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Should you Purchase a “Rights Only" Property in the Philippines?

31 December 2022
Should you Purchase a Rights Only Property in the Philippines

Have you thought about investing your hard-earned money? Investing in real estate can be among the best decisions you can make. There is evidence to suggest that real estate is one of the most profitable investments available today! Besides increasing in value over time, these properties can also provide you with income when converted into something else, such as a house rental, property rental, or farm. Property in the Philippines is far too expensive now, but every so often, you'll find a property with just a tax declaration or with "rights only".

 

There are several reasons why beneficiaries fail to register their property mostly in rural land. These include the fact that they don't have the funds or find it challenging to do so, or that they aren't really concerned about it because they do not even know how to do it. Interested in learning more about "rights only" properties?

 

If you're looking to buy land or a real estate property and not only the right, Lumina Homes is your best pick. Economic development is our focus and we will help help you with the process of owning land without the risks. Hence, if you want an affordable house and lot for sale with a stress-free private ownership process, you can definitely trust Lumina Homes.

 

 

What Do Real Property Rights in the Philippines Mean

The concept of real property rights encompasses both the possession of resources and the use of those resources. Whether tangible or intangible, citizens, businesses, and government bodies already possess these resources. Most countries, such as the Philippines, tend to rely on private property rights for accruing, keeping, naming, leasing, and selling their real estate.

 

All market exchange is based on property rights, and how these rights are distributed in a societal structure influences the effectiveness of commodities.

 

The government enacts laws that protect property ownership by firmly establishing and enforcing those laws. Real estate property rights come with all the corresponding benefits and rights associated with them. A property can be categorized into many types, and the legal protection of each type varies depending on the regulatory authority.

 

Land, condo units, buildings, and houses are among the many types of real estate situated in the Philippines that are subject to different ownership conditions. In order to possess land property, natural-born Filipino citizens and domestic corporations with at least 60 percent stock ownership are required to possess it. Investments in local firms and strategic partnerships may be made by foreign nationals who wish to acquire land in the Philippines, but they are limited to a 40% stake. So, if you're a natural-born Filipino citizen considering buying real properties, take note of this.

 

By mandating the regulation, the 1987 Constitution of the Philippines, its supreme law, further safeguards local ownership into the foreseeable future. Having a rigid and conscientious assessment of possible future landowner qualifications is a component of the Philippines' guided experience of land grants. In most cases, the appropriate register of deeds issues a certificate of title showing ownership of registered land. A condominium certificate of title, however, can prove ownership of a condominium unit.

 

In spite of the fact that the Civil Code of the Philippines recognizes the freedom of the parties to an agreement to specify the contract's terms, the terms must not be contrary to law, morals, or public policy, especially since Philippine laws are considered to be fully integrated into every contract. Therefore, Philippine real estate laws are included in every real estate contract, lease, or ownership agreement.

 

When investing in real estate, you should first check the zoning ordinance of the area where you want to establish your property. This is because you should not settle for real estate that cannot serve your purpose. Due diligence is essential even before business permits or building permits are obtained, as the local government requires location-specific clearance. If conditions are met, zoning ordinances may permit deviation from the dedicated land use.

 

 

Let's Define a “Rights Only” Property in the Philippines

The term "rights only" properties, refers to government-owned properties that are granted to relocated low-income families. Often, in the Philippines, these relocation places are granted with "rights only"; however, a few of these properties eventually become legal possessions when the government hands over the property title. The Local Urban Poor Affairs and Housing Office or LUPAHO in your municipality can provide documentation for these types of real estate.

 

 

Should You Buy a “Rights Only" Property in Philippines?

Despite being able to obtain a Certificate of Title, "rights only" properties tend to be very cheap. The cost-effectiveness of "rights only" properties is tempered by their extreme risk. In addition to acquiring the property from someone who is not legally entitled to it, real estate may also be sold to two or more different buyers. This is called a double sale. It is likely that you will lose your finances in such a case and even end up in a protracted legal battle.

 

 

Do most legal experts agree that buying a "rights only" property is a good idea?

Experts still do not recommend buying a "rights only" property. In the Philippines, the Supreme Court has always ruled that a Certificate of Title is the most reliable proof of ownership. In addition, you may have to wait years and years to access the title. Despite their affordability, you will not feel secure knowing that something could happen in the future. This is because you will not have sufficient title to your property after making significant investments.

 

 

Defining Tax Declaration

A Tax Declaration is a traditional assessment document or record maintained by the provincial, city, or municipal assessor, showing, among other things, the market and assessed values of the real estate as the reference for the collection of real property tax.

 

 

Can you purchase a property with the seller possessing only a tax declaration?

Yes, you can, but it comes with high risks. It puts your property at risk if you buy it from someone who doesn't own it legally. There is also the possibility of a double sale or a situation in which the property is sold to two or more different individuals.

 

Basically, it's either a loss of money or a prolonged court case. Note that this scenario is only common on islands and provinces located far from civilization. Hence, you should be very cautious if someone offers you untitled property in a residential land or city like Manila or Cebu.

 

 

8 Tips on How You Can Minimize the Risk of Buying Untitled Properties

Even though it is not recommended to buy untitled property, there are ways you can minimize the risks if that is your only option.

 

1. Conduct a thorough inspection of the property.

Untitled properties should never be purchased based on photos and papers from unknown sources. You need to verify it yourself if the seller is telling the truth. Millions of pesos are at stake, so you need to verify the truth.

 

Getting to know the history of the property from neighbors (especially the elderly) is a good idea. Their knowledge of the property is often extensive, including who owns it, the heirs, if anyone else lived there, how long they stayed, and many more.

 

2. Visit the municipal or assessor's office to check the property owner's name on the property tax map.

The Tax Map is a massive map that shows the shape and size of a property, as well as the owner of the lot. Checking the available information from the municipal can help you in verifying a few things that can also help you in the process of buying the property.

 

3. Inspect the chain of ownership and secure that all legal heirs have signed.

The most challenging part of dealing with an untitled property is the title search. It's imperative to trace the property back to the person listed on the Property Tax Map in order to determine the chain of ownership. In the event that just one heir refuses to sell it, this is a serious issue. It would be better if you avoided purchasing this property and instead looked for another one.

 

4. Avoid dealing with a Special Power of Attorney or SPA.

There is a requirement that the other sellers provide a Notarized Special Power of Attorney (SPA) from the absent heir confirming he authorizes the sellers to sell the property on his behalf, along with a valid ID, when one or more of the heirs aren't present to sign the Deed of Sale. It's not entirely a red flag, but you can consider it a warning.

 

5. Ask a licensed surveyor for a property survey.

You should ensure that, if you decide to buy said property, you will be paying for the appropriate cost and that the property's meters and bounds are accurately described in the Deed of Sale. Oftentimes, the metes and bounds of a property may change during this process, which is called a Relocation Survey. The last time this property was surveyed was ages ago, when technology was not as advanced as what we have today.

 

6. Initiate a negotiation.

Generally, you've already agreed on the price, but negotiating the payment terms wouldn't hurt. It would be better if you went for a 50-50 split. Payment of 50% down is required, with the remaining 50% due when the title is released under your name.

 

By doing this, you will somehow ensure that the process will run smoothly and that the title will be released under your name. If not, you will still receive half of the money.

 

7. Follow up on the process.

The property has been purchased, the necessary fees have been paid, and the sale has been registered with the proper authorities. It may seem that everything ends at that point, but it does not.

 

The barangay where the property is located will post a Notice informing everyone that you took ownership of the property and giving them the opportunity to contest it. In addition, once the title has been transferred to your name, it will take some time for the title transfer process to be completed. You should be able to get the contact information of the Government agencies so you can ask them about the status of your title.

 

8. Work with a Licensed Real Estate Broker, Accredited Sales Agent, or Lawyer.

If you're dealing with a large amount of money, having an attorney to guide you through every step of the process wouldn't hurt (even if it costs a bit more). Moreover, you can be sure you are dealing with an experienced and knowledgeable Realtor/Salesperson when you deal with one. If there is a problem, you can always file a case against the broker/salesperson for the revocation of his/her professional license.

 

The property may be less expensive than a titled one, but it is very risky and could be the source of litigation.

 

 

Start a Profitable Investment with Lumina Homes

Indeed, investing your hard earned money is crucial. Homeownership requires you to consider various key points before making a major decision. Do not worry though, Lumina Homes is committed to helping every aspiring Filipino achieve their dream of owning an affordable house and lot. Therefore, if you're looking for a sign to begin investing, here it is!

 

If you are interested in purchasing a house and lot in the Philippines through Lumina Homes, we offer several options for securing your down payment and monthly payments. Get started with your home investment with our accredited Lumina Homes sellers and check out the different properties available from Lumina Homes.

 

Become a property owner today!

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