House and Lot Lease
House and Lot Lease
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I wanted to share a few points about a house and lot lease for long term, to hopefully clarify how and why this is done here in the Philippines.
First off, we need to discuss the restrictions of foreign ownership of land in the Republic of The Philippines. Basically, but clearly, the law reads that no foreigner shall be entitled to hold title to land in the country. This is a hard and fast rule that cannot be avoided, and any broker, agent or salesperson who tells you differently, either is not experienced in the real estate industry, or is trying to put one over on you. The issue of foreign ownership of land is a testy subject, with some very nationalistic emotions at play to protect Filipino land for Filipinos. If you try and skirt the law using “dummies”, be very, very careful. If you get caught, you will probably get the book thrown at you.
The Basics Frequently Asked Questions on House and Lot Lease:
- How long can I lease for? – The maximum allowable term of a house and lot lease is 25 years , renewable for another 25 years. After the second 25 years, the possession of the property reverts back to the landowner
- What price should I be paying for a House and Lot Lease? – If it is a long term lease, the reasonable expectation is that you would pay the current market value of the property as if it were a sale
- Can I Pay Monthly? – Yes, legally you can, but in reality this rarely happens, unless it is a short term lease. No landowner would want to tie up his equity in the property for 50 years with the payout strictly being the current market value. An owner on rare occasions might consider monthly payments, but expect to pay multiple times what the current market value is over the term of the contract.
- Can I own the house, and lease just the land? – Absolutely, and this would be the best way for you to maintain some value for your equity. There are no legal restrictions against foreigners owning a structure. Ownership of the house would be shown through Tax Declaration registered at the local municipal treasury office. Note that if you are using this lease to satisfy conditions of an SRRV through the Philippines Retirement Authority, it has to be a house and lot lease, not a land only lease.
- Do I have to pay taxes on the lease? – Yes you do. The total lease contract amount is subject to the same taxes as a sale
- What happens if the landowner dies, sells the property or the company goes bankrupt? – This concerns should definitely be addressed clearly in the house and lot lease contract. There would need to be a clause in the contract that states that that all heirs, assignees etc, are bound by the agreement
- Can my rights be protected? – Yes, absolutely. The house and lot lease contract should be drafted by a trusted Attorney, notarized , and then an annotation registered on the title at ROD(Registry of Deeds). This way, the property cannot be sold, mortgaged or transferred without your authorization to remove the annotation.
For more information on house and lot lease or to see what we at Metro Dumaguete Estates have to offer, please visit our contact page and send us a quick email. We are here to help you ! If you want to to know more about what would be in store for you if you do make the commitment for retirement in Dumaguete, please visit the retiredumaguete website