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Author Topic: Best Legal Structure for a Condo Project?  (Read 7933 times)

Offline philippineexplorer

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Best Legal Structure for a Condo Project?
« on: June 01, 2009, 06:02:56 PM »
I am planning to build a 5 story luxury condominium building on a piece of land that I own. There will be 4 total units 3, of those being offered for sale as I will retian ownership of one unit. They will be total turn key like in America with all the finishing provided including appliances, etc.....

My question is as follows. How should my condominium be legally structured? I want simplicity, little to no headaches, best for all parties involved and legal protections. The property and building ownership will be in my wifes name and she is a Filipina with our children as beneficiaries.

I have heard arguments that if I incorporate there are a million fees involved, taxes, stringent tax and filing issues and on top of that I can possibly become a minority shareholder and other shareholders could turn the condo docs inside out and change things that I want built in such as 1. No Pets of any kind or farm aninmals allowed on the property, 2. No hanging of laundry outside the building and other lifestyle considerations

I have been suggested that the best route would retain property and building ownership and then lease out (at a sale oriented pricing)† the units on a 40 year term with right to automatically renew indefinetely. I would also be giving the leasee full rights to transfer to another owner/leasee. I would control the board and all rules and regulations would be in my control. T

On the negative side I have heard this would not be attractive to Filipino owners. These units will sell for around 15 to 20 million each for the 200sqm.

Bottom line is I want simplicity while at the same time maintaining the condo doc rules and not having them put in jeopardy. Live and enjoy but not wake up with a couple of roosters greeting me in the morning

Offline Lee2

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Re: Best Legal Structure for a Condo Project?
« Reply #1 on: June 01, 2009, 06:49:54 PM »
Sorry, I do not know about all the other legality issues but I would first suggest you have 5 not four, since the law of ownership says 60/40 and it will be harder to do with just 4 and might really hamper who you can sell the 3 units to. With 5, 2 could be foreign owned, otherwise only one could be.

As far as ownership might go, many of the people who you might sell such units to might also be married to a Philippine citizen, so those would not be considered foreign owned from what I have been told, so you might be able to sell to more foreigners that way.

Last, I always thought a great idea might be a small hotel geared toward foreigners with the penthouse on top being mine and the elevator being a key system so only we or guests we allowed, could get up to that floor, but that is only a dream for me because I could never afford such a project, but maybe something you might want to think about for your project.

The best of luck with it.
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline c_a_p_t_a_i_n_r_o_n

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Re: Best Legal Structure for a Condo Project?
« Reply #2 on: June 02, 2009, 02:07:03 AM »
.................................

Last, I always thought a great idea might be a small hotel geared toward foreigners with the penthouse on top being mine and the elevator being a key system so only we or guests we allowed, could get up to that floor, but that is only a dream for me because I could never afford such a project, but maybe something you might want to think about for your project.

The best of luck with it.




Not that expensive..............20 metres of rope and you\'re sorted..................
instant elevator to the penthouse† ;D

see here


















Offline philippineexplorer

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Re: Best Legal Structure for a Condo Project?
« Reply #3 on: June 02, 2009, 06:16:21 AM »
Any chance we can be serious here and just deal with the subject at hand.

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Re: Best Legal Structure for a Condo Project?
« Reply #4 on: June 02, 2009, 07:19:42 AM »
Any chance we can be serious here and just deal with the subject at hand.

Captain Ron be serious† ;D ;D ;D

I think your project is well outside the league of the members of this forum so I doubt if you will get many serious replies.

Personally, I would think that anyone with P15M-P20M to spend would prefer to use the money to buy a lot and have a luxury house built to their own specification, I know I certainly would. Getting tied up leases and legal wrangling is best avoided in the Philippines. Just my opinion.

Colin

Offline maricel

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Re: Best Legal Structure for a Condo Project?
« Reply #5 on: June 02, 2009, 09:13:00 AM »
Any chance we can be serious here and just deal with the subject at hand.

Captain Ron be serious† ;D ;D ;D

I think your project is well outside the league of the members of this forum so I doubt if you will get many serious replies.

Personally, I would think that anyone with P15M-P20M to spend would prefer to use the money to buy a lot and have a luxury house built to their own specification, I know I certainly would. Getting tied up leases and legal wrangling is best avoided in the Philippines. Just my opinion.


Colin

What Colin says is true, a Filipino with that kind of amount of money will just but a very big lot and have his house built in his own choice of design and specs.† Filipinos are not fond of condos unless it is located in a place like metro manila or Cebu, but then again if they would get one, they won\'t purchase that much. Most reason of why Filipinos acquire condo units is they can be accessible to their work or business or whatever their reason to acquire such property. IMHO as a Filipino, we view condos as a luxury but don\'t consider it as our home. This is not to discourage your plan but do make a very thorough feasibility studies in the area you\'re planning to built in.
God bless you all!

Maricel

Offline kiwiruss

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Re: Best Legal Structure for a Condo Project?
« Reply #6 on: June 02, 2009, 10:49:33 AM »
Hi, im a little curious where you intend to build ? Thats top of the line Boracay prices for a Condo

Offline philippineexplorer

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Re: Best Legal Structure for a Condo Project?
« Reply #7 on: June 02, 2009, 01:16:25 PM »
I appreciate the commentary. In general I would have to agree with you. It is a freakin lot of money for sure.† Most condo\'s these days which sell in the 100,000 per sqm range are found mostly in Manila. However there is lots of locals money in this country and of course there are the well heeled foreigners looking for their piece of paradise and this represents that kind of place.† I am patient, but still it would be great to sell these units in the quickest amount of time and I intend to use every savvy smart marketing tool I can get my hands on to do it. Remember I only have 3 units to sell.

First off I will have a design that will stand out from the outright ugliness that calls itself architecture in this country. Something magazine worthy in the league of Lor Calma or Jerry Contreas (local architects) who are supreme at Tropical Modern. It may take a little while to find the right architect but I will. Probably will a bright young recent graduate of a design school. Who knows from where.

Second, I am offering a turn-key ultra deluxe space that you would have to be an ignoramus from the bowels of Arkansas/Mississippi not to appreciate (no insult intended). Only a person with the kind of money to spend on this will appreciate it. Just add furniture and you are done.

There will be a dedicated web site to promote and only the top realtors will handle it both in and out of the country.

I am not trying to be cocky as I know nothing is quite so easy here in the Philippines. Nevertheless, I will take nothing for granted and it will get done and the units will be sold.

Would still appreciate the help on best type of selling legal structure it should have. Once the project takes more shape I intend to share the building and selling aspects here so others can learn what to and not to do from my experience.

Offline tom.inbigdtexas

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Re: Best Legal Structure for a Condo Project?
« Reply #8 on: June 02, 2009, 01:49:00 PM »
I am planning to build a 5 story luxury condominium building...
How should my condominium be legally structured...
I want simplicity, little to no headaches...
I have heard arguments that if I incorporate there are a million fees involved, taxes, stringent tax and filing issues...
These units will sell for around 15 to 20 million each for the 200sqm.
Bottom line is I want simplicity... Live and enjoy...

Philippineexplorer,

First, if you do not already know the answers to all of the above questions from an attorney highly experienced in condominium construction in the Philippines...† then your plan is dead in the water until you get those answers from that source.

Second, seeking \"simplicity\" & \"no headaches\" - while becoming a real estate developer/owner in a foreign country - is a plan that is doomed to failure.† I can assure you such a plan is an impossibility in the U.S., and I strongly suspect your complications will increase by at least 10 fold in the Philippines, which will result in a severe, long-term migraine.

Third, if you have the necessary funds to properly capitalize the project you envision, but you truly do seek \"simplicity\" while you \"live and enjoy\" life in the Philippines... then you might want to re-evaluate other options available to you with that sum of money that do not involve major construction projects or other activities that will require lengthy and intensive interaction with the Philippine legal system and local government entities.

I truly do wish you the best of luck with your pursuits, but unless you have very deep pockets and can lose your entire investment in your contemplated project, I would hope that you will not gamble your dreams on being able to profitably construct and sale condos in the Philippines.

Best of luck to you,

Tom

† † † †
Dallas, Tx, USA
Mactan, Cebu, PH

Offline philippineexplorer

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Re: Best Legal Structure for a Condo Project?
« Reply #9 on: June 02, 2009, 06:47:20 PM »
Tom

I appreciate your thoughts. Again I am simply asking about legal structure and not about building it.

1. I am not so nieve, ignorant or stupid not to have most of a plan of responsible action in place;

2. I have an extremely credible builder who builds hotels and private residences for numerous savvy and sophisticated foreigners who DON\'T lose money here with their projects and some of these clients are I looked at and his pricing is more or less close to any other builder in the Philippines depending on where you are. As a general rule based on my experience in many areas of the country I have been....In the Province you pay less for labor and more for materials. In Manila and vicinity you pay more for labor and less on materials. The bottom line is building costs will generally range between 15,000 to 20,00 per sqm for a decently finished house no matter where you are unles you build it yourself for 12,000 sqm.† I am calculating around 25,000 for my endeavor and even as high as 28,000 per sqm due to the extremely high quality of my finishings. The job will most likely be a cost plus 15% anyway and once my architectual stuff is done I will know my costs fairly well.

My initial question here was soley about a legal structure. My friends and others I have spoken have their opinions and I was simply asking for others here on the forum. Go corporate or go lease or any other avenues......I have a very good handle on the building aspects.

Thanks to all

Offline aerosick

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Re: Best Legal Structure for a Condo Project?
« Reply #10 on: June 02, 2009, 07:56:58 PM »
Hello,

I assume that your earlier Post about looking for an \"Ultra-Modern Architecture utilizing lots of glass for a residential building job in Tagaytay\" is for this Condo Project. Is this correct?

In this Post you state that you have a Builder in place that has \"numerous savvy and sophisticated foreigners who DON\'T lose money here with their projects\".

What is the Builder telling you about how his other Clients have set up for their legal structures? Have you researched the legal structures of these \"savvy and sophisticated foreigners\"?

I would think that this would be easy information to find out from the Public Offices.

But if you are just here looking for 2 or 3 prospects wanting to spend a 1/2 mil US$ of their retirement egg on a Condo, count me out...

Just an ignoramus from the bowels of Arkansas,

Billy
"We're here to preserve democracy, not practice it."

Gene Hackman: Crimson Tide ~ 1995

Offline philippineexplorer

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Re: Best Legal Structure for a Condo Project?
« Reply #11 on: June 02, 2009, 09:33:21 PM »
Thanks Bill. Big help! (that\'s sarcasm for those of you from Mississippi and Arkansas)

The builder has clients that are 1. Filipino corporations for restaurants and hotels 2. Private Individuals for† residential buildings 3. Joint Foreigner/Filipino corporation for Hotel project.

Have already spoken to some of his clients about building using a Filipino/foreign owned corporation and I see mostly cons to that structure so I keep seeking out more opinions.

Obviously I have heard the opinions of my friends, builders and others and am looking for more and I figured that this is a forum dominated by foreigners who are engaged in building here so naturally I wanted those opinions as well and how it has worked out for them on stuff other than residential.

Anway thanks for all you wonderful suggestions. See ya!!

Offline tom.inbigdtexas

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Re: Best Legal Structure for a Condo Project?
« Reply #12 on: June 03, 2009, 06:21:08 AM »
Tom
I appreciate your thoughts. Again I am simply asking about legal structure and not about building it.
My initial question here was soley about a legal structure.

I have a working knowledge of various ownership/equity structures applicable to the U.S. - Corporate; C corp; S corp; Prof. Corp.; Prof. Asso.; LLC; Partnership; Limited Partnerships; and Sole Proprietorship being the most common.† However, I do not know squat about legal ownership entities† available to a foreigner in the Philippines for purposes of building and owning a multi-unit residential property... unless there is an attorney licensed by the RP who specializes in transactional law who is a member of this Forum, I suspect that the collective knowledge of the members of this Forum on this limited subject also equals \"squat.\" ( ;D no offense intended to any know-it-alls).

That having been said, based solely on what I have seen posted by others on this and other groups, it appears that your options are to select a structure that will:

1) give up control to your wife;
2) give up control to majority shareholders;
3) give up control to someone who is a Philippine citizen eligible for ownership.

If you discover method for a foreigner to own and control real property in the RP, please post it, as I have seen about 1,000 posts searching for this \"holy grail.\"

Good luck,

Tom† † † †  
Dallas, Tx, USA
Mactan, Cebu, PH

Offline kiwiruss

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Re: Best Legal Structure for a Condo Project?
« Reply #13 on: June 03, 2009, 11:28:56 AM »
Friends are doing similar to what you want. They set up a corporation which owns the land. Apartments are sold under Condo laws. (research with a lawyer) Ultimately someone else has a finger in your pie (the corporation) And yes things change when you have built a magnificent building and EVERYONE wants to take a bit more. Tread carefully especially with the famous architects builders etc as they are out to make money like everyone else. A friend here just blew 4.5mill euro to build his dream resort...1/3 finished. gave up and went home (for sale).
Standard build price Boracay for the finish quality you are looking for is 35k+ meter..just for you to compare, but they do sell for $300k+

Offline tom.inbigdtexas

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Re: Best Legal Structure for a Condo Project?
« Reply #14 on: June 03, 2009, 12:54:03 PM »
A friend here just blew 4.5mill euro to build his dream resort...1/3 finished. gave up and went home (for sale).... they do sale for $300k+.
I have an extremely credible builder who builds hotels and private residences for numerous savvy and sophisticated foreigners who DON\'T lose money here with their projects

Kiwiruss, please introduce your friends to Philippineexplorer\'s builder immediately.† My consulting fee for having saved the Dream Resort project is a $300k condo in Boracay.† My fee for having conferred the ideal marketing name on the project is on the house.

Thank you,
Tom† †

PS - Please title my condo in the name of \"Dream Resort Corporation d/b/a Dream Resort, LLC., d/b/a Cayman Island Resorts Holding Company, LTD., d/b/a TominbigDtexas Consulting, P.C.\"†
Dallas, Tx, USA
Mactan, Cebu, PH