Ways foreigners can own real property in the Philippines

Posted on July 20th, 2007

John Smith, a natural born US citizen of American descent, is thinking of retiring in the Philippines and wants to buy a house and lot in Cebu.

Can Smith and other foreigners like him acquire real property in the Philippines?

Generally, no, said Cesar E. Santos, a licensed realtor, appraiser, and consultant. Santos conducted a whole-day review for our class one Saturday last May on the possible questions to expect during the real estate licensure examination.

The Philippine Constitution, starting with the 1935 enactment, strictly limits ownership of land to Filipinos.

There are, however, certain exceptions to this rule, Santos added.

Foreigners like Smith and their legal heirs retain rights to real property in the Philippines that is acquired before the effectivity of the 1935 Constitution.

Hence, property bought by an American or any foreign national before 1935, when no prohibition was in effect, remains in his or her possession.

In case of death, the foreign national’s heirs continue to have ownership rights over the property. The second exception, therefore, is hereditary succession.

Also, Smith may purchase a condominium unit or units provided that the total controlling interest of foreigners in the condominium project does not exceed 40 percent.

Condominium owners have exclusive rights over the space “encompassed by the walls, ceilings, and floors” of their units but are only co-owners of the common areas, such as the hallways, lobbies, entrances and exits, and parking bays.

For acquisition of real property by former natural born Filipino citizens, a different law applies. More on that in later posts.