How close are you to buying your own home? Most OFWs dream of going back home to the Philippines. A lot of times the process or the lack of understanding of the process involved in buying a property is the only hindrance from fulfilling this dream. It’s not money, it’s time. Do you really have to dedicate your entire precious vacation handling the process? Can you do it while abroad? How can you make sure that the person you entrust to represent you is not getting a runaround by the different agencies you need to secure forms for?
What is “consularization”? Who is the attorney-in fact? How much are the other expenses involved? These are the most asked questions when you plan to buy a property as an OFW. At some point, it feels dumbed down, but the assumption that you can tell a fake document from a real document is not fully helpful either.
Step-By-Step Procedure on Buying a Philippine Real Estate Property for OFWs/Filipinos Abroad
- You will have a representative and he/she will be called attorney-in-fact will reserve the unit for you. He/ She will sign the forms (reservation form, special power of attorney and authorized representative form) as well as pay the reservation fee.
The property agent will then send you the Special Power of Attorney (SPA) for you to sign and consularize. This is the legal document authorizing your attorney-in-fact to act on your behalf. Consularize/consularization- is a required process that authenticate the documents by the Philippine consulate. It usually costs 25 USD per document and varies from which country you’re working from. The documents will have a seal and a red ribbon over it. It’s non-refundable.
- Once reserved, here are the requirements that you need to submit within 30 days:
- The SPA (Consularized) – this must be authenticated by the Philippine consulate
- Income Proof (3 months)
- Proof of Billing (here in the Philippines)
- TIN (for verification. If you don’t have a TIN # in the Philippines, the property specialist may do this for you)
- CEC (Certificate of Employment and Compensation) – needs to be consularized as well
- Employment Contract (should be in English) – must be with the seal of the employer as well as a signature of the authorized personnel (HR manager, etc…). Can be photocopied as long as it is certified as true and correct.
- Post dated checks (PDCs) for the down payment. Requirement may change to some developers. If you don’t have a checking account yet, your attorney-in-fact may open one in his name. If you have a local savings account, you can request for a checking account thru your representative.
- Photocopy or scanned copy of your passport and IDs
- Your attorney-in-fact will apply for a housing loan with the bank (if bank financing), developer (if in-house financing), or Pag-IBIG (if Pag-IBIG financing).
- Send back all the requirements on step 2 via courier to your agent/ property specialist.
- The property specialist will then submit all the documents together with the PDC’s to the developer and that is all there is to it. All you need to do is fund the checking account and continue to pay the monthly amortization.
The steps above will vary depending on the terms of the developer and the bank.
When Buying Condominiums
A down payment of 10%-30% is usually required. Ownership of condominium units is evidenced by the Condominium Certificate of Title (CCT) but the transfer of title is usually not executed until the property is fully paid. Foreigners can only own up to 40% of a condominium project.
The Other Costs
Get your calculators ready for computing these on top of the actual price:
Real Estate Transaction Costs in the Philippines
Purchases from Individuals:
- Philippines Capital Gains Tax – According to the Bureau of Internal Revenue, CGT is 6% of the actual sale price or the zonal value of the property, whichever is higher.
- Philippines Documentary Stamp Tax – 1.5% of the actual sale price or the zonal value of the property, whichever is higher. It is paid depending on the agreement between the buyer and the seller but is usually paid by the former along with the Transfer Tax and Registration Fee.
- Philippines Transfer Tax – It varies from 0.5% to 0.75% of actual sale price or the zonal value of the property, whichever is higher, depending on the location of the property.
- Philippines Registration Fee – It is computed using the Registration Fee Table of the Register of Deeds and is based on the actual price of the property.
Purchases from Developers:
- Philippines Capital Gains Tax – 10% of actual sale price. This value might be expressed as part of the sale price.
- Philippines Documentary Stamp Tax – 1.5% of the actual sale price.
- Philippines Transfer Tax – 0.5% of the actual sale price.
- Philippines Registration Fee – 0.25% of the actual sale price.
It is always a good practice to inspect the land/property you’re going to buy. Inspect not only the physical location but also thru the Register of Deeds to ensure that everything about the property is in the right place and legally documented. Register of Deeds will help you verify the authenticity of the title and the legitimacy of the owners selling you the property.
The turnover process is the most important to a new homeowner, because this is when the property finally changes hands. Because we know how important this is to you, we’d like to share some guidelines to make the transition smooth and satisfactory for both parties.
- Completion of unit will commence upon issuance of Authority-To-Turnover (CLEARANCE) by Documentation
- Completion date:
- Thirty (30) days for single condominium unit
- Forty-five (45) days for tandem condominium units
- Approximately Nine (9) months for unit construction
- Punch listing/inspection by the client will be scheduled after the completion date
- Rectification of punch listed items will be done immediately but completion date may vary depending on the nature of the punch listed items
- Client is responsible in settling all required fees & deposits prior to unit turnover
- Homeowner Orientation of community house rules, policies & regulations is done during handover of unit
- Handover kit and welcome gift is given to client upon acceptance of unit
- Upgrade/improvements of the client’s unit will be allowed only after the acceptance of unit
- Note that certain warranties may be voided by any unit material alteration
I hope that this helps broaden your perspective and make it easier for you to set expectations as you invest into buying your dream place. This is something we should all be aware of and we thought as brokers, sharing this knowledge is important for prospective buyers for it helps them truly understand where their investment is going.