Best Posts in Thread: Rent to Own?

Even though I agree that a foreigner should think at least twice about buying real estate in the Philippines, the view of the two previous commenters is too rigid and cynical for me.
They look at the coin from only one side and from a pure "financial risk" perspective.

In my view, buying/building a house in the Philippines can make sense for the many foreigners who are lucky enough to be in a stable and loving relationship with a Filipino partner.
My considerations are that:
1. The Filipino spouse will generally be a fair bit to a sizable number of years younger than the foreign partner, which means that as a foreigner you enjoy the love of a partner who's giving her best years to loving and caring for you.
I would not want my partner to not only outlive me as expected but also suffer dire consequences after my demise.
2. One way to diminish those consequences is to at least make sure she has a roof over her head and no rent to pay.
3. Think about it, if there is money available to buy or build a house, then yes, you could invest in something else, and if you make smart decisions you might get richer, and then you die. Who is gonna own those investments then? Are those really the people you would want to enable to buy two new cars and go on a world cruise or something? Or can you think of a more logical recipient? And wouldn't she be happier with a house than some investment portfolio?
4. Rents in the Philippines are high, relative to the value of the house. My estimate is that while renting, you pay the value of the entire house in rents in between 11 and 15 years. So yeah, you can hold out and not buy, and then 15 years later you don't own a house, the partner doesn't own a house and the money is still gone.
5. Sure there is still the risk that the relationship will ultimately fail and that I end up empty handed, but I refuse to fall for the trap of misogynistic thoughts or cultural distrust that would only ensure that I'd be unhappy.
6. There are legal ways to protect your right to live in the house you paid for, even if the title is not in your name.

 

In my view, even if many Filipino's are blissfully ignorant about those aspects, there is more to the value of a property than the size of the lot and the sqm of the house.

• quality of the build (and no, I don't mean the looks, but rather technical stuff like the type/quality of hollow blocks used, sufficient pillars and reinforcement bars, vents and insulation measures, proper water disposal etc.
• quality of the finish of a house. Typical pinoy-style finish means lousy windows, locks, kitchen and bathrooms, cheap metal roofing, etc. Yes the "rust while you wait" type fittings save money in the short run, but I have a longer view.
  
• atmosphere of the immediate surroundings (a nice house in the middle of a bunch of squatter huts doesn't do much positive for the value).
• safety concerns (some people like myself also just don't want to "live in a prison", i.e. surround my lot with a 3 meter wall topped with glass shards or military style razor blade barbed wire, and get two or more dogs in the yard just to discourage any would-be burglars).

 

Basically, foreigners should not invest in real estate in the Philippines. There are many other countries with much fairer laws.

 

Maybe to put this matter to rest, people should read this article about the subject of how and what a foreigner can (come to) own in terms of real estate in the Philippines. I believe the article has factual information and is not some "infomercial"
PROPERTY OWNERSHIP FOR FOREIGNERS IN PHILIPPINES
The article explains that yes, a foreign spouse of a deceased Filipino citizen can inherit from their deceased spouse, including any real estate that may be part of the marital assets, however, if the deceased leaves any other relatives (such as children, or parents, or siblings, or even nieces/nephews) then the spouse will not inherit all of the estate.
The source for that information in the article is the Filipino Civil law, book III, title IV (about Succession). Article 887 of the law defines the surviving spouse as a compulsory heir.

 

You are right. But foreigners can BUY land on a rent to own, they can just never transfer it to their name so by the time its paid for you either have to sell it or put it in a filipina's name.

I see a lot of people urging caution, but use the grey matter, if the down payment is small and the payments are the same as rent then its hard to get screwed over on a rent to own. Just watch that down payment and get a lawyer to write up the agreement.

Also, its hard to sell if you still owe on it. Its not like some countries where you can sell the place and pay off the amount owing from the proceeds of sale. You cannot transfer title if there is a lien on the title and they will not remove the lien until its paid off and you cannot pay it off if you cannot sell it. Catch 22. So think of it more like renting without anyone being able to kick you out or raise your rent provided the payments are made each month. IF you ever pay it off that's a bonus.

 

Never ever enter into any deal regarding real estate without consulting a qualified, experienced and bona-fide lawyer. The only exception would be an outright rental contract for a set period. Anything that involves more than that and you'll want to involve a lawyer (whom you choose and pay for).
For example, if a property is encumbered with a mortgage, the bank's rights to the property will always come before you and your rights as a "rent to own" party.
So much better to buy and get financing yourself, than to rely on a private contract partner who may default on whatever obligation and see a third party (mortgage bank) confiscate your dream.

 

There was a project in south Manila or in Cavite offering townhouses with condo titles. They labeled it with foreigners can legally own the townhouse and the lot. But when looking carefully it is more like a right to use the lot where the townhouse is on it. It was the first project using condo titles for townhouses.

Anyway. Condos are for their size completely overpriced. On the other side the construction price per sqm for a condo is lower than of a single house. That means that they have OFW (60/40 rule) and foreigners as market target in view to sell the condos totally overpriced. Rent to own is quite common with condos and townhouses. I guess they want to hide the excessive and hideous/ridiculous prices of these buildings.

About the inheritance. Foreigners can inherits a lot from passed Filipino spouse. But then they are forced to sell the lot in a reasonable time.

 

When you see a house/lot "For Assume" then it is most time a house/lot repossessed by Pag-Ibig. You pay the "For Assume" price to be able to move in and then you pay down the remaining Pag-Ibig balance. Some "For Assume" house/lots are coming from bank repossessing the house/lot. I dunno if you can buy a house/lot with delivering the complete price at once. (If it comes from a bank, you have more certainly the possibility to purchase it by paying the complete price at once if you want.)

If you want to buy a mortgaged house/lot you need certainly a lawyer to get rid off the mortgage from the title when you purchase the house/lot.

Better is to search for a house/lot with a clean and unencumbered title. Check the title with the DENR to check if there are hidden encumbrances or if the title is genuine.

 

The only time I have seen this is when low income people buy a house through Pagibig and cannot afford the payments. They want you to give them back the money they have put into it so far and keep making the payments for them. Thus they don't care if you don't pay because Pagibig is taking the house back if they don't do this and if you do give them their down payment back they may just do the same again if you skip out.

I have not seen this plan without any down payment. But the down payment part will be flexible if they are close to getting the house foreclosed on. At a minimum you will have to pay all the late payments to get the bank off their back and then you could negotiate the balance.

I have seen houses in my subdivision where Pagibig did repossess them and will sell them to a qualified purchaser so if you have a wife/gf who qualifies for Pagibig that may be an option. As a single foreigner, be prepared to put down about 20 % of the purchase price and then "rent to own" the difference. Such is what I seen here, other experiences may be different.

 

You seem to have read the "admittedly not a lawyer"'s blog and missed the response by Attorney Claudette that the blogger acknowledges to be more accurate when she says:

Now half an inheritance is better than nothing but remember that is "up to" and then remember this is Philippines and try to remember any time you got what you were supposed to get "up to". Its very rare.