Buying Property in the Philippines: Foreigner's Legal Guide

What should property buyers in the Philippines know first?

The most important things to know are who legally owns the property, whether the land is legally titled and registrable, and what taxes and fees will apply. You must check the title, land classification, and local zoning, then register the sale with the Bureau of Internal Revenue (BIR), the local government, and the Registry of Deeds.

Real estate in the Philippines is governed mainly by the Civil Code, the Property Registration Decree (Presidential Decree 1529), the Public Land Act (Commonwealth Act 141), the Condominium Act (Republic Act 4726), and various tax and local government laws. Transactions are recorded through the Land Registration Authority (LRA) and its local Registries of Deeds, while the BIR, local treasurer's offices, and the Department of Human Settlements and Urban Development (DHSUD) regulate taxes and real estate development.

Key legal actors and agencies

• Land Registration Authority (LRA) / Registry of Deeds - issues and records land titles (TCTs and CCTs).
• Bureau of Internal Revenue (BIR) - collects capital gains tax, documentary stamp tax, and issues Certificate Authorizing Registration (CAR).
• Local Government Units (LGUs) - city/municipal assessors and treasurers handle transfer tax and real property tax (RPT).
• DHSUD and HLURB (legacy) - regulate subdivisions, condominiums, licenses to sell, and buyer protection.
• DENR - handles land classification (alienable and disposable vs forest or protected areas).
• DAR - oversees agricultural lands and agrarian reform (CARP/CARPER).

Core principles you should understand early

• Registered title prevails - Under the Torrens system, the person named in the Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) is presumed the lawful owner.
• Tax declaration is not ownership - A tax declaration only evidences possession and tax obligations; it does not equal a title.
• Form and registration matter - Sales must be in a written Deed of Absolute Sale and notarized to be binding on third parties when registered.
• Land classification is critical - Only alienable and disposable land can become private property. Forest, mineral, and protected lands cannot be privately titled.
• Due diligence avoids costly litigation - Checking title history, encumbrances, and disputes is much cheaper than a court battle later.

Who is allowed to own real estate in the Philippines?

Filipino citizens and corporations that are at least 60% Filipino-owned may own land in the Philippines. Foreigners generally cannot own land, but they may own condominium units (up to 40% of a project) and can lease land long-term.

The 1987 Constitution and related laws like the Anti-Dummy Law (Commonwealth Act 108) restrict land ownership to Philippine citizens and qualified Philippine corporations. There are limited exceptions, such as hereditary succession and special economic zone arrangements, but any attempt to hide foreign ownership through nominees can carry criminal liability.

Ownership by Filipino citizens and corporations

• Filipino citizens - May own land and buildings subject to laws on land classification and agrarian reform.
• Philippine corporations - Must be at least 60% Filipino-owned to own land directly.
• Balikbayans / former Filipinos - May own limited residential land (e.g., up to 1,000 sq.m. urban or 1 hectare rural under specific conditions) under certain laws and policies.

Foreign individuals and entities

• Land ownership - Generally prohibited for foreigners except by:
  • Hereditary succession (inheritance) as an heir.
  • Ownership acquired before current constitutional bans (rare legacy cases).
• Condominium ownership - Allowed if:
  • Total foreign ownership in the condominium corporation does not exceed 40%.
  • Foreign shareholding in the project stays within legal limits under RA 4726.
• Long-term lease of land - Under the Investors Lease Act (RA 7652), foreigners may enter into:
  • Initial lease up to 50 years, renewable for 25 years, for investment purposes.
• Anti-Dummy Law - Prohibits using Filipino "dummies" to hold land for foreigners; violations may result in fines, imprisonment, and company dissolution.

Practical foreign ownership structures

What types of property titles and documents are used in the Philippines?

The main ownership documents are Transfer Certificates of Title (TCT) for land and Condominium Certificates of Title (CCT) for condo units. Supporting documents include tax declarations, Deeds of Sale, and various clearances and certifications.

These documents are issued and recorded by different agencies, and each serves a specific purpose. Secure ownership depends on a clean TCT or CCT registered with the Registry of Deeds, not just on tax declarations or private contracts.

Core ownership documents

• Original Certificate of Title (OCT) - First title issued when land is initially registered under the Torrens system.
• Transfer Certificate of Title (TCT) - Issued when ownership of titled land is transferred.
• Condominium Certificate of Title (CCT) - Issued for individual condo units under the Condominium Act.

Supporting and related documents

• Tax Declaration from the City/Municipal Assessor:
  • Used for assessing real property tax.
  • Evidence of possession, not conclusive proof of ownership.
• Deed of Absolute Sale (DOAS):
  • Main contract between seller and buyer.
  • Must be notarized to be registrable and to bind third parties.
• BIR Certificate Authorizing Registration (CAR):
  • Issued after payment of capital gains tax (or creditable withholding tax) and documentary stamp tax.
  • Required before the Registry of Deeds will transfer the title.
• Real Property Tax (RPT) clearances:
  • Show there are no unpaid real property taxes.
• Certificates from Registry of Deeds:
  • Certified True Copy of Title.
  • Certified Encumbrance or Adverse Claim annotations.

How to spot red flags in titles

• Title number does not match the property location or lot/plan numbers in the survey.
• Multiple titles claimed over the same property.
• Adverse claims, notices of lis pendens, or mortgages annotated on the title.
• Title not yet transferred from long-deceased owners or missing links in the chain of ownership.
• Seller only has a tax declaration, "rights" or unregistered "Deed of Sale" but no TCT/CCT.

How do you safely buy real estate in the Philippines?

To safely buy property, you must verify the title and property status, use a clear written contract, pay the correct taxes, and register the sale so the title is transferred to your name. Skipping due diligence or registration exposes you to fraud, double sales, and future disputes.

The process differs slightly for raw land, houses and lots, and condominium units, but the principles are the same: verify, document, pay, and register. Working with a reputable broker and lawyer significantly reduces risk, especially for high-value transactions.

Step-by-step process for buying titled property

1. Initial review and offer
   • Get a copy of the title (TCT/CCT) and tax declaration from the seller.
   • Check the property's physical condition and neighborhood.
   • Agree on a purchase price and general terms.
2. Due diligence
   • Secure a Certified True Copy of the title from the Registry of Deeds.
   • Check annotations for mortgages, liens, adverse claims, or pending cases.
   • Verify real property tax payments with the local treasurer.
   • Confirm zoning and land classification with the LGU and/or DENR.
   • If a condo or subdivision, verify the developer's licenses with DHSUD and HLURB legacy records.
3. Contract and payments
   • Sign a Contract to Sell or Reservation Agreement for installment or pre-selling projects.
   • For ready-for-occupancy or full payment, prepare a Deed of Absolute Sale.
   • Use traceable payments (bank transfers, manager's checks), and avoid large cash transactions.
4. Notarization
   • Have the Deed of Sale notarized by a licensed notary public.
   • Ensure the notary details and roll number are valid and current.
5. Pay taxes at BIR
   • File the Deed of Sale and required forms with the BIR Revenue District Office.
   • Pay Capital Gains Tax (CGT) or Creditable Withholding Tax (CWT), and Documentary Stamp Tax (DST).
   • Obtain the Certificate Authorizing Registration (CAR).
6. Local transfer tax and assessments
   • Pay local Transfer Tax at the city/municipal treasurer.
   • Secure updated tax declarations in your name from the assessor (after title transfer).
7. Title transfer
   • Submit the CAR, Deed of Sale, old title, tax clearances, and other documents to the Registry of Deeds.
   • Pay the registration fee.
   • Claim the new TCT/CCT in your name when released.

Typical timeline

• Due diligence and contract negotiation: 1 to 3 weeks.
• BIR processing and CAR issuance: 2 to 6 weeks (longer if documents incomplete).
• Title transfer at Registry of Deeds: 2 to 8 weeks, depending on location and volume.
• Total realistic timeframe: roughly 1.5 to 4 months from signing to new title issuance.

Common mistakes buyers should avoid

• Paying large amounts before verifying the title and property status.
• Relying only on a tax declaration or "rights" without a registered title.
• Not checking for unpaid taxes, mortgages, or co-owners' consent.
• Failing to register the sale and leaving the title in the seller's name.
• For foreigners, using illegal nominee schemes in violation of the Anti-Dummy Law.

What taxes and fees apply to real estate transactions in the Philippines?

Real estate transactions usually involve capital gains or withholding tax, documentary stamp tax, local transfer tax, registration fees, and notarial and professional fees. Combined, these costs often reach about 7% to 12% of the property's value, depending on the deal structure and location.

By law, some taxes are the seller's obligation while others are typically borne by the buyer, but parties may reallocate costs contractually. The BIR always computes national taxes on the higher of the contract price, BIR zonal value, or LGU fair market value.

Main taxes and fees on a typical sale

Sample cost estimate (for planning)

• Property price: PHP 5,000,000.
• Approximate taxes and fees:
  • Capital Gains Tax: PHP 300,000.
  • DST: PHP 75,000.
  • Transfer Tax (0.5%): PHP 25,000.
  • Registration Fee (0.25%): PHP 12,500.
  • Notarial Fee (~1% cap, often discounted): PHP 20,000 to PHP 30,000.
• Total typical costs (excluding broker and legal fees): roughly PHP 430,000 to PHP 450,000.

Ongoing property costs

• Real Property Tax (RPT) - Paid yearly to the LGU; surcharges and penalties apply for late payment.
• Special Education Fund (SEF) - Additional 1% RPT usually added for education.
• Condo dues or HOA fees - Monthly or quarterly; can be significant for high-end developments.

How do you transfer and register a land title in the Philippines?

You transfer and register a land title by executing a notarized Deed of Sale, paying the BIR taxes and getting a CAR, paying the local transfer tax, and then filing all documents with the Registry of Deeds to issue a new title in the buyer's name. Without registration, the title on record stays with the seller, and your rights remain vulnerable.

The process is largely administrative but very document heavy. Missing signatures, incorrect property descriptions, or unpaid taxes can delay registration by months.

Step-by-step title transfer flow

1. Prepare documents
   • Notarized Deed of Absolute Sale.
   • Owner's duplicate copy of the existing TCT/CCT.
   • Tax clearances, IDs, and corporate documents if applicable.
2. BIR filing and payment
   • File the deed and forms within the BIR's prescribed period (commonly 30 days from notarization for some taxes).
   • Pay CGT or CWT and DST.
   • Claim the CAR and stamped Deed of Sale.
3. Local government processing
   • Present CAR, title, and deed to the city/municipal treasurer.
   • Pay transfer tax and secure receipts.
4. Registry of Deeds filing
   • Submit CAR, tax receipts, notarized deed, old title, and required IDs/authorizations.
   • Pay registration fees based on the LRA schedule.
   • Receive the new TCT/CCT once processed.
5. Update tax declaration
   • Bring the new title to the Assessor's Office.
   • Request issuance of new tax declaration in the buyer's name.

Judicial vs administrative titling

• Judicial titling (Land Registration Court)
  • Used for original registration under the Torrens system when land has no existing title.
  • Requires proof of open, continuous, exclusive, and notorious possession and ownership.
  • Can be lengthy and costly; requires a lawyer.
• Administrative titling
  • Handled by DENR and other agencies for certain public lands.
  • Subject to specific deadlines and qualification rules.

What are the rules for condos, subdivisions, and homeowners associations?

Condominium and subdivision projects must comply with the Condominium Act and the Subdivision and Condominium Buyers Protective Decree, including registration with DHSUD and issuance of titles to buyers. Homeowners associations (HOAs) and condo corporations manage common areas and enforce community rules, and owners must pay association dues.

These projects offer structured living but come with legal obligations regarding use of property, alterations, and payment of shared expenses. Foreign ownership rules, maintenance responsibilities, and governance documents all affect your rights.

Condominium projects

• Governed by RA 4726 (Condominium Act) and PD 957.
• Developer must secure:
  • License to Sell and Certificate of Registration from DHSUD.
• Each unit gets a CCT issued by the Registry of Deeds.
• Foreigners may own units subject to the 40% project-wide cap.
• Unit owners automatically become members of the condominium corporation that manages common areas.

Subdivision projects

• Also regulated by PD 957 and DHSUD rules.
• Buyers get individual TCTs for their lots or house-and-lot packages.
• Developers must complete basic facilities like roads, drainage, and open spaces.
• The Maceda Law (RA 6552) protects installment buyers of residential real estate from immediate cancellation and forfeiture.

Homeowners Associations (HOAs) and condo corporations

• Usually organized as non-stock corporations.
• Governed by:
  • Articles of Incorporation.
  • Bylaws and House Rules.
• Have the power to:
  • Collect association dues.
  • Enforce subdivision/condo rules.
  • Maintain common areas.
• Owners must:
  • Pay dues to avoid penalties or disconnection of certain services.
  • Observe use and alteration rules (pets, renovations, rentals, etc.).

How do residential and commercial leases work in the Philippines?

Residential and commercial leases are governed by the Civil Code and, for lower rent residential units, by the Rent Control Act and its extensions. Leases must clearly state the rent, term, and responsibilities, and longer-term leases should be in writing and registered.

Landlords and tenants both have statutory rights, including rules on rent increases, deposits, and eviction. Foreigners often use long-term leases to control land where they cannot own it.

Basic lease rules

• Form:
  • Leases for more than one year should be in writing.
  • Leases over one year can be registered with the Registry of Deeds.
• Deposits and advance rent:
  • Common practice: 2 months deposit + 1 month advance for residential.
  • Contract should specify when and how the deposit may be applied or refunded.
• Maintenance:
  • Landlord: structural repairs and major defects.
  • Tenant: minor repairs and proper use of the property.

Rent control for residential units

• Rent Control Act (RA 9653) and later extension laws apply to:
  • Residential units within certain monthly rent brackets (recent guidelines often cover up to PHP 15,000 in NCR and lower in other areas, subject to periodic adjustment).
• Covers:
  • Limits on annual rent increases (e.g., capped percentage per year).
  • Rules on deposits and eviction grounds.
• Units above the rent thresholds are generally not under rent control but still follow the Civil Code and the contract.

Commercial leases and long-term land leases

• Commercial leases are largely contractual, with parties free to negotiate terms, escalation, and fit-out obligations.
• Foreign investors may use long-term leases under the Investors Lease Act for:
  • 25 years renewable up to 25 more years; or
  • Up to 50 years renewable for 25 years in certain cases.
• Registration of long-term leases gives the lessee stronger protection against third parties and future buyers of the land.

What special rules apply to agricultural, public, and ancestral land?

Agricultural, public, and ancestral lands are subject to special regimes that may limit sale, ownership, and conversion. Before buying such land, you must verify that it is alienable and disposable, free from agrarian reform coverage, and not part of an ancestral domain.

Violating agrarian reform or land classification laws can lead to cancellation of titles, legal disputes, and even criminal liability. These lands often require clearances from national agencies, not just local offices.

Agricultural land and agrarian reform

• Governed primarily by:
  • Comprehensive Agrarian Reform Law (RA 6657) and its amendment (RA 9700).
• Lands awarded to farmer-beneficiaries may:
  • Be subject to restrictions on sale or transfer for a number of years.
  • Require DAR clearance for transfer or conversion.
• Conversion of agricultural land to residential or commercial use:
  • Requires DAR conversion clearance.
  • Violations can lead to cancellation of titles or penalties.

Public land and land classification

• Under the Public Land Act (CA 141) and Constitution, land is classified as:
  • Agricultural (alienable and disposable or otherwise).
  • Forest or timber.
  • Mineral.
  • National parks or protected areas.
• Only land classified as alienable and disposable agricultural land can be titled to private persons.
• You can request a DENR certification on land classification before buying.

Ancestral domains and IPRA

• Indigenous Peoples Rights Act (RA 8371) recognizes ancestral domains and lands.
• Ancestral domains are covered by Certificates of Ancestral Domain Title (CADT).
• Special rules apply to:
  • Recognition of customary law.
  • Consent for projects and certain transactions (Free and Prior Informed Consent or FPIC).
• Buying land within ancestral domains without proper processes can be invalid or voidable.

When should you hire a real estate lawyer or expert in the Philippines?

You should hire a real estate lawyer when dealing with high-value properties, complex ownership histories, foreign ownership structures, or any sign of title or boundary problems. A reputable broker or surveyor is also crucial for pricing, negotiation, and technical checks.

For straightforward, low-value deals between family members with clear titles, you might manage with only basic notarial help, but professional review still adds safety. As transaction size and complexity increase, legal and technical help quickly becomes cost-effective.

Situations where a lawyer is strongly recommended

• Property value is high relative to your resources.
• Title shows annotations like mortgages, adverse claims, or lis pendens.
• There are multiple co-owners, heirs, or pending estate proceedings.
• Land is agricultural, near protected areas, or suspected to be untitled or public land.
• You are a foreign buyer needing to comply with ownership restrictions and Anti-Dummy Law.
• Developer is offering complex pre-selling or long-term payment schemes.

How a lawyer can help

• Review and draft Deeds of Sale, leases, and contracts to sell.
• Conduct title verification and legal due diligence.
• Structure lawful foreign ownership or lease arrangements.
• Handle estate settlement and partition before sale.
• Represent you in negotiations or disputes with sellers, co-owners, or developers.

Other experts worth engaging

• Licensed real estate broker - Market pricing, listing access, negotiation, document coordination.
• Geodetic engineer / surveyor - Verification of boundaries, preparation of subdivision/consolidation plans.
• Tax professional - Planning around CGT, CWT, VAT (for developers), and ongoing tax obligations.

What are the practical next steps for property buyers and owners?

Your next steps are to clarify your goal (buying, selling, leasing, or regularizing title), gather all existing property documents, and map out the specific legal and administrative processes that apply. Then, build a timeline and budget that include taxes, registration, and professional fees.

By moving in a structured way, you minimize delays and surprises and improve your negotiating position with counterparties.

Action checklist for buyers

1. Define your goal and constraints:
   • Location, budget in PHP, timing, and whether you will need financing.
2. Shortlist properties:
   • Compare titled vs untitled, condo vs subdivision vs raw land.
3. Engage a licensed broker and/or lawyer for due diligence.
4. Request and review:
   • Certified True Copy of title.
   • Tax declaration and RPT receipts.
   • Developer permits if applicable.
5. Negotiate and document:
   • Use clear written contracts with payment schedules and conditions.
6. Plan for taxes and fees:
   • Set aside roughly 7% to 12% of property value for transaction costs.
7. Complete BIR, LGU, and Registry of Deeds processes until the new title is in your name.

Action checklist for current owners

1. Secure and digitize:
   • Original owner's duplicate title, tax declarations, and receipts.
2. Check your status:
   • Confirm if there are any liens or adverse claims annotated on the title.
3. Update:
   • Tax declarations and RPT payments.
   • Estate settlement if the titled owner is already deceased.
4. Before selling or mortgaging:
   • Have a lawyer review your documents.
   • Clarify who will bear which taxes and fees in the contract.
5. For long-term planning:
   • Consider estate and succession planning to avoid future disputes.