Challenges Foreigners Face in Purchasing Real Estate in the Philippines

My Life in the Philippines: 2005 to the Present

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Challenges Foreigners Face in Purchasing Real Estate

By Corey Augenstein 
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1. Don’t ever get too excited about a property that you lose your common sense and objectivity – Even though real estate is getting more expensive here, prices are still a bargain compared to other places in the world. I mean come on, where can you find a hectare (100,000 square feet) of white sand beachfront property for $20,000 USD.And there is also beachfront property that can cost you one million dollars. In either case, it is very exciting to see that property you have dreamed about your whole life and you want to buy it yesterday. Big mistake. Never, never never allow your excitement to cloud your judgement and good sense.

2. Clear Title – One of the biggest problems and major obstacles is securing clear title. The Philippines has so much land that is without clear title it is laughable. What is more scary is there are no Title companies like in the states where you are fairly protected against fraud. In the states you can get a long term mortgage of up to 40 years and in this process of securing a mortgage generally a careful due-diligence is done on you and the property before a mortgage is granted and even then there is still fraud. Now imagine in the Philippines where for land and existing buildings there are no title insurance companies, no mortgages availiabe and rarely a due-diligence done

Many foreigners here get scammed from people selling trying to sell them property because the foreigner doesn’t do a simple due diligence. Since foreigners can’t own land here they usually purchase through their wives or girlfriends. Unfortunately, their women are probably provincial girls with limited to no education and unlikely to have any knowledge of real estate issues or protocol. All they can think of is their new property! This all gives the foreigner a misguided comfort level since no objections are raised by the spouse. Couple this with the property looking so good and the seller seeming so sincere and the bogus official looking title. The seller takes your money and off they go and you are owning nothing but the pictures of the property you have in your camera and that bogus title. No fun.

3. Claims on Property – Properties here can often be owned by many people who are usually of the same family. Families fight here just like anywhere else and they make their own claims on the property so they have their fair share. So even if you are successful in finding a property there might be a chance someone has or will come out of the woodwork and file a claim against the property even if the title was clear. Many properties in the Philippines have people living on them for decades but technically they don’t own it. After a certain period of time they can make a claim on it and buy it from the government. These are coincidentally the nicer properties that foreginers are interested. This process takes ions so don’t bother waiting around until these claims are resolved. You will have lots of gray hair…

Suggestions

If you see a property that you have an interest in here are a number of places you must go to.

1. Bureau of Land Management – Go here to see the status of a properties title and to get copies of surveys done on the property. A survey will give you the exact square meters and layout of the property. Also the Bureau will let you know if there are any claims on the property. If there are claimants or the title is not clear then forget it. These things can take years to clear up. Move on.

Listen to this. When Lynnette and I moved here we used a real estate agent to find our house. She became a good friend to Lynnette and we have gotten together fairly often. As it turns out her parents live on what is my dream beachfront property. Even better as it turns out, her parents took a real liking to Lynnette and told us they needed money and wanted to sell the property. Of course we never thought it was anyone else’s property but theirs. I was creaming my pants with excitement. We told them we were interested. We asked if the property had clear title and were there any unresolved issues.They said no problems, no unresolved issues and the title was clear. The other challenge we needed clarified was regarding road access. There was a good road that led up to about 300 feet from the property but them it stopped. We asked about this and they said they also owned the land where the balance of the road could be built on. Great. Everything was falling into place.

We asked how much and they said they wanted 4,000,000php which came out to 1,000php per sqm. About $75,000. Lynnette and I thought about it and accepted the price with the condition they would have to put in the road at their expense. They said yes and we shook on it. A few days later we came back to see them to try and put something in writing. They had a lawyer there and he said some other people were very interested and could get 2000php but because they liked us and shook on a deal with us they felt bad but was hoping we could go up to 1,250php. and also be willing to put in the road at our expense. This would be an additional $19,000USD plus the cost of the road which was maybe $10,000USD so $29,000 more than the original deal. Okay, we were pretty put off but new this to be a bargain even at 2,000php. We told them it would probably be acceptable but to give us a couple of days to think about it

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View From South

View From Beach

House #1

Pig Pens

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Well what a bunch of idiots we were. Blinded by our own greed thinking we were getting the property at a fire sale price. Idiots yes, but not stupid as we went to the Bureau of Land Management and found out.

1. The survey showed much less property than they claimed they were going to sell us and owned;
2. AND GUESS WHAT!!! They didn’t even own the property LOL
3. There are claims on the property by 4 other people. Can you believe this shit. I wanted to build a few shallow graves for these nice people.

 

The bottom line is they people lied to us and thought we were stupid enough to buy it from them on the basis of friendship. The moral of the story is don’t trust anyone especially your so-called friends you might make here!!!! Socialize with them but that is all. Of course I am mostly referring to local Filipinos and not so much to expats. But, you still always have to maintain a buyer beware mentality. Just use common sense.

Corey Augenstein 
http://mylifeinthephilippines.com

 

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