6.05.2019

Can An Expat Lease Land From His/Her Filipino Spouse?

Can You Lease Land From Your Filipino Spouse?





Disclaimer

This article is not legal advice and details personal opinions regarding how Philippine laws apply to a foreigner living in the Philippines.

Table Of Contents:

Can An Expat Lease Land From His/Her Filipino Spouse?


The short answer is no.

Why would they even want to?

The topic comes up sometimes when expats are discussing the measures they have taken to protect their investment in a house and land. Some expats believe that, although they cannot own the land, they can lease the land that the house sits upon.

The legal logic behind the prohibition is that a married couple is a unit and that selling or leasing a property to your spouse is like selling or leasing a property to yourself.

To find the answer we start with Article 1646 of the Civil Code of the Philippines:
The persons disqualified to buy referred to in Articles 1490 and 1491, are also disqualified to become lessees of the things mentioned therein.
Article 1646 refers us to Article 1490 in determining who cannot lease to whom:
The husband and the wife cannot sell property to each other, except:
(1) When a separation of property was agreed upon in the marriage settlements; or
(2) When there has been a judicial separation or property under Article 191. (1458a)
 "The husband and the wife cannot sell property to each other," ends all debate.

With one exception that is really not an exception.

Marriage Settlements


The definition of Marriage Settlements:
An agreement made by the parties in contemplation of marriage by which the title to certain property is changed, and the property to some extent becomes tied up, and is rendered inalienable.
A marriage settlement is a prenuptial agreement. A prenuptial agreement that gives you a lease on a property that your Filipino spouse owns indicates one of two possible situations: 
1. You are leasing a property that your Filipino spouse paid for or
2. You are leasing a property that you paid for
If you are that latter case, then it means that you have purchased a property for a Filipino to whom you were not married. That seems risky.

The first possibility of you leasing your Filipino fiance's property and making that agreement part of a prenup may or may not work out in the end, but at least you have less skin in the game.

Can You Create Or Alter Marriage Settlements After Marriage?


Not according to Article 77 of Executive Order #209 Family Code Of The Philippines:
The marriage settlements and any modification thereof shall be in writing, signed by the parties and executed before the celebration of the marriage. They shall not prejudice third persons unless they are registered in the local civil registry where the marriage contract is recorded as well as in the proper registries of properties.
Marriage settles must be created before marriage. Being an encumbrance, a lease would need to be noted on the title.

Would Your Lease Hold Up In Court?


Even though you have a valid contract you can still lose. If you spend any time browsing land cases in the Philippines you will note countless times that a case had to drag through two or three levels of the court system before it was decided right in the court of appeals. And that is for citizens. 

But let's say that you do make a long term lease with your spouse. Then imagine that the spouse dies. Family challenges you and you win in court...because a contract is a contract. Do you really win? 

If people really want you out no piece of paper will save you. Nor would you have any quality of life in such a situation.

Conversely, if you have a good situation with a reasonable family no piece of paper would be needed.

This is the basic rule: Come to the Philippines with the understanding that you can potentially lose everything that you bring into the country. Do not bring anything that you cannot afford to lose forever. If you can live with that understanding and be at peace with it, then you are going to be ok in the Philippines.

The safe thing to do is to err on the side of caution. Even if there is an exception, it is far from a guarantee for a foreigner. I am thinking of a certain resort owner...or at least he thought he was a resort owner.

Reduce Your Risk


  • The best way to reduce risk and minimize what you can lose is to rent or lease a house you did not pay for (whether from your spouse or someone else).
  • If you simply have to have to pride of ownership, then your next best bet is to buy a condo. A foreigner can own 100% of a condo (no land title involved).
  • If you must have a house and land and you want to pursue the marriage settlement lease, then you can attempt to establish ownership of the actual building in your name. Maintain records of your expenses and where the cash comes from when you build your house and have your Filipino spouse sign a notarized affidavit stating that you funded the house construction. Documents showing ownership of a building are no stronger than a lease, which as discussed is vulnerable.

The Bottom Line 


Don't take my word for it. Go talk to a lawyer.

This post will be updated as I learn more.

Two additional items to remember: 
1. It is also possible for a foreigner to inherit land from their Filipino spouse, subject to all the same familial/legal risk previously discussed.
2. Keep in mind that you will be dealing with all of this in the midst of possible loss/change of status of your visa.

6 comments:

Anonymous said...

I have a 25 year lease on our property and it was notarized by my wife's relative who is an attorney.

Gary M. said...

Doesn't matter who notarized it. It's still not valid or legally enforceable.

Anonymous said...

Dear Anonymous @ 18:32,

If I knew who you are talking about I would report that attorney to the Bar Association. He is incompetent and should not be practicing law.

Philippine Destiny said...

To the person whose comment is just above, the person that you are responding to might have simply been saying that he has a 25 year lease and not necessarily that it is from their spouse.

anonymous said...

Paragraph 1 under 1490 says there is an exception that allows a sale or lease to a spouse in the case of a marriage settlement. As far as I can tell, a marriage settlement is what is called a pre-nuptial agreement in other countries. (https://pnl-law.com/blog/marriage-settlement-prenuptial-agreement-property-relations-marriage/)

Philippine Destiny said...

@09:00

Let me know if you have a comment about the rewrite.

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