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Condo VS House and Lot

Location

Condominiums are located in prime locations – in business districts, near shopping malls,
churches, marketplaces, restaurants, schools and in where there are major routes public transportation. This would surely offer convenience and cost effective.

Space

It is evident that a house has bigger space, you can do more with your property. On the other hand, when you own a condo unit, you have to settle with maximizing your space and you share common areas with other unit owners.

Maintenance, repairs and renovation

Due it’s limited space, a condo has lesser expense on the maintenance, repairs and rennovation. Most often you would need to get permission from the management before you proceed.

For house and lot, cost of maintenance is high, specially if have bigger area where you have to hire gardener and house help to do the chores. But the good thing is that you have full control of your property, it gives you the freedom of what to do with it to your hearts delight.

Price

Houses are priced at higher range than condo, considering it’s land component. Lower-range condominiums are often within the budget of first-time buyers and start-up families.

Although you may also find houses similar to the price of a condo, but location is in the suburbs and not so derirable neighborhood.

Deciding to sell your house is a major decision. It has to be weighed carefully. You need to fully understand your intentions as may affect your current financial position, your lifestyle and your family.

One can do the marketing by himself or he may hire an expert real estate agent.

Hiring a Real Estate agent makes it more easier and quick. As an expert he must be able to give you insights with regards to the pricing, the favorable time to sell, current market conditions. Some of them have a pool of investors or network of agents who is able to sell your property in short span of time.

A skilled real estate agent is knowledgeable on tax savings and estate planning strategies.

Most of all, you must be able to talk to your agent on his commitment and efforts and strategies that he will employ for a fast sell-out of your property.

General requirements of most banks, for complete list of requirements for bank financing, kindly check with the bank to which you will file the loan to.

If in the Philippines

  • Income Tax Return (latest) Certificate of employment with compensation;
  •  Business Permit (if self-employed) Community;
  • Tax Certificate T.I.N. (Tax identification Number);
  • Bank Statement (for the last 6 months);
  • Marriage Certificate (if married) (Photo copy);
  • Proof of Billing Post Dated Checks.

Note: All original except marriage certificate, Business Permit, Community Tax Certificate

If Borrower is permanently abroad

  • Federal Income Tax Return (latest)
  • Bank Statement (for the last 6 months)
  • Special Power of Atty. (SPA) (consul authenticated)
  • Certificate of Employment with compensation (consul authenticated)
  • Proof of remittance
  • Business Permit (if self employed)
  • Marriage Certificate (if married)
  • Post Dated Checks.

Location

Condominiums are located in prime locations – in business districts, near shopping malls,
churches, marketplaces, restaurants, schools and in where there are major routes public transportation. This would surely offer convenience and cost effective.

Space

It is evident that a house has bigger space, you can do more with your property. On the other hand, when you own a condo unit, you have to settle with maximizing your space and you share common areas with other unit owners.

Maintenance, repairs and renovation

Due it’s limited space, a condo has lesser expense on the maintenance, repairs and rennovation. Most often you would need to get permission from the management before you proceed.

For house and lot, cost of maintenance is high, specially if have bigger area where you have to hire gardener and house help to do the chores. But the good thing is that you have full control of your property, it gives you the freedom of what to do with it to your hearts delight.

Price

Houses are priced at higher range than condo, considering it’s land component. Lower-range condominiums are often within the budget of first-time buyers and start-up families.

Although you may also find houses similar to the price of a condo, but location is in the suburbs and not so derirable neighborhood.

The following is a summary regarding the Philippine Real Estate Law. For a comprehensive information source, please refer to the philippine government page about the subject by clicking on this link.

3.1 BP 185 Property Ownership for Former Filipino

If a former Filipino who is now a naturalized citizen of a foreign country does not want to avail of the Dual Citizen Law, he or she can still acquire land based on BP (Batas Pambansa) 185 & RA (Republic Act) 8179 but limited to the following:

3.2 For Residential Use (BP 185 – enacted in March 1982)

Up to 1,000 square meters of residential land.Up to one (1) hectare of agricultural of farm land.For Business / Commercial Use (RA 8179 – amended the Foreign Investment act of 1991):Up to 5,000 square meters of urban land.Up to three (3) hectares of rural land.

3.3 REPUBLIC ACT NO. 4726  Condominium Act of the Philippines

A condominium is an interest in real property consisting of separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building. A condominium may include, in addition, a separate interest in other portions of such real property. Title to the common areas, including the land, or the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the “condominium corporation”) in which the holders of separate interest shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas.

3.4 REPUBLIC ACT NO. 6552  MACEDA LAW

An Act to provide protection to buyer of real estate on installment payments

Where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace period for every one year of installment payments made; provided, That this right shall be exercised by the Buyer only once in every five years of the life of the contract and its extensions, if any.

(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made; provided, that the actual cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer. Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made. SECTION 4.

In case where less than two years of installments were paid the seller shall give the buyers a grace period of not less than sixty days from the date the installment become due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.

Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance (e.g., paint, roof, AC, appliances, flooring)? Also ask about the house and neighborhood, focusing on quality of life issues. Be sure the seller’s or real estate agent’s answers are clear and complete. Ask questions until you understand all of the information they’ve given. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive.

To qualify for a Pag-IBIG housing loan, a member shall satisfy the following requirements:

On Pag-IBIG Membership
Must be a member under the Pag-IBIG I, Pag-IBIG II or Pag-IBIG Overseas Program (POP) for at least twenty-four (24) months, as evidenced by the remittance of at least 24 monthly contributions at the time of loan application.
A member with less than the required number of contributions applying for a Pag-IBIG housing loan shall be allowed to make lump sum payment based on the mandatory monthly membership contribution rates (both EE and ER share) to meet the said requirement at point of loan application provided he has been a contributing member of the Fund for at least twelve (12) months. Lump sum payment of membership contributions shall be considered a single contribution for the applicable month as of the payment date.
A member whose loan exceeds P500,000.00 shall be required to pay the upgraded membership contribution rates upon housing loan approval and onwards.
A member who has contributed for at least two (2) years and whose loans exceed P500,000.00 shall be required to pay the upgraded contribution rates upon housing loan approval and onwards.

For purposes of satisfying the required two (2) years membership contributions, the member may opt to pay in lump sum any amount short of the said requirement. In addition, the period corresponding to the TAV applied earlier to an outstanding loan shall also be considered when counting the total number of monthly contributions, provided the remaining TAV after offsetting does not fall below the equivalent amount of two (2) years membership contributions.
Not more than sixty-five (65) years old at the date of loan application and must be insurable; provided further that he is not more than seventy (70) years old at loan maturity;
Has the legal capacity to acquire and encumber real property;
Has passed satisfactory background/credit and employment/business checks of the Pag-IBIG Fund;
Has no outstanding Pag-IBIG housing loan, either as a principal borrower or co-borrower;
However, should a co-borrower in a tacked loan signify an intention to avail of a Pag-IBIG housing loan for himself, he shall be allowed to do so provided the tacked loan is updated and the amount proportionate to his loan entitlement has been fully paid. Hence, the co-borrower shall be released from the original obligation and shall be allowed to avail of his own Pag-IBIG housing loan, subject to standard evaluation procedures.
Had no Pag-IBIG housing loan that was foreclosed, cancelled, bought back due to default, or subjected to dacion en pago, which shall include cases where the borrower is no longer interested to pursue the loan and surrenders the property;
Has no outstanding Pag-IBIG multi-purpose loan in arrears at the time of loan application. A member whose multi-purpose loan is in arrears shall be required to pay his arrearages over the counter to update his account. “

Pag-Ibig Housing Loan Application pls. Click this Link

As a rule, ownership of lands in the Philippines is reserved to Filipinos only (Section 2, Article XII, 1987 Constitution). As an exception, foreigners shall be allowed to acquire private lands in cases of hereditary succession (Section 7, Article XII, 1987 Constitution). A different rule, however, shall be observed in case of a former natural born Filipino who became a citizen of other countries. Section 8, Article XII of the 1987 Constitution allows such citizens to be a transferee of private lands, subject to limitations provided by law.

Such limitation is provided in Section 5 of Republic Act (R.A.) No. 8179, to wit:
Section 5. The Foreign Investments Act is further amended by inserting a new section designated as Section 10 to read as follows:

“Section 10. Other Rights of Natural Born Citizen Pursuant to the provisions of Article XII, Section 8 of the Constitution. – Any natural born citizen who has the legal capacity to enter into a contract under the Philippine laws may be a transferee of a private land up to a maximum area of five thousand (5,000) square meters in the case of urban land or three (3) hectares in the case of rural land to be used by him for business or other purposes. In the case of married couples, one of them may avail of the privilege herein granted: provided, that if both shall avail of the same, the total area acquired shall not exceed the maximum herein fixed.

“In case the transferee already owns urban or rural land for business or other purposes, he shall still be entitled to be a transferee of additional urban or rural land for business or other purposes which when added to those already owned by him shall not exceed the maximum areas herein authorized.

“A transferee under this Act may acquire not more than two (2) lots which should be situated in different municipalities or cities anywhere in the Philippines: provided that the total land area thereof shall not exceed five thousand (5,000) square meters in the case of urban land or  three (3) hectares in the case of rural land for use by him for business or other purposes. A transferee who has already acquired urban land shall be disqualified from acquiring rural land and vice versa”.

Hence, you may still be able to buy lands in the Philippines subject to the aforementioned limitations even if you are already a German citizen, provided that you are considered a natural born Filipino citizen. For this purpose, a natural born citizen refers to a person who is a citizen of the Philippines from birth without having to perform any act to acquire or perfect his/her Philippine citizenship. A person who was born before January 17, 1973 of a Filipino mother and who elected Philippine citizenship upon reaching the age of majority shall also be considered a natural born citizen (Section 2, Article IV, 1987 Constitution).

The Condominium Act of the Philippines, R.A. 4726, expressly allows foreigners to acquire condominium units and shares in condominium corporations up to not more than 40% of the total and outstanding capital stock of a Filipino owned or controlled condominium corporation. However, there are a very few single-detached homes or Townhouses in the Philippines with condominium titles. Most condominiums are high rise buildings.

Foreigners owning a house or building in the Philippines is legal as long as the foreigner does not own the land on which the house is build.

What foreigners should know about Real Estate Ownership in the Philippines.

If you are thinking of acquiring land in the Philippines here are some few things that you should know. Many Americans and Europeans are surprised when they cannot simply buy house and lot packages in the Philippines and have the Land Title placed with their names. Unlike in their countries, anyone who can afford to buy real state can easily do so regardless of Citizenship. In the Philippines, real estate ownership is confined to Filipino Citizens, corporations with at least 60% Filipino interest, and Dual Citizens or Former Filipinos with some limitations.

The Philippine constitution prohibits foreigners from purchasing land. Only Filipino citizens or corporations with at least 60% Filipino equity can acquire lands in the national territory. Corporations with the accepted foreign/Filipino equity stake percentages still must apply to the Board of Investment (BOI) for permission to buy, sell, or act as an intermediary in a real estate transaction. This normally takes 60 to 90 days.

Foreign corporations in general that are investing in the Philippines can lease land for up to 50 years, with a renewal option for another 25 years.4

Foreign investors can purchase up to 40% of the units in a condominium project. Foreigners can own these condominiums in their own names and this is the general practice.
Foreigners Leasing Of Philippine Real Estate Property

Leasing land in the Philippines on a long term basis is an option for foreigners or foreign corporations with more than 40 percent foreign equity. Under the Investor’s Lease Act of the Philippines a foreign national and or corporation may enter into a lease agreement with Filipino landowners for an initial period of up to 50 years renewable once for an additional 25 years.

This is one of the most common concerns raised by condominium buyers. And it is a very relevant question to ask especially since we are talking about millions of money here.

In the Philippines, there is a law that protects the interest of the unit owners in a condominium project. This is the Republic Act 4726 or The Condominium Act of the Philippines which was mandated on June 18, 1966.

To answer the concern of the condominium owners and the would-be owners, here is an excerpt of the act.

SECTION 8. Where several persons own condominiums in a condominium project, an action may be brought by one or more such persons for partition thereof by sale of the entire project, as if the owners of all of the condominiums in such project were co-owners of the entire project in the same proportion as their interests in the common areas: Provided, however, That a partition shall be made only upon a showing:

That three years after damage or destruction to the project which renders material part thereof unit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction, or That damage or destruction to the project has rendered one-half or more of the units therein untenatable and that condominium owners holding in aggregate more than thirty percent interest in the common areas are opposed to repair or restoration of the project; or That the project has been in existence in excess of fifty years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than fifty percent interest in the common areas are opposed to repair or restoration or remodeling or modernizing of the project. That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the condominium owners holding in aggregate more than seventy percent interest in the common areas are opposed to continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or That the conditions for such partition by sale set forth in the declaration of restrictions, duly registered in accordance with the terms of this Act, have been met.

It’s not like you will buy a condominium property and then after 50 years, your investment will be gone, just like that. When a condominium project is fully turned over to the unit owners, it becomes just like a corporation, and you are one of the owners of that corporation if you have a unit there.

So it follows that you will have a “say” in the decision making as to what to do with the whole building, and if it has been decided that the property is going to be sold or demolished so that a new property will be developed on the area, you will get your appropriate share of the proceeds of the sale.

Just like any investment, your condominium property can last, can be profitable and can be passed on to your heir(s).

” BATAS PAMBANSA BLG. 185 – AN ACT TO IMPLEMENT SECTION FIFTEEN OF ARTICLE XIV OF THE CONSTITUTION AND FOR OTHER PURPOSES”

” Section 1. In implementation of Section fifteen of Article XIV of the Constitution, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private land, for use by him as his residence, subject to the provisions of this Act.

Sec. 2. Any natural-born citizen of the Philippines who has lost his Philippine citizenship and who has the legal capacity to enter into a contract under Philippine laws may be a transferee of a private land up to a maximum area of one thousand square meters, in the case of urban land, or one hectare in the case of rural land, to be used by him as his residence. In the case of married couples, one of them may avail of the privilege herein granted; Provided, That if both shall avail of the same, the total area acquired shall not exceed the maximum herein fixed.

In case the transferee already owns urban or rural lands for residential purposes, he shall still be entitled to be a transferee of additional urban or rural lands for residential purposes which, when added to those already owned by him, shall not exceed the maximum areas herein authorized.

Sec. 3. A transferee under this Act may acquire not more than two lots which should be situated in different municipalities or cities anywhere in the Philippines; Provided, That the total area thereof shall not exceed one thousand square meters in the case of urban lands or one hectare in the case of rural lands for use by him as urban land shall be disqualified from acquiring acquiring rural land, and vice versa.

Listen to your real estate agent’s advice, but follow your own instincts on deciding a fair price. Calculating your offer should involve several factors: what homes sell for in the area, the home’s condition, how long it’s been on the market, financing terms, and the seller’s situation. By the time you’re ready to make an offer, you should have a good idea of what the home is worth and what you can afford. And, be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth until they can agree on a price.

Your real estate agent will assist you in making an offer, which will include the following information:

  • Complete legal description of the property
  • Amount of earnest money
  • Down payment and financing details
  • Proposed move-in date
  • Price you are offering
  • Proposed closing date
  • Length of time the offer is valid
  • Details of the deal

Remember that a sale commitment depends on negotiating a satisfactory contract with the seller, not just making an offer.

There isn’t a set number of houses you should see before you decide. Visit as many as it takes to find the one you want. On average, homebuyers see 15 houses before choosing one. Just be sure to communicate often with your real estate agent about everything you’re looking for. It will help avoid wasting your time.

In addition to comparing the home to your minimum requirement and wish lists, you may want to consider the following:

  • Is there enough room for both the present and the future?
  • Are there enough bedrooms and bathrooms?
  • Is the home structurally sound?
  • Do the mechanical systems and appliances work?
  • Is the yard big enough?
  • Do you like the floor plan?
  • Will your furniture fit in the space? Is there enough storage space?
  • Imagine the home in good weather and bad – will you be happy with it year round?

Take your time and think carefully about each house you see. Ask your real estate agent to point out the pros and cons of each home from a professional standpoint.

The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.

The two don’t really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.

Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that’s an investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities- like insurance, real estate taxes, and upkeep- which can be substantial. But given the freedom, stability, and security of owning your own home, they are worth it.

You can find out by asking yourself some questions:

  • Do I have a steady source of income (usually a job)? Have I been employed on a regular basis for the last 2-3 years? Is my current income reliable?
  • Do I have a good record of paying my bills?
  • Do I have money saved for a down payment?
  • Do I have few outstanding debts, like car payments?
  • Do I have the ability to pay a mortgage every month, plus additional costs?

If you can answer “yes” to these questions, you are probably ready to buy your own home.

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