Long term leases

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Long term leases


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Old 27th June 2018, 10:37 PM
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Default Long term leases

Has anyone here ever taken a long term lease? I am talking about the 25 year with a 25 year renewal option under Presidential Decree 471.

I have a trusted Pilipino friend and what I am thinking of doing is buying a property, in his name with a provision in the sale that that I get a long term lease on the property.

Im looking for ideas on how to structure the deal. I am thinking that Id split the title, buildings in my name, land in his. I would place a mortgage on the land and he would rent it back to me in lieu of making payments on principle or interest. Mortgage and lease registered on the title and Id keep the original title in my possession. Id be responsible for all taxes, maintenance and upkeep and would have the right to make repairs or modifications to the property including demolishing and rebuilding. Id also assume all risks such as flood or other acts of nature.

Id also like a provision that should it become allowable under Philippine law for a foreigner to own land here that I would be able to convert the mortgage into a sale of the land and assume full title.

Has anyone any experience with such a setup? Any opinions as to what else I should consider? Is there any pro forma sample contract available on line? (Ive looked but cannot find one.)

I am here on an SRRV and would also like to convert my deposit into the payment.

I will of course get some legal advice before setting up anything but right now am looking for some background so I can ask the lawyer intelligent questions.

I am also open to a referral to a lawyer experienced in these matters.
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Old 27th June 2018, 11:33 PM
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Manitoba, we have accomplished this and I have mentioned bits of what we did on this forum, I am a bit tied up at the moment but will send you a PM later this arvo with how we went about it and a flaw I picked up after the fact with regards to SRRV and converting bond monies. It will be long winded so won't bore others with details. BTW with what you have mentioned in your post you are on the right track.

Cheers, Steve.

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Old 28th June 2018, 11:22 AM
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Steve, if you dont mind posting what you did with your long term lease here, I for one would be greatly interested in reading it no matter how long it is. I'd also like to learn about the flaws you encountered.

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Old 28th June 2018, 07:46 PM
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Quote:
Originally Posted by HondaGuy View Post
Steve, if you dont mind posting what you did with your long term lease here, I for one would be greatly interested in reading it no matter how long it is. I'd also like to learn about the flaws you encountered.
Hi HondaGuy, If you search within the forum "effective land ownership Philippines" there is some good info there, plenty of pros and cons thrown up to think about.

Here is an extract from what I sent to Manitoba and I hope he doesn't mind me sharing.

We searched for several years before we found what we wanted, talked to the agent about how we wanted to purchase and lease, quite common according to him.
The purchase price after negotiations was PHP 5.75M then with the agent and an attorney this is what we did.
5M was the land cost and the title is in Ben's name, .75M was for the house and all improvements on the lot, this is reflected on the title with me as the owner. The title is encumbered by the 25 + 25 year lease again with me as the lessee so difficult to sell or get a mortgage against.
The lease,,,,,,, It is stated in the lease that the lease on the property for the 50 years is paid for in full up front with the purchase price of the land in Ben's name, the usual free run of the house and lot with sole discretion with
renovations/improvements, paying taxes, Barangay fees etc by me. The freedom to sell the lease or rent or sublet, bequeath the lease and improvements to whom I desire and the list goes on. I presented a very long list of inclusions to the attorney and she even added things I missed, it is really up to you how you administer the drawing up of the lease to suit your requirements after all it's your dollars. Both Ben and I are very comfortable with the arrangement and hope there are no problems in our relationship in the future........ Protect your ars*.

My downfall with all this is that I assumed because I had the lease I could get my bond back from the PRA, not so, while the title is encumbered and we I have the lease the wording on both documents is wrong, so a heads up if you go this way here is a link to the correct wording on the documents.

https://tinyurl.com/ycocbqty

Unfortunately it's too late for me to go the SRRV route at this stage but I'll see if I can have the title and lease changed to reflect their conditions,,,,,,,,, more money and 12 months or more to turn that problem around once we are living there.
I also talked to my shipping forwarder in Manila about this problem, He said that if I come in on a tourist visa they would slug me PHP 200 to 250K in taxes, but he suggested that If Ben as a returning Filipino (not OFW) that has lived and worked in Oz for over 5 years which he has and by the time we move will also hold an Aussie passport then the taxes will probably be 100K so we will probably go that way and worry about the PRA later.

I hope this helps and if you want to pick my ailing brain further please do or if you can throw light onto both our situations I would appreciate that also.

So HondaGuy one of my downfalls was with the SRRV as stated above.
A realestate agent that looked very polished but misguided us on several issues such as their valuation on the land for CGT that the owner would pay and out tax contribution, ended up more than double his advice.
The previous owner is a westerner (property in his ex wife name) he had an SPA which we read and appears to be above board, guided by our attorney. The title office rejected it as it did not contain the title number of the land in question. A new Special power of attorney had to be drawn up and resubmitted, this has been going on for 15 months. just waiting for titles office to put the rubber stamp on it now.
Bureaucracy is a huge hurdle in PH as we all know so one just has to be patient and play the game.

Ask your questions and I'm sure you will get plenty of answers here.

Cheers, Steve.
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Old 28th June 2018, 10:27 PM
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I have to add here that this is what we did and whether right, wrong or indifferent was the path we took and sincerely hope that it doesn't come back and bite me one day. Only time will tell.
All have individual and unique situations and have to learn the different avenues then make a decision on what is suitable and will work to achieve the goal.

Cheers, Steve.

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Old 29th June 2018, 12:25 AM
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Steve

No problems with what you posted about our discussion. I was going to message you suggesting we post most of it.


A couple things I'd like to add. You need a trusted local to make this work. Most people will pick your partner or SO but there are issues with that. Lots of the guys here are divorced back home and should learn from that. I am lucky, I worked in Afghanistan many years and was with one Filipino OFW for 7 years. We worked and lived in very close proximity and shared a bunker on numerous occasions. Any vets here will agree, something about shared danger over a long period of time in an intense situation builds strong bonds of trust and loyalty.

I would have the property in his name even if I had a SO. I'd then will the balance of the lease to her so she had a place to live after I'm gone and my kids back home would not have to worry about disposing of the lease.

Register the lease on the title and get the original copy of the title for yourself. That will make it difficult for a mortgage or sale to leave you out in the cold.

Be careful of the anti-dummy laws. It could void your lease leaving you very badly off.

Finally I'd like to point out that a 10,000,000 p investment for 50 years at 4% is just over 38,000 a month. If you can get a secure shorter term lease on a property, then that would give you the lifestyle you may be looking for without the huge commitment. At my age (62) I might look into taking a 5 year or 10 year lease instead. I'd not get back the SRRV deposit against the lease but I would also have a much lower cash outlay and less long term risk exposure. A 10 year lease at 4% and same payment for a 10,000,000 property 50 year lease would be just under 4,000,000. (5 years just over 2 million)

That would cover the time I would need a place with much lower cost outlay.

Everyone has a different situation. here are lots of options out there that can satisfy everyone's needs, wants and resources. There are a lot of unknowns. What will be our health? What will be our situation with a partner/SO? What will happen with the exchange rate, the economy, our investments back home, our family situation back home? What will be the political and security situation here?

All we can do is take a good look around and do our due diligence and cross our fingers and pick what we think is the best option for us.

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Old 29th June 2018, 06:52 AM
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Steve, I guess one wrinkle in your situation could be if/when the Philippines would allow same sex marriage.

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Old 29th June 2018, 07:24 AM
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Quote:
Originally Posted by Gary D View Post
Steve, I guess one wrinkle in your situation could be if/when the Philippines would allow same sex marriage.
I'd expect that about the same time they make divorce easy, make paying child support mandatory and enforce that, and allow foreigners to buy property.


'In other words don't hold your breath waiting for that. lol
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Old 29th June 2018, 08:17 AM
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Quote:
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Steve, I guess one wrinkle in your situation could be if/when the Philippines would allow same sex marriage.
Hey Gary, Yep thought of all that and what constantly comes to mind is "pigs might fly" and as Manitoba said there are too many other things to fix before worrying about same sex marriage. Even if it did come to pass we have a prior arrangement, a pre existing condition like my old timers disease.
A marriage certificate is really just a piece of paper but look at the troubles one has in PH if you want a divorce/annulment. I was married for 22 years, never again as there is no need.
So the only wrinkles I see are mine as I get older.
Good point though Gary.

Cheers, Steve.
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Old 30th June 2018, 07:26 AM
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Steve,

Thank you for taking the time to post this and for sharing your experience; I for one have learned a lot from it!

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