Buying/Leasing land or house in Philippines

[gregpinton]

Hi everyone, this may have been covered already, but i am still confused, so i will explain my situation and see if someone can advise the correct law.

I am 61y/o Australian guy, married 28 years to a Filipino woman, we live in Australia.

We are going to Philippines in April 2019 for 2 month holiday, and 4 weeks will be spent in far northern Palwan (Diapila Bay) as we want to try and set up a couple of small cottages to rent out to tourists as there is only one other place there, a 2 story concrete house with 3 bedrooms that is available for tourists, which is owned by a local resident who also runs an island tour business in El Nido.

This guy tells me that he and his nephew are the primary land owners around Diapila Bay, but has no titles for any of his properties, just Tax Dec and some maps with lines drawn on them to show roughly what properties are his.

I asked if he had any beachfront property he can sell to me and my wife (1000sm to 5000sm) and he has such a property on the main beach but will only lease it for P100k per year for 10 years, which i think is too expensive, but i can negotiate with him i think when we go there next year.

He has a small beat up cottage on that land which he will get rid of, and he will tidy it up and also arrange to build 3 small Nipa hut cottages for us at a very reasonable cost, suitable for couples to stay in, and he will arrange for a local family to cook their meals and charge a small fee for this service, and he will have a local man maintain the 3 cottages and the surrounding land at no extra cost.

What would be required of my Wife and I to lease this land from the owner for say 10 years and then build the 3 cottages, as i understand that when the lease is over, we may have the choice of extending, or he can simply take the land back with the cottage on it, and start using it for his own business.

Would this guy need to pay us something for those cottages, and if so, should we include this in any lease agreement that we make (in writing) between him and my Wife and I.

Cheers

[lost_in_samoa]

has no titles for any of his properties, just Tax Dec and some maps with lines drawn on them to show roughly what properties are his.

We have see "informal" real estate agreements work out and turn into a mess both here and in Samoa.

In the good cases .... well it was good.  Folks got what they wanted and profited from each other.

In the bad cases it tore families apart.  Caused people to get in fights.  Wasted huge amounts of resources in court.

Without the possession of a clear, surveyed, deed of title then ownership and proceeds from that ownership can be called into question.

Any deal would be a subjective ...... faith ...... trust ...... based arrangement.

Ester and I looked for over a decade before we found a titled place.  IMO it is  crawling through a barrel of fish hooks.

[gregpinton]

Thanks for the reply, not exactly the information i wanted, so i will see what other might have to say, especially because we want to get a legal document signed by the land owner for the Leasing of a property, so he can't pull the pin out from under us until the lease comes to term.

The whole idea is for us to build the 3 or even 4 Nipa style cottages (without any concrete construction) with all the floor, walls and roof built from hardwood timber frame with split bamboo on the floor, and the walls and roof clad with thatch, which will be the cheapest method of building, and easy to dismantle if we ever had to.

We want to make money from these cottages, and we would employ a local resident who can look after the guests, take the money, prepare the meals and maintain the cottages for us when we are not there, and the land owner will provide his boats for tours to surrounding beaches and islands, and for commuting them back and forth to and from El Nido, where they will initially arrive and depart from.

Cheers

[suzukig1]

Unless you can agree on a contract that will result in a different outcome the land owner has control of what happens to improvements on the land at the end of a lease.

One option is that the land owner can require that the land be brought back to it's original condition at the lessee's expense.  This is the big club that usually forces the lessee to give up any improvements without recovering much from the land owner.  Option 1: You give everything to the land owner and end up with nothing.  Option 2: You pay to have the land brought back to it's original condition and end up with nothing (unless you can somehow save and move any structures).

You need a lawyer that has experience with drawing up leases.

As a start read the PHL Civil Code re: leases.  http://www.chanrobles.com/civilcodeofthephilippinesbook4.htm

[lost_in_samoa]

not exactly the information i wanted

I understand. 

What I can do is tell you about a fellow I knew in Samoa.  Kiwi,  fairly nice guy.  He took a long lease on a hill side lot from a local who had the same ownership documentation as is common here.  No title, just tax receipts and a few other circumstantial documents.

He and the "owner" worked out a contract on the lease and disposition of the improvements at expiry.  My friend executes the lease, finishes construction of a nice place.  He moves in with his new bride.  A cousin to the "owner".

Well couple of years later a "brother"  returns from serving in Iraq.  Spy's a nice looking place on the property.  Decides he likes it.  And takes his brother and my friend to court.  Sue's over lost income and sundry other charges.

The local community kinda rallied behind the veteran, and he prevailed in court.  Property was split between the brothers.  The leased lot being awarded to Iraq brother.

The lease was nullified.  My friend was evicted.  His improvements confiscated without compensation and transfered to Iraq brother.

I understand your situation.  But as long as the "owner" does not have title then there is the possibility that "Uncle Tito" can appear out of nowhere and make a claim.  The courts and community will probably favor him.

Hope this helps.

[gregpinton]

I would want a lease agreement stipulating 10 years minimum with a fixed annual rate for the 10 years (no increases in lease fees) and have an option to lease for a further 5 years should both parties agree to it, and at an agreed annual fee, which may be higher than the previous rate was.

When the lease expires after 10 years, or 15 years (whatever the case may be) we can either clear the property and return it to its original condition, or we can we can ask the owner of the land pay us a set amount of money to leave the cottages there, and he completely take over the accommodation business from us, which i would think would be a much better option for him.

If we can build the cottages at minimal cost to us, the less we lose at the end if we are required to remove them, and building them from timber and thatch makes it a very simple job to remove them if we had to, and we want the cottages to be more akin to the surrounding dwellings on this beach as well, apart from the owners 2 story "yellow and green" concrete accommodation house that is built at one end of the beach.

We just need to make sure that we can make a go of the accommodation business so it gives us a small income on top of paying the lease fees every year, and it is our intention to live there for 6 months a year after 2021 if all goes to plan.

The plan we have worked out is to build 3 cottages initially, and charge 500 to 750 peso per night for each cottage, with occupancy running at 5 nights per week per cottage, and if this works, we can make around 390,000 to 580,000 peso per year depending on what we charge, with the lease costing 100k per year, or less if we can haggle it to say 75k per year, which is what i feel it is worth, given this region has not yet developed any tourism at all, and has only basic facilities, but is within 1 hour of El Nido by boat or vehicle.

As mentioned, a Lawer with skills in Leasing will definitely be a must, but i have to put this to the land owner and i am not sure how he will take this, as we have only talked online several times, and will meet him when we get to Diapila Bay next April to meet him.

Cheers

Edit by Steve: Removed link.

[JoeLP]

There is a community a municipality away from where I live that is going through hell right now based on one thing...deeds.  The man who sold the land/leases has not showed proper deed work and everything is a mess with everyone blaming everyone and courts being used for different levels and difference cases.  The whole thing is a major mess.

Now, that ARE places in the phils where there is no deeds.  Hell, my wife's family lives in such a place.  A complete set of two barangays that have not had any deeds to land at any time.  When the time for deeds came about post WWII, there were claims from everyone and even the government on the land.  So ,no one got it.  No taxes are paid on it...no one has anything in any sense to show proof of ownership.  So who knows, maybe that's what you are dealing with. I don't know.

That said, if the place is not like one of those areas I just discussed, then I would do a damn thing without a deed.  Either the man you are going to lease from better have a deed showing himself as full owner or he's willing to sell you land with a deed.  There are FAR too many dangers that can bite you VERY hard in the butt if you move forward without a deed playing a part.  Because, like the story Samoa shared, the minute someone who DOES have that lease to that land you are wanting to lease shows up....you could be VERY screwed.  And in the philippines?  The law will NOT side with you.  Just won't happen.  And if your wife is not from that area, chances are they will not side with her. 

[fred]

I asked if he had any beachfront property he can sell to me and my wife (1000sm to 5000sm) and he has such a property on the main beach but will only lease it for P100k per year for 10 years, which i think is too expensive, but i can negotiate with him i think when we go there next year.

We are in a similar business but on a different island...Where we are, 100K for that much land on a beach front would cost 10X that amount!
2 things you need to be careful of with beach properties and ANY type of commercial building requiring a business permit..

1. Research very carefully about the easement zone in that area.. Some coastal areas have NO BUILD ZONES of up to 40 Meters from high tide mark.. Where we live,it`s 30 meters.
Since the Boracay drama the DENR are issuing demolition orders around the country.
Be ready for a shed load of requirements to start a business like that from the LGU and the DENR..
Ask the DENR about waste water from septic tank.. They will probably ask you to secure a waste water dispatch permit if there is no accredited waste water treatment facility.
You will also need an ECC certificate and attend a one week seminar to become a PCO.(Pollution Control Officer) and the list goes on and on..
2.
IMO this is not the type of business that will do well if you and your wife are not there managing it on a full time basis.. I cannot emphasis that enough.

In regards leasing,you need to be there and speak with at least 3/4 lawyers till you find one you feel confident with.. Leases here can be renewable but the terms of that renewal must be made clear in the original contract.. Lawyers here do not check any lien issues that the land may have..If the land is tax declaration,You will have to check that out yourself with visits too the DENR,the municipal hall,Barangay hall and the BIR.
If it`s titled you can check it out at The Land Registration Authority.

[piozam13]

2 things you need to be careful of with beach properties and ANY type of commercial building requiring a business permit..
2.
IMO this is not the type of business that will do well if you and your wife are not there managing it on a full time basis.. I cannot emphasis that enough.

totally agree, even if you have lease etc drawn up properly.  nobody might be interested today.  once people see you are making a little money,  many will be interested.  decent people might buy you out fairly - others might just "take over".

[gregpinton]

Thanks for the replies, don't know why my photo was removed from my last post which basically showed the beach area that we are looking at.

Anyway, we know for fact that the "land owner" has no deeds or title, he only has tax dec, and only gave me an aerial photo taken from google earth with a hand drawn outline of the location of the small property that he wants to lease to us, so that kind of annoys me, but i also needed to ask him who actually pay the taxes on that portion of land while it is under lease, him or us ?

Also, that plot he has would be about 50m wide but it goes back around 500m, and around 100m back he is building a concrete block house (its half complete) so we told him we only want the front portion back to about 50m  from the front boundary line (total of 2,500sm) which means he won't have to remove that house, all he needs to do is remove a couple of old shanties at the front, and clear the land for us.

We will be in Palawan for 4 to 6 weeks looking into this, staying in Diaila Bay and commuting back and forth between Diapila Bay and Peurto Princesa, where we hope to find a "reputable" lawer (cough cough) and do some research.

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.

[lost_in_samoa]

once people see you are making a little money,  many will be interested. 

Took me a while to remember the Latin.   Sorry I'm getting older.

"Nemo dat quod non habet"

[FastWalk]

One thing to watch for is make sure you have a clearly defined and documented access from the main road in case the  property you like does not directly connect to the road.  Don't accept a verbal agreement for getting access or right of way to the road.  If there is no formal paperwork available get the barangay captain to be a signed witness to the agreement you need to have access to the road.   If the person you lease from has the access to the road,  make sure to include your agreement that you can also have access,  where that access is and how wide it is.

Go to the regional land registry either personally or have someone you completely trust and make sure the owner is the real owner.  It is some times common due to the CARP system for the real owner to not always be immediately in view.  Land can have more than one title,  usually the one filed in the registry is the proper one.  Getting a lease from a tenant might not protect you,  would want it from the real owner.

[gregpinton]

Hi, just got a more detailed plan of the beach where we want to lease land, and have uploaded the image hoping the mods do not remove it this time.

You can see the 2 small white plots which he has offered us, right next to a small creek running from the hills at the back, we didn't know about this, so we have declined that land as it is too close to the main village area as well as being next to that creek.

When we get there we will approach the owner of the land marked in red and see if we can lease 20 to 25% of that area instead, as we know there are only a few shanty buildings on that land with a few families living in them, and it is more away from the village area as well, plus there is a 10 foot wide dirt access road running all the way along the back of the beach (about 50m back) that connects to the main road that goes to El Nido, apparently suitable for vans and trikes to travel on, which is what we also need.

Cheers

[Steve & Myrlita]

Hi, just got a more detailed plan of the beach where we want to lease land, and have uploaded the image hoping the mods do not remove it this time.

Hi Greg and welcome. Sorry about removing the links earlier but forum rules don't allow attachments to new members on probation. You are now cleared of that.

[gregpinton]

Hi, thats ok, i had a feeling it may have been my new status.

Cheers