Co-Buying Property In The Philippines

Buying property these days can be a pain in our budget, especially for newbies and young seekers. Depending on your lifestyle, co-buying may be a great idea to give you an idea of how to start becoming more responsible as an adult.

Here are some things you must know about co-buying private property.

What is Co-Buying?

Co-Buying, commonly known as co-ownership in the Philippines, is when more than two persons own property and decide to split the ownership. Co-buying can be done by families, couples, friends, or businesses, similar to being a co-owner. The only difference is that the share of a co-buyer is proportional to their interest.

While co-buying is a relatively new concept for luxury real estate, the rights of the co-buyer to the property owned are also the same for a co-owner. These rights include the right to enjoy the property’s natural or industrial fruits and benefits pertaining thereto, sell, mortgage, demand reimbursement for any costs advanced for the co-owner property, allow a third party to use the property, and demand partition.

Under Article 494 of the Civil Code, no c0-owner shall be obliged to remain in the co-ownership. However, they may form an agreement to keep the property undivided for a maximum period of 10 years. This may be extended by forming another agreement.

What You Need to Know About Co-Buying Property in the Philippines

What is Included in the Term “Real Property”?

Under Article 415 of the Civil Code, immovable property or Real property includes the following:

(1) Land, buildings, roads and constructions of all kinds adhered to the soil;

(2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable property;

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object;

(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements;

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;

(6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in case their owner has placed them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of it; the animals in these places are included;

(7) Fertilizer actually used on a piece of land;

(8) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant;

(9) Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast;

(10) Contracts for public works, and servitudes and other real rights over immovable property.

What is Included in the Term “Personal Property?”

It is also worth mentioning what is personal property and what is considered as such under the Civil Code. Under Article 415, these are the following personal properties:

(1) Obligations and actions which have for their object movables or demandable sums; and

(2) Shares of stock of agricultural, commercial, and industrial entities, although they may have real estate.

Whenever the law or an individual declaration mentions the term “immovable things or property” or “movable things or property,” it shall be deemed to include the items mentioned under Articles 415 and 416 of the Civil Code.

But if the word “muebles” or “furniture” is used alone, it shall not be deemed to include money, credits, commercial securities, stocks and bonds, jewelry, scientific or artistic collections, books, medals, arms, clothing, horses or carriages, and their accessories, grains, liquids, and merchandise, or other things which do not have as their principal object the furnishing or ornamenting of a building, except when they are expressly stated by law or individual declaration.

What is Included in the Term Real Property

Legal Basis for Co-Buying Property Owned under Co-Ownership Civil Code

A homebuyer co-buying such property must know some laws before pursuing this transaction. Here are some provisions of the law on Property under the Civil Code:

Article 429

Under the law on property, Art. 429 states that the owner of a thing has the right to exclude any person from using his property, and he may use such force to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property.

Article 431

This provides that the owner of a thing cannot use his property in such manner that would injure the rights of a third person.

Article 486

This provides that the co-owner may use the thing owned in common, provided that he does so for the purpose for which it was intended and in such a way as not to injure the interest of the co-ownership or prevent other co-owners from their right of using it.

Article 488

This provides that each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the right or thing owned in common and to the taxes. Any co-owner may exempt himself from this obligation by renouncing his undivided interest equal to his proportional part of his cost and taxes. No such waiver shall be made if it is prejudicial to the co-ownership.

Article 489

This states that any co-owner may repair the property for preservation, but he must first notify his co-owners of the necessity of such repairs. Repairs may include defective electrical wiring, leaky faucets, clogged drains, or leaning concrete fences.

Article 490

This provides that whenever there are different stories of the house belonging to different owners, the following rules shall be observed:

(1) The main and party walls, the roof, and other things owned in common shall be preserved at all times by all the owners in proportion to the value of the story belonging to each of them;

(2) Each owner shall bear the cost of the expenses of their story, but all the owners must maintain at their expense the entrance floor, front door, common yard, and sanitary works;

(3) The stairs from the entrance to the first story shall be maintained at the expense of all the owners pro rata, except the owner of the ground floor, the stairs from the first to the second story shall be preserved at the expense of all, except the owner of the ground floor and the owner of the first story; and so on.

Article 491

This provides that none of the co-owners shall make alterations to the thing owned in common without their consent. Alterations include changing a plantation into a recreational facility. However, if one or more co-owners withhold their consent which would be clearly prejudicial to the common interest, the courts may afford adequate relief.

In the case of Cruz v. Catapang, the Supreme Court held in its decision that any act of rigorous dominion or possession is already considered a change in the property, and any encumbrance or disposition is assumed to be an alteration. It is also an act of dominion when a home is built on jointly-owned real property.

What is Included in the Term Personal Property

Article 492, in relation to Article 489 of the Civil Code

This states that a majority vote is required for the improvements or adornments to the property. The majority is determined by the resolution of the co-owners who represent the controlling interest in the co-ownership.

However, if a part of the thing belongs exclusively to one of the co-owners, Article 491 of the Civil Code shall apply only to the part owned in common.

Article 493

This states that the co-owner shall have full ownership and of the fruits and benefits pertaining thereto, and he may sell, assign, or mortgage his portion, and substitute a third person in the enjoyment of his property, except when the subject of the co-ownership involves personal rights.

Article 495

This provides that the co-owners cannot demand a physical division of the thing owned in common when it would render it unserviceable for the use for which it is intended.

Pros and Cons of Co-Buying

Whether you are buying a house and lot property for sale or a luxury condominium, there are advantages and disadvantages of co-buying properties. Let’s start with the pros:

  • Owning luxury real estate becomes less inexpensive because the deposit and mortgage payment is divided
  • You will begin to accumulate equity in your home
  • Saves money on expenses on utilities and other costs
  • The asset is divided in a preset manner in case of a split

Here are the cons of co-buying:

  • The interest rate shall be determined by the buyer with the lowest credit score.
  • Other co-buyers shall be obliged to make the required payments if the other co-buyer cannot afford or is unable to pay.

How to Enter into Co-Buying Such Property

How to Enter into Co-Buying Such Property

Co-buying can be a bit overwhelming, to begin with, but you need to create a formal agreement with your co-buyer to make co-buying work. Outline each owner’s responsibilities and roles. You can also ask for the help of real estate brokers to give you clarity on property ownership.

Your real estate lawyer should create this agreement and must include the following details:

  • The kind of title for your house
  • The proportioned payment for each owner on the down deposit and mortgage
  • Allocation of shares
  • How the shares are distributed after death
  • Who will respond to the payment if one co-owner is unable to pay
  • What will happen if the co-owner terminates the co-ownership

Know More About Co-Buying with Brittany

Whether you are a solo owner or planning to be a co-owner of a property, let Brittany be part of your luxury living. Call us at 55-8BRITT local 0335-36, and take a look at our luxury house and lot in Metro Manila to know more about Brittany.

You may also visit our website, LinkedIn, and Youtube accounts. Our customer service agents will provide you with the best deals as you are getting one step closer to your new home.

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