Understanding Philippine real estate law is crucial for both homebuyers and property investors. This guide provides a comprehensive breakdown of ownership laws, taxes, contracts, and legal requirements to ensure secure and legally compliant property transactions.

Understanding Property Ownership Laws in the Philippines

In the Philippines, property ownership is subject to specific laws and regulations. Here’s what you need to know:

Who Can Own Real Estate in the Philippines?

• Filipino Citizens: Can own land, houses, and condominiums without restrictions.
• Foreigners: Cannot own land but can buy condominium units (up to 40% of a building’s total units) and lease land for up to 50 years (renewable for 25 years).
• Dual Citizens & Former Filipinos: Can reacquire land ownership subject to certain limits.

For a deep dive into real estate investing, check out our PH Real Estate Investing: Ultimate Guide.

Key Real Estate Laws and Regulations

Several laws govern real estate transactions in the Philippines. Here are the most important ones:

1. Presidential Decree No. 957 (Subdivision and Condominium Buyers’ Protection Decree)

• Regulates developers to ensure they deliver what they promise.
• Requires a license to sell for real estate projects.

2. The Maceda Law (Republic Act No. 6552)

• Protects buyers who fail to pay installment contracts.
• Applies to those who have paid at least two years of installments.

3. The Condominium Act (Republic Act No. 4726)

• Allows foreign ownership of up to 40% of condominium projects.
• Defines condominium corporations and unit owners’ rights.

4. Property Registration Decree (Presidential Decree No. 1529)

• Ensures secure property titles and protects against fraudulent land transactions.

Legal Considerations When Buying Real Estate

1. Checking the Property Title

• Verify the Transfer Certificate of Title (TCT) (for land) or Condominium Certificate of Title (CCT) (for condos).
• Ensure the title is clean and free from encumbrances or legal disputes.
• Confirm authenticity with the Land Registration Authority.

2. Understanding Taxes and Fees

• Documentary Stamp Tax (DST): 1.5% of the property price.
• Capital Gains Tax (CGT): 6% (paid by the seller).
• Transfer Tax: 0.5% to 0.75% depending on location.
• Notarial Fee: 1% to 2% of the contract price.

Learn more about taxes in our Taxes and Liabilities section.

Contracts and Agreements: What to Watch Out For

Legal contracts define the terms of property transactions. Here are the key documents involved:

1. Deed of Sale

• Officially transfers ownership from seller to buyer.
• Must be notarized and submitted to the Registry of Deeds.

2. Contract to Sell

• Used when a buyer is paying in installments before full ownership transfer.
• Ensures the seller delivers the property upon full payment.

3. Lease Agreements

• Protects both landlords and tenants by outlining lease terms.
• Learn more in our Rent Property Philippines: Ultimate Guide.

Common Legal Issues in Real Estate and How to Avoid Them

Here are some common legal pitfalls to watch out for:

1. Buying Unregistered or Fake Titled Properties

• Always verify the title with the Registry of Deeds.

2. Undisclosed Encumbrances

• Check for mortgages, liens, or legal disputes before purchasing.

3. Developer Delays in Turnover

• Only invest in trusted developers. See our list of Top Developers.

Final Thoughts: Securing Your Real Estate Transactions

Understanding Philippine real estate law is essential for safe and successful property transactions. Whether you’re a buyer, investor, or landlord, knowing your legal rights and responsibilities will protect you from costly mistakes.