards (PAREB):

You can also verify whether your real estate broker or sales agent is licensed or registered with PRC via this link.

Laws: Republic Act No. 9646 – The Real Estate Service Act of 2009

What are my rights as a buyer?

The following rights of a homebuyer in a property sales agreement are:

  1. You have the right to demand the developer to deliver the title of the unit or property upon full payment;
  2. You have the right to get reimbursed with the amount you have paid in lieu of the agreement, including the amortization payments. This means that it is illegal for the developer to forfeit any installment payments in favor of the developer or owner.

Laws: Presidential Decree No. 957 – Subdivision and Condominium Buyers Protective Decree

If I miss paying my monthly amortization and I’ve paid fewer than the required number of installments, will I automatically lose rights to the property I’ve brought?

If you have paid two years’ worth of installment amounts on a property, you have the following rights in terms of default payment:

1. Your developer should allow you to pay the unpaid installment amounts due without additional interest within the total grace period. Conditions are:

  • Grace period is one month for every year-worth of installments.
  • Can only be exercised once every five years of the contract’s life and its extensions, if there are any.

2. Your developer should issue a refund if the contract was cancelled. Cancellation should take place after 30 days of receipt of notice of cancellation or a demand of rescission of the contract by a notarial act from the developer and upon full payment of cash surrender value (CSV) to the buyer;

  • Refund should be at CSV of the payments of the property or equivalent to 50% of the total payments made to the developer;
  • If you have made more than five year’s worth of installment payments, you are entitled to an additional refund worth 5% of total payments made in a year. The refund should not exceed 90% of total payments needed to be returned.

3. If you do not have the capacity to make further payments to your property, you can sell your rights or assign the payment to another person. You can also ask for a reinstatement of your contract by updating your account within the grace period and before of the actual cancellation of the contract. All must be done by notarial act.

If the total amount of installment payments is less than two years’ worth, your developer is obliged to give you no fewer than 60 days ahead of the installment date due to perform your financial obligation. If you are unable to fulfill your financial obligation within the given grace period, your developer may cancel the sales contract after 30 days from the time you receive the notice or demand of cancellation of the contract. You may follow 3 and 4 for alternative options.

Laws: Republic Act No. 6662 – Realty Installment Buyer Protection Act

I have been required to seek mortgage redemption insurance (MRI) for my housing loan. What is it, and is it required by law to have one?

An MRI is a form of protection for all parties, which means you, your developer and financing provider, in case of the buyer’s death. This way, the life insurance covers the buyer’s mortgage in terms of the insured’s death. If the buyer has an existing life insurance, the financing provider could opt to assign that insurance as the MRI.

Laws: Republic Act No. 9507 – Socialized and Low-Cost Housing Loan Restructuring Act of 2008

I don’t want to pay association fees. Am I required by law to be a member of the homeowners’ association?

No, but the law states that the benefits and entitlement only accorded to members of the homeowners’ association is not awarded with prejudice. Homeowners’ association fees cover security and maintenance of common facilities like pool, reception area, function rooms and more. This means that there is no legal recourse if you are denied access to benefits or entitlement a homeowners’ association member enjoys.

Laws: Republic Act 9904 – Magna Carta for Homeowners and Homeowners’ Association

What is the Condominium Act?

According to this article, the law answers a homebuyer’s misconception about investing in a condominium unit or units should the building once the building reaches past its 50th year. There is value for money in a condominium unit. Once your condominium building reaches past its 50th year, you, along with the rest of the unit owners, will have the right to decide on what to do with the entire building. This means that if majority of the unit owners of the condominium building decide to sell the property, you will get the appropriate share of the proceeds. You can also pass your right as a unit owner to your heirs.

Laws: Republic Act 4726 – The Condominium Act of 1966

I heard about this bill that provides tax relief for first-time homebuyers. How do I avail of that as a first-time homebuyer?

Should Senator Sonny Angara’s pet law be passed into law, first-time homebuyers would only need to know three words to fully appreciate the legislation: interest-free loan. In April, Angara said in his explanatory note to Senate Bill No. 2148 as published in Rappler that the passing of the bill will encourage Filipino homebuyers to buy homes at already affordable payment terms from developers.

Angara added,

By removing interest rates in the equation, potential homeowners will only have to pay the principal amount of the property, and thus avoid the stress of dealing with ballooning interest payments.

The bill has yet to be passed. However, it is safe to say that the bill will most likely be passed into law as Angara has successfully pushed other laws that eases taxes levied on the working-class Filipino. One of the laws he has authored is the Tax Exemption for Minimum Wage Earners Law or Republic Act No. 9504.

Law: Home Mortgage Relief Act of 2014

Do you have other legal questions about the real estate laws in the Philippines? We’d love to hear them! Share us your questions or comments by leaving a comment below.


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