Author Topic: Buying/Leasing land or house in Philippines  (Read 885 times)

Offline Hestecrefter

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Re: Buying/Leasing land or house in Philippines
« Reply #15 on: September 03, 2018, 12:11:28 AM »
Greg,

I hate to join the chorus of naysayers, but I echo the sentiment that a measure of caution is required. 

The saving grace here is that megapesos are not involved.  Your downside risk is limited.  It sounds like your loss would be no more than one year’s lease cost, plus the money spent on the nipa huts, should the whole thing blow up in your face.  You can walk away and be out of pocket no more than $15,000 or so (I confess, however, that I have no idea what your construction costs will be, but it sounds like not a lot).

I find myself wondering why the “owner” of the property proposed to be leased is willing to lease at a modest P100,000/yr., then to build a few nipa huts on the cheap, and to throw in free maintenance services.  If he can do all that, why is he not already running the proposed business by himself and making P500,000 or more per year?

Another alarm goes off with this bit of info:


EDIT: in response to the last post, we do have several of my Wife's family members in Cavite who would be prepared to move there and run it for us, but i would be curious about how the locals there would feel having outsiders moving in and running it for us, as i got the impression from the land owner that we will employ him or someone in his family to run the accommodation side, but i told him i only wanted him to help us find a local family who can provide meals for the guests at whatever prices they asked.

If we got my Wife's niece and her hubby to run it, we would build 4 cottages so they can live in one, and basically do everything except the cooking of meals.


If it’s the case that the owner wants you to “employ him or someone in his family” (which does not surprise me at all), I can already sense the resentment (and attendant fallout) at you importing outsiders from Cavite to run the show. 

What would be the expectations of “wife’s niece and her hubby”, who propose to pull up stakes and move from Cavite?  Do they already have a stable source of income (I can guess the answer to that) or will they (most likely) expect to eat off the avails of tito Greg’s resort?  My guess is they are not moving there to provide services gratis.  What is their business experience?

A caveat with anyone running the show in your absence is their honesty.  I can see a fair amount of the proposed business being in cash and how will tito Greg know if some is being skimmed?

Earlier, I alluded to the notion that the nipa hut construction costs will likely be small.  Have you come up with any figures?  Whatever they may be, I would not hold out any hope for recovery at the end of the “lease”, assuming the whole thing does not fall out of bed before 10 or 15 years has run.  For one thing, the buildings will depreciate as a matter of accounting practice, regardless of upkeep.  Using the straight-line method to calculate depreciation, I would expect the useful life of a nipa hut used as a rental to be substantially consumed by the end of 15 years.  If I were the owner, being asked to pay you some kind of compensation for the residual value at lease end, I would probably tell you - in fluent Tagalog - to pound sand. 

As others here have suggested, abandon at the outset any hope of finding succor in the courts should things go sour.  It will take forever, cost you a fortune and be unwinnable.  If the plan is to have any prospect of success, it will depend, in part, upon the honesty, goodwill and decency of the participants.  Given that enforcing any contractual “rights” against a recalcitrant landlord will be nigh on impossible, I would consider any contract itself to be a thing writ in water.  If it works out it will be because the parties to the contract are people of integrity who take their obligations seriously. 

Even if you have the good fortune to be dealing with someone who is genuine and not wholly motivated by self-interest, bad things can happen.  As others here have suggested, with non-titled land someone can come out of the woodwork and assert a claim.  Your “landlord” might die during the term of the lease and his executors, administrators and assigns might take a rather different view of any arrangement and may decide it does not bind them at all.  Do you think you can force them into court and get an order requiring them to stay the course?  We’re not in Kansas anymore.

My apology for sounding so negative.  I am a lawyer and I have had a fair amount of personal experience in the Phils and, on occasion, walked away from a sight more than 10 or 15 thousand dollars.  My own view is that embarking on any “business” venture in the Phils should always be regarded as something fraught with risk and you should put up no more than you are prepared to lose.  If a $15,000 hit will leave you smarting, stay out.  A long time ago, when I was training as a CPA, I was taught a basic principle of business accounting: “Anticipate all losses.  Expect no gains.”  Those words ring as true today as they did then.  Time has served only to enhance their meaning.

Offline lost_in_samoa

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Re: Buying/Leasing land or house in Philippines
« Reply #16 on: October 04, 2018, 06:46:14 AM »
A follow up article I ran across today.

Property sold without the consent of the owner

Offline Gray Wolf

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Re: Buying/Leasing land or house in Philippines
« Reply #17 on: October 09, 2018, 11:05:37 PM »
I've been reading this with a good deal of interest but can offer no suggestions except to pay heed to the words of wisdom shared by the other members of this group. I do however have a question (maybe two) that popped up during the reading of this thread. What experience do you and your wife have in running resort rental properties in a far away island? In that same vein, what experience does your niece and nephew have in running rental properties, or any business for that matter? I see too many ways for you and your profit to be separated. Sorry to say, but unless you personally plan to live there and watch over the property, I would say that you have a 99.9% chance for financial failure. Just my ever humble opinion. Your mileage may vary. Good luck!
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Online gregpinton

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Re: Buying/Leasing land or house in Philippines
« Reply #18 on: December 05, 2018, 02:56:44 PM »
Hi everyone, apologies for not returning until now, and i got so carried away with myself that i came back into the forum and started a brand new Topic regarding this matter, not thinking i already had this one from several months ago.

How things changed during my absence, so here is what i have been up to in the past month or so to try and sort this out with the owner before we go there next year.

Firstly, regards to the size of the Lot that we was offered, i stuffed up somewhat in my opening post of this topic about the size of the lot we was offered, it turned out to be a 500sm beachfront portion of a much bigger lot that the owner has further along the beach, and he wants P100,000 per year for 10 or 15 year lease, however i am going to try and get that down to P75,000 if i can because the beach is still not on any tourist route, and does not get a lot of tourists staying there, mainly because there has been nobody there promoting it, yet it is only 1 hour north from El Nido by boar or car.

I got back to the Lot owner a few weeks ago suggesting that we will be hiring a suitable lawer to do all the required paperwork for any deal that we make with him, and he agreed to this, but we have put a few options to him that we will be asking him to accept before signing any paperwork and us handing him any money.

We want an option to cancel the lease at any time during the 10 or 15 year term (paid up to the end of the current year) and if we do break the lease, we would surrender any dwellings that we have built on his land to him as part of surrendering the lease, but we want him to agree not to terminate the lease himself during the agreed lease period, unless we also agree to it, and if we did agree to it, he will be required to pay us for the actual cost of building any dwellings on the lot, or we will have them removed and re-located to another place (as the cottages will be built in sections and then erected on site so they can be pulled apart if need be.

We have not yet worked out what will happen to the dwellings should the agreed lease period run its full coarse and we do not renew the lease.

I have sent the Land owner plans for the cottages we want to build, and his carpenter advised each one (5.5m x 3.5m) will cost around P250,000 each (he can't give fixed price) which is what i thought they would be.

The idea we have now is for us to provide only the accommodation to tourists that go there, and the tourists will have their meals provided by the land owners wife at a small restaurant located at their home (tourists will pay directly to her) and the land owner himself will provide beach and island hopping trips around the region in his own boats, with them paying him directly as well, and we will have a house keeper to clean the cottages each day, who we will pay ourselves, this way we only need to concentrate on the accommodation side of the business, and other locals can earn some money themselves as well.

We are going back to Palawan next April for 6 weeks, so we will be checking out this particular plot of beachfront land that has been offered to us, and if we can work it out, my wife and the land owner can sort out the legalities and sign whatever documentation needs to be done before handing any money over (it will be a lump sum paid to him each year in advance)

My main concern right now is that i believe the Lot we want is not yet titled, just Tax Dec, and need to find out if the Lot owner is even allowed to Lease a portion to us, and because we will be operating a tourist accommodation business, i also need to find out what permits i need to get, and if i need to obtain building permits for the cottages we will be building as well, and if so, where we need to get them from.

I also need to find out if leasing the beachfront land is a better option than buying it outright, and finding out if the lease payments can be claimed against the business at tax time in the Philippines, or is it different over there as opposed to other countries.

The whole idea for leasing is that we can put our money into building the cottages, building up the business to attract tourists to stay there, and if anything goes wrong during the lease period, we can simply cancel the lease, and walk away leaving him the cottages to do with whatever he likes, and we have lost minimal cash in the process.

We are also looking at doing the same thing in Port Barton (south from El Nido) should this Lot fall thru, and we have been offered a partnership with 2 other existing Eco Resorts in Port Barton and northern Palawan as well, but really want our own place.

Finally, at least one of us would be living there and running it.

Cheers
« Last Edit: December 05, 2018, 03:05:17 PM by gregpinton »

Offline David690

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Re: Buying/Leasing land or house in Philippines
« Reply #19 on: December 05, 2018, 08:48:20 PM »
Hi everyone, apologies for not returning until now, and i got so carried away with myself that i came back into the forum and started a brand new Topic regarding this matter, not thinking i already had this one from several months ago.

How things changed during my absence, so here is what i have been up to in the past month or so to try and sort this out with the owner before we go there next year.

Firstly, regards to the size of the Lot that we was offered, i stuffed up somewhat in my opening post of this topic about the size of the lot we was offered, it turned out to be a 500sm beachfront portion of a much bigger lot that the owner has further along the beach, and he wants P100,000 per year for 10 or 15 year lease, however i am going to try and get that down to P75,000 if i can because the beach is still not on any tourist route, and does not get a lot of tourists staying there, mainly because there has been nobody there promoting it, yet it is only 1 hour north from El Nido by boar or car.

I got back to the Lot owner a few weeks ago suggesting that we will be hiring a suitable lawer to do all the required paperwork for any deal that we make with him, and he agreed to this, but we have put a few options to him that we will be asking him to accept before signing any paperwork and us handing him any money.

We want an option to cancel the lease at any time during the 10 or 15 year term (paid up to the end of the current year) and if we do break the lease, we would surrender any dwellings that we have built on his land to him as part of surrendering the lease, but we want him to agree not to terminate the lease himself during the agreed lease period, unless we also agree to it, and if we did agree to it, he will be required to pay us for the actual cost of building any dwellings on the lot, or we will have them removed and re-located to another place (as the cottages will be built in sections and then erected on site so they can be pulled apart if need be.

We have not yet worked out what will happen to the dwellings should the agreed lease period run its full coarse and we do not renew the lease.

I have sent the Land owner plans for the cottages we want to build, and his carpenter advised each one (5.5m x 3.5m) will cost around P250,000 each (he can't give fixed price) which is what i thought they would be.

The idea we have now is for us to provide only the accommodation to tourists that go there, and the tourists will have their meals provided by the land owners wife at a small restaurant located at their home (tourists will pay directly to her) and the land owner himself will provide beach and island hopping trips around the region in his own boats, with them paying him directly as well, and we will have a house keeper to clean the cottages each day, who we will pay ourselves, this way we only need to concentrate on the accommodation side of the business, and other locals can earn some money themselves as well.

We are going back to Palawan next April for 6 weeks, so we will be checking out this particular plot of beachfront land that has been offered to us, and if we can work it out, my wife and the land owner can sort out the legalities and sign whatever documentation needs to be done before handing any money over (it will be a lump sum paid to him each year in advance)

My main concern right now is that i believe the Lot we want is not yet titled, just Tax Dec, and need to find out if the Lot owner is even allowed to Lease a portion to us, and because we will be operating a tourist accommodation business, i also need to find out what permits i need to get, and if i need to obtain building permits for the cottages we will be building as well, and if so, where we need to get them from.

I also need to find out if leasing the beachfront land is a better option than buying it outright, and finding out if the lease payments can be claimed against the business at tax time in the Philippines, or is it different over there as opposed to other countries.

The whole idea for leasing is that we can put our money into building the cottages, building up the business to attract tourists to stay there, and if anything goes wrong during the lease period, we can simply cancel the lease, and walk away leaving him the cottages to do with whatever he likes, and we have lost minimal cash in the process.

We are also looking at doing the same thing in Port Barton (south from El Nido) should this Lot fall thru, and we have been offered a partnership with 2 other existing Eco Resorts in Port Barton and northern Palawan as well, but really want our own place.

Finally, at least one of us would be living there and running it.

Cheers
I cannot offer any advice on the legalities of what you propose, but for what its worth here is my assessment of the financials.  500sqm is very small, and I doubt that you will manage more than 2 cottages in that space. 2 nights per week per cottage would be considered pretty reasonable occupancy rate, and therefore your income, assuming P500 per night, would be maximum of P104k per year.  Which is only just paying your rent on the land.  All other expenses will eat into your bottom line and I cannot see how that would be a profitable business.
Wishing you well and I am following with interest.


Edit by Steve: Fixed the quote.
« Last Edit: December 06, 2018, 01:41:30 AM by Steve & Myrlita »
Londoner at heart

Offline M.C.A.

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Re: Buying/Leasing land or house in Philippines
« Reply #20 on: December 06, 2018, 03:28:09 AM »
Hi Gregpinton, This land would be considered squatters land because he appears to have no title so this land is worthless and I feel would be a huge money loss and nobody cares about how much money you've lost,  plus the Philippines is really cracking down on these resorts you could end up with fines or troubles with getting a license to run it they might want grease money and what about taxes and a business license Oh boy lets not go there and even deportation and blacklisting if you don't have the proper Visa such as a permanent resident. 

There's a guy on YouTube you should check out the addresses many of these issues and more and I think he's originally from England  his channel is BADLADZ, one of my favorite videos of his about resorts, this video is under his business youtube section so unsure if I can post this if not please remove but gives a wake up call to how things operate here. https://www.youtube.com/watch?v=R74UNl1IVkQ&index=9&list=PLFaaIV9wPHKLJX84S06RnkPvtzfIbkDfg

I'd watch many if not all his business videos but he seems to do well he also owns condos we can own condos as foreigners.
My views would be from someone who lives out in the province close to in-laws on a pension.  Norwegian and French heritage.

Online gregpinton

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Re: Buying/Leasing land or house in Philippines
« Reply #21 on: December 06, 2018, 01:32:46 PM »
Hi guys, regarding the lot owners land being "Squatters" land and being worthless, i don't really know about that, he has now told me that all his properties in Diaplia Bar are Tax Dec, and are up to date, including the large portion of beachfront property that he owns, a portion of which he will lease to us, and this is why i am not going to do any more about this Lease until we go there next April, and my Wife's family in Manila has a Lawer who will take a trip to Diapila Bay to find out what is going on, and advise us accordingly, so we are aware of the pitfalls (i have lived and worked in the Philippines, and been married to my Filipino wife for 30 years, and have owned non titled beach fron properties in Calayo (Batangas)

I know Badladz, we have stayed with him in Puerto Galera several times several years ago, great bloke, and would arguably be the one to listen to regards to living in the Philippines.

As far as all this Government cracking down on businesses in tourist regions especially (Boracay and now El Nido to a lesser degree) we are aware of this, and we already have the updated information regarding lot and dwelling setbacks in Palawan, which is why i have notified the lot owner that i will be submitting my plans and lot layout to the correct authorities for approval, especially given we need to install a septic tank to each cottage.

This is not a case of just jumping in and opening a beach resort (which it isn't anyway) we have thought about it, we have talked to others who have done a similar thing to this (in other places in Palawan) and received good feedback from them, and we do understand that we are not going to make any money in the first year at least.

« Last Edit: December 06, 2018, 01:42:10 PM by gregpinton »

Offline M.C.A.

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Re: Buying/Leasing land or house in Philippines
« Reply #22 on: December 06, 2018, 04:06:39 PM »
I'm a squatter on family land squatted land since 1940 and we pay land taxes there's no title and we could be evicted at any time and do you have a business or permanent resident visa, if not this doesn't bother you?... Wish you well with your new business endeavors.
My views would be from someone who lives out in the province close to in-laws on a pension.  Norwegian and French heritage.

Offline David690

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Re: Buying/Leasing land or house in Philippines
« Reply #23 on: December 06, 2018, 07:26:45 PM »
Hi guys, regarding the lot owners land being "Squatters" land and being worthless, i don't really know about that, he has now told me that all his properties in Diaplia Bar are Tax Dec, and are up to date, including the large portion of beachfront property that he owns, a portion of which he will lease to us, and this is why i am not going to do any more about this Lease until we go there next April, and my Wife's family in Manila has a Lawer who will take a trip to Diapila Bay to find out what is going on, and advise us accordingly, so we are aware of the pitfalls (i have lived and worked in the Philippines, and been married to my Filipino wife for 30 years, and have owned non titled beach fron properties in Calayo (Batangas)

I know Badladz, we have stayed with him in Puerto Galera several times several years ago, great bloke, and would arguably be the one to listen to regards to living in the Philippines.

As far as all this Government cracking down on businesses in tourist regions especially (Boracay and now El Nido to a lesser degree) we are aware of this, and we already have the updated information regarding lot and dwelling setbacks in Palawan, which is why i have notified the lot owner that i will be submitting my plans and lot layout to the correct authorities for approval, especially given we need to install a septic tank to each cottage.

This is not a case of just jumping in and opening a beach resort (which it isn't anyway) we have thought about it, we have talked to others who have done a similar thing to this (in other places in Palawan) and received good feedback from them, and we do understand that we are not going to make any money in the first year at least.

From what you say, you know more about this than anybody here.  Not sure exactly what you can learn from us and what you're asking for..........but I wish you well and hope that you will keep us advised of how it goes.
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Online gregpinton

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Re: Buying/Leasing land or house in Philippines
« Reply #24 on: December 06, 2018, 10:13:15 PM »
From what you say, you know more about this than anybody here.  Not sure exactly what you can learn from us and what you're asking for..........but I wish you well and hope that you will keep us advised of how it goes.

I don't know why you think that i know more than anybody else in here, because i don't, however i am not an idiot either, and as i already mentioned several times, we are not jumping into this blind folded, we are just getting plans together, seeking advice, and looking at all the pitfalls that we may be facing during this venture, and when we arrive in Palawan next April, we will be taking a Family Lawer with us to sort the legalities out for us, and if he advises not to do this, we will walk away and try doing it elsewhere, or we will just buy into an existing business.

My Wife is Filipino, with dual citizenship, but i will be looking into getting the appropriate visa's and paperwork next April to enable me to live there on a permanent basis once we are clear to start this venture, and we will be obtaining all the correct building and business permits as well, as i don't want to be flaunting any laws because i know how tough the government can be over there.

I am a retired building contractor, hence why i am very familiar with drawing plans and making sure i get all the required permits before we start anything, and i would look forward to living at this place while the construction is taking place, and watching the skills of the local tradesmen.

As of tonight, my last communication with the Lot Owner has been thru Facebook/Messenger and he has now seen my proposal, as well as my Cottage Pans, and a Plan of the Lot Layout, and he has agreed to give us my required 30m x 20m lot to build the 3 cottages on, he still has not yet accepted my offer of P75,000 per year lease fee.

The whole idea behind this plan was to try and get other tourists to visit some of the other beautiful beaches and islands that Palawan is known for, unfortunately most foreigners seem to want to go to places such as El Nido, or Boracay, with both places being ruined by the locals who are only interested in the almighty dollar, and don't care about keeping their environments clean, so they deserve to be closed for restitution.

With our revised plan and new cottage design, and bigger beachfront lot, we fully understand that we will only cover our costs during the first year, based on my new estimates, and with a bit of luck, if it does work out, and we expand to a third cottage, we think we should have a pretty decent income earner in the future.

EDIT: i have been trying to upload a copy of my proposed Cottage plan, as well as the revised Lot layout, but it is not working for some reason, so i have them in my Backblaze account, and can be viewed by clicking the following 2 links.

https://f001.backblazeb2.com/file/GlensShareStuff/Cottage%20Plans/Cottage%20Plan.jpg

https://f001.backblazeb2.com/file/GlensShareStuff/Cottage%20Plans/Lot%20Plan%203%20cottage.jpg

Cottage will be something similar to this one. https://f001.backblazeb2.com/file/GlensShareStuff/Cottage%20Plans/Cottage%201%20edit.jpg
« Last Edit: December 06, 2018, 10:48:06 PM by gregpinton »

Online gregpinton

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Re: Buying/Leasing land or house in Philippines
« Reply #25 on: December 07, 2018, 10:43:31 AM »
Found this short but interesting article regarding property ownership and leasing by Badladz.

https://badladz.com/property-ownership-in-the-philippines/

Lease of Property

Now, Lease property from the “owner”. This is legal also.

Write a Lease Contract on the property for 75 years. Pay 10 pesos per year in advance and get a receipt to prove payment. Then REGISTER THIS LEASE ON TITLE. (in my case P75,000 per year in advance)

You now have Physical Control.

A Foreigner can Legally have property ownership in the Philippines on buildings that are on someone else’s property through a process called TAX DECLARATION. This means you pay the taxes on the building and proves your ownership.

If you want to build on that property or there is already an existing building then create a document from the “owner” of the property saying that you have permission to build or purchase the building from the “owner “. Should you ever vacate the property, the owner must reimburse you for construction costs.

Under Article 1678, the lessor upon the termination of the lease shall pay you one-half of the value of the improvements at that time.

Should the lessor refuse to reimburse you said amount, you may remove (demolish) the improvements, even though the principal thing may suffer damage thereby (my cottages will be built in pre-fab format anyway, making them easier to build and dismantle)


The only thing i noticed was there is no mention of what happens if you lease any property from the owner that is only Tax Dec and not titled, but i believe the process is exactly the same, but it can be more of a risk because of the non titled aspect of the leased property.

The lot owner in my case has had his lot surveyed and is awaiting the title process to be completed, which he tells me can be at any time, which doesn't help me out as i really need this lot to be titled before we do anything, so i have asked him if he can check this out for me, and let the people who are dealing with this matter know that he has someone interested in leasing the lot, but will only do so if the lot has a title, they may then speed up the process, but i would not hold my breath for too long.

The section referring to the termination of the lease i found very interesting, and was not actually aware of until i read that article, where it appears that i can actually ask the lot owner to pay me for the actual cost of building the cottages, plus 1/2 of the cost of any improvements made on the property at the time of termination, or i can remove the cottages and take them elsewhere.

I now have to re-think how i can work this out with the lot owner, because if i was to spend say P1,000,000 to build 3 cottages with solar in the first 2 or 3 years, and i was to pay the owner P100,000 per year lease fees over 10 years, then i cannot see him accepting a lease agreement if he has to pay all the lease fees back to me for the cost of the buildings, but if i don't ask him for anything and i leave the cottages there, then he can start his own business by renting them out himself, and the cottages will also drive up the value of his lot as well.








Offline Peter

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Re: Buying/Leasing land or house in Philippines
« Reply #26 on: December 07, 2018, 12:18:13 PM »
Greg.

There are too many variables, IMHO, to be able to make any constructive (pun intended LOL) suggestions.

The legal status of the land as you have described, is debatable. Does he really own it? Are there any encumbrances on the title?
<... and let the people who are dealing with this matter know that he has someone interested in leasing the lot, but will only do so if the lot has a title, they may then speed up the process,  ... >

In my experience, the only way to expedite official transactions would be to use an "express lane" method and even then what you get may not be on the "up and up."

As an example of what can, or may, be in store, albeit in quite an extreme situation.
NAPOLCOR (the National Power Corporation) were given all the required Government permissions to expand their site in our barangay.

They are purchasing, from the original owners - a family of which there are 6 sons/daughters as beneficiaries, 5 of whom have not lived here for many, many years - 32 hectares of what was being farmed as rice/corn lands. All the land was being used, with permission, as farm land by locals. Of the 32 hectares, about 12 were under "Tax Declaration", while the remainder only had permission to farm.

NAPOLCOR paid off, as a good will gesture, the tenants of the 20 odd hectares of non-tax paid land, for the crops/trees/buildings and are now preparing that part for development. Farm houses have been demolished, paddy and corn fields are bulldozed flat, project office containers are installed and tower bases already constructed.

Most of those who have paid the annual land taxes (tax declaration) about 12 hectares, are in court to stop the sale/purchase of the land. (Holding out for more money it is thought locally.) Even though they don't own the property, they still have a form of legal right to occupy. My wife's best friend, who lives quite near, is the daughter of one of the family owners, and said the other day that the legal business has been in court for over 6 months and the local court has now reserved their judgement until next May!

Folks who don't own the land can get paid for moving out! A right bugger's muddle it appears to be.

Now, although most of the above is not applicable in your situation, it spells out, I think, just how fraught land occupation is without the absolute right to own the "mother title".

My only advice would be not to pursue this until the "owner" has the proper title registered in his name.  Even then get a legal opinion, based on current Philippines' land law, by an independent Filipino lawyer, before proceeding further.

But what do I know? My thoughts only. More fun in the Philippines LOL!

Peter
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Virtus autem corruptibilis est,
summa virtute prorsus corrumpitur,

Online gregpinton

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Re: Buying/Leasing land or house in Philippines
« Reply #27 on: December 07, 2018, 02:29:02 PM »
Thanks a lot Peter, a great post indeed, and as mentioned before, we are not going into this blind folded, and leasing i believe is still our first option because the purchase prices of 600sm beachfront lots in northern Palawan (north of El Nido) is simply way over priced, with leasing we can at least claim this cost each year against the business expenses (i know this for sure as of today) and i know we will never buy any lot unless it has the clear title, but leasing a lot with tax dec only is a lot more risky i think.

The lease price of P75,000 per year that we offered to the lot owner has been based on how many tourists go to this place, and what infrastructure is in place (water/power/road access etc) and this region is not a recognized tourist beach as of now, purely because nobody except the owner of the lot that i want has built any accommodation there for tourists to stay in (a 3 bedroom 2 story house with small restaurant) but many who do arrive there do want to stay for a few nights because it is more remote and only inhabited by local Filipino people, but they end up moving on to another place where there is more accommodation.

The lot owner has guaranteed that he is the registered tax dec owner, and taxes are up to date, but he can't tell me when the title will be issued, but he keeps insisting that a lot of properties in Palawan is bought and sold only as tax dec, but i have told him i will only lease if he gets the title first, even if i have to go to the place who processes the title and explain my situation to them (maybe pay a few bribes)

I asked the lot owner a few hours ago what will happen to my 3 cottages when the lease is finished, and he explicitly told me that he wants the cottages handed over to him and we walk away, telling me this is the common lease practice in Palawan, when i don't believe this is so (just in Palawan) so i told him i will not accept this AND pay him P100,000 lease fee each year, because the first 2 cottages will cost me at least P800,000 all up with solar power and water tanks, and another cottage later on will add another P400,000 on top, so at the end we walk away and he can continue running a business and his land value will go up because the cottages are there.

I have now decided not to start this unless he gets the clear title first, and i have decided to make him a new offer now before we go any further.

Option 1: we offer him P50,000 lease fee per year over 10 years (P500,000 total) and we spend P1.2m to build 3 cottages, which equates to P1.7m out of our pocket, and he gets the cottages when the lease period expires.

Option 2, we offer him his P100,000 per year over 10 years (P1.0m total) and we spend P1.2m to build 3 cottages, which equates to P2.2m out of our pocket, but when we walk away after the lease expires, he has to pay us P600,000 for 50% of the cottage construction cost, leaving us P1.6m out of pocket, if he can't pay the P600,000 then we remove 2 of the cottages and leave him just one.

The lot owner is the winner regardless of which option he takes, after 10 years his lot value has risen quite a lot, especially with those cottages already there, and he can continue to operate his own business using them.

The problem with Option 2 is that we have no idea if he will have the cash to pay the P600,000 for 50% of the cottage construction cost, and i would not really want to remove 2 of the cottages, even tho they will be built as pre-fab, so for me, option 1 is the one i would prefer, but i don't like my chances to be honest.

We have 2 other lots offered to us, one is just 15 minutes from Diapila Bay (Bucana) 500sm for P3.5m purchase outright with title pending, and another in Port Barton, south from El Nido, which is 1,800sm clear titled lot with a brand new 64sm bamboo house already, selling for P1.5m, but it is not on the beach.
« Last Edit: December 07, 2018, 02:38:56 PM by gregpinton »

Offline David690

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Re: Buying/Leasing land or house in Philippines
« Reply #28 on: December 07, 2018, 06:44:53 PM »
I don't know why you think that i know more than anybody else in here, because i don't, however i am not an idiot either, and as i already mentioned several times, we are not jumping into this blind folded, we are just getting plans together, seeking advice, and looking at all the pitfalls that we may be facing during this venture, and when we arrive in Palawan next April, we will be taking a Family Lawer with us to sort the legalities out for us, and if he advises not to do this, we will walk away and try doing it elsewhere, or we will just buy into an existing business.

My Wife is Filipino, with dual citizenship, but i will be looking into getting the appropriate visa's and paperwork next April to enable me to live there on a permanent basis once we are clear to start this venture, and we will be obtaining all the correct building and business permits as well, as i don't want to be flaunting any laws because i know how tough the government can be over there.

I am a retired building contractor, hence why i am very familiar with drawing plans and making sure i get all the required permits before we start anything, and i would look forward to living at this place while the construction is taking place, and watching the skills of the local tradesmen.

As of tonight, my last communication with the Lot Owner has been thru Facebook/Messenger and he has now seen my proposal, as well as my Cottage Pans, and a Plan of the Lot Layout, and he has agreed to give us my required 30m x 20m lot to build the 3 cottages on, he still has not yet accepted my offer of P75,000 per year lease fee.

The whole idea behind this plan was to try and get other tourists to visit some of the other beautiful beaches and islands that Palawan is known for, unfortunately most foreigners seem to want to go to places such as El Nido, or Boracay, with both places being ruined by the locals who are only interested in the almighty dollar, and don't care about keeping their environments clean, so they deserve to be closed for restitution.

With our revised plan and new cottage design, and bigger beachfront lot, we fully understand that we will only cover our costs during the first year, based on my new estimates, and with a bit of luck, if it does work out, and we expand to a third cottage, we think we should have a pretty decent income earner in the future.

EDIT: i have been trying to upload a copy of my proposed Cottage plan, as well as the revised Lot layout, but it is not working for some reason, so i have them in my Backblaze account, and can be viewed by clicking the following 2 links.

https://f001.backblazeb2.com/file/GlensShareStuff/Cottage%20Plans/Cottage%20Plan.jpg

https://f001.backblazeb2.com/file/GlensShareStuff/Cottage%20Plans/Lot%20Plan%203%20cottage.jpg

Cottage will be something similar to this one. https://f001.backblazeb2.com/file/GlensShareStuff/Cottage%20Plans/Cottage%201%20edit.jpg

Apologies if I came across as being confrontational.  That is not my nature.  My comment was based upon the fact that for every piece of advice or input from members up until now, you always have stated that you have already considered that and have a way around or a solution for it.  Anyway, as I say before, I wish you very success and hope that you will keep us all updated hoe it works out.
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Online gregpinton

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Re: Buying/Leasing land or house in Philippines
« Reply #29 on: December 07, 2018, 07:45:02 PM »
Apologies if I came across as being confrontational.  That is not my nature.  My comment was based upon the fact that for every piece of advice or input from members up until now, you always have stated that you have already considered that and have a way around or a solution for it.  Anyway, as I say before, I wish you very success and hope that you will keep us all updated hoe it works out.

Its all good David, maybe i came across as a bit of a "bobby know it all" but in reality, we have been involved with buying tax dec properties several years ago in Batangas and Mindoro Island, later on selling them after we got them titled (was a nightmare) for a good profit, but a lot has changed in 15 years, so i need to basically start looking at how it all works today.

We also spent 18 months in Mindoro where we also managed (on a profit share basis) a small beachfront nipa hut resort for the Australian owner, so we are familiar with the tourist business, but not as owners of a tourism business or resort, which in itself would not be dissimilar to each other, however it was more to do with the legalities of actually leasing land to build our cottages on, as i was not able to find anything relating to leasing tax dec land, only titled land, and the best information i got was from the link i provided up the page to Badladz article about buying/leasing property in the Philippines.

So the main focus for this topic going forward was to find out if anyone had solid information relating to leasing tax dec land, and the only solid info i have found is to only lease a titled property for our own legal welfare, so we have heeded this warning and have now told the lot owner that we can't accept any offer until his lot has the clear title in his name only, so i think this is probably not going to happen by the time we arrive in Palawan next April.

Also, i cannot give him his P100,000 per year, spend P1.2m on 3 cottages (possibly more) and then walk away with nothing after 10 years, better he accept P50,000 per year, and then we give him the cottages, better for us, better for him as he gets to continue the business, or we extend the lease at P50,000 per year for another 5 years.

Now looking into other land options just in case.

 


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