Property Title Problems in the Philippines

A lot of Filipinos Property Rich but Cash Poor

For the past year I have seen my wife get well established in the Dumaguete Real Estate market, and one of the things I have seen over and over again is how so many Filipinos are property rich, but cash poor. The vast majority of raw property that comes across her desk is for the most part unsaleable because of issues with titling.

This seems to be in most part due to the fact that the sellers’ interest in these properties are from inheritance and usually it is several generations removed from the original owner before the issue of proper titling is addressed.

The beginning seems to be what is called a “mother title” owned by an ancestor and upon their death, the justified heirs duly inherit a stake in the property as laid out by Filipino statute. ( I will not go into trying to explain in this article, as it is a whole complicated subject in itself). When the mother title is passed down, numerous things are supposed to happen in order for the heirs to gain their own titles. These include such things an “extra judicial settlement” whereby the parties agree to the division of the land and who gets what. At that point there are costs involved including estate taxes, legal fees and surveying charges, which in most cases are far beyond the means of the average Filipino family. Not being able to complete that process, the heirs do nothing and next thing you know, some of the heirs die, bringing their heirs into the picture. Before long there can be so many people involved that not only is cost a factor but the added hurdle of reaching a consensus among the large group that now has to be in agreement but who have differing views.

When buying a property, it is crucial to gain a full understanding of the background of the land including who is involved and what the costs will be to get everything in order. The most common scenario  if a person deems the property to be well worth the hassle, is that part of the sale price will have to be paid up front to work through all these legal titling hurdles. As well, the buyer will require a whole lot of patience since things in Philippines do not seem to happen quickly or easily.

Absence of a purchaser who will endure the hassles, that handed down land will probably remain unsold for years to come, leaving the Filipinos who own it in a continual state of being property rich and cash poor. Each succeeding generation of heirs will just add to the complications.

A sad state!