Island Acquisition in the Philippines
Your Piece of Paradise
As an islandsrealtor, I started my real estate career way back 2001 in Puerto Princesa, Palawan. Back then Palawan is not yet known for its spectacular natural wonders. It is known as a place with undeveloped roads and mosquitos that gives malaria. Now, with the efforts of smart and visionary investors Palawan became a top eco-tourism destination. It takes a special breed of investors to make this happen in a country which tourism development is faster than the bureaucracy.
Back then I am very new in online marketing and I have to create a website on my own, I got all of my real estate clients via the internet. I have dealt and delivered several private islands and beachfront properties since 2001. Now, in 2013 is the best time for island acquisition. Let our team of tourism real estate professionals be your guide in finding your piece of paradise.
Island living is more fun in the Philippines
Island Acquisition for Non-Filipinos
The Philippine laws land ownership are restricted to Filipino citizens only. However, from my experience in dealing with non-Filipino clients here are the ways they use to secure and control their Island Property Investment in the Philippines:
- Filipino Corporation
- Condominium Unit Ownership
- Filipino Spouse
- Become a Filipino Citizen
Disclaimer: Please take note that I am not a lawyer. All of my clients have consulted and hired Philippine Real Estate Lawyer. I am just sharing here how they go about with their purchase in the bounds of the law and hopefully will serve as your guide as well.
A foreign national or their corporation can have a 50 years lease with the option to renew for another 25 years with the Filipino island owner. There are special laws however for islands under public domains inside protected areas and forest lands that gives 25 years with the option to renew for another 25 years.
2. Filipino Corporation
A foreign national can form a corporation with Filipino landowners, business persons and/or entrepreneurs. composed of minimum of 5 incorporators. By law, a foreign national can own at most 40% share of the company. The Filipino Corporation can then purchase the island.
3. Filipino Spouse
If you are married to a Filipino citizen, the you can take this option. Also this option if the island is titled and not more than 5 hectares. The foreign spouse name cannot be on the title but on the contracts buying the property. In event of death of Filipino spouse, the foreign spouse can sell the property within the time allotted by law or the property will be passed to the Filipino heirs.
4. Condominium Unit Ownership
If there will be any island resort project with condominium development on it. Take for example in Boracay Island, there are several condominium developments that are taking place. A foreign can fully own condo units not more than 40% of the entire project. This is the best option if you just want to own a piece of the island resort development.
5. Become a Filipino Citizen
If you are ready to renounce your current citizenship then this option is for you. Guidelines how to become a naturalized Filipino Citizen visit the Philippine Bureau of Immigration website here.
Please take note that always consult a lawyer who specializes in real estate and commercial laws because they have a different mindset which are friendly to investors. Also be aware of the Anti-Dummy Law. There are now big casino investors in the Philippines having trouble because of circumventing the law with their fake firms.
ISLAND FOR SALE: Isla Encantadia - Tax Declaration
Securing Tax Declared Islands
The Philippines top tourist destination Boracay Island has 90% of its land as tax declaration. This happens because the economic development of the area went faster than the government bureaucracy. Nevertheless, in order to be one of the "pioneers" in island acquisition in the Philippines like the owners of the resorts listed above we just have to learn how to deal with "tax declared" islands. This tips is also applicable to tax declared islands, beachfronts and other properties intended for tourism business.
- Conduct your due diligence by having your lawyers or hired private investigators check the authenticity of the documents presented: tax declaration, tax receipts, survey plans.
- Secure a certified true copy of these papers from your island broker and have these copies authenticated by you or your trusted representatives.
- Check local ordinances and zoning: barangay, municipal and provincial with regards to the existing special laws (environmental and tourism) which affects the island you are acquiring. See if you can secure board resolutions from them in support of the project you are planning to build in the island in their area of jurisdiction.
- Check with the provincial and municipal environmental office if the island you are purchasing is inside their area of jurisdiction. Find out how you can legally develop the property. You can also hire an environmental planner or resort development consultant if ever you are planning a large scale island resort project.
- Check if there are informal settlers (squatters) or indigenous people (local tribes people) living in the island. Coordinate with the Barangay (Village) Captain to have them summoned and properly compensated (in accordance to law) for their relocation.
- If there are indigenous people living in the island, check with the the government agency in-charge with indigenous people ancestral domain.
- Be sure to include in your contract or conditions of sale proper removal of informal settlers (if any), payment of back taxes (if any), certification from the different levels of LGUs, and the Environment Office that the island you are acquiring is free from any legal questions and problems whatsoever.
- If you are buying an island owned by a deceased person (usually the tax declaration or title still in the name of that deceased person) look for extra-judicial settlement of estate among their heirs. Also, make sure the person you are paying your money with has a Special Power of Attorney to represent their heirs. Always ask for copy of government issued ID to counter-check signatures in legal documents.
- Hire a licensed geodetic engineer to do a relocation survey. This will determine the exact boundaries of the property you are purchasing. Shorelines are considered public domains and you need to secure a foreshore lease to secure these areas.
- Hire a caretaker. Tax declared properties 90% proof ownership is possession.
- Put no trespassing private property sign in all boat approaches of your property.
- Get Local and National Government Approval by requesting for a board resolution in support of your island resort project.
- Comply with the requirements of the DENR with regards to your development.
- Start building and developing your island resort.
- If you are planning to re-sell the island in the future build an interim structure with western standard toilet. You can accommodate island hoppers and divers in your island and will give you extra income to pay for your caretakers.
Boosting the Philippine Tourism Industry
This article was written with the intention of peventing the dream of owning a paradise into nightmares. This to guide investors from all over the world on how to deal with the unique culture of Filipinos and legal conditions in dealing real estate properties for tourism development. Let us work together in making the Philippines the top tropical destination of the world.