Monday, September 22, 2008
Koreantown: 60-40 Rule
With the influx of Koreans in the Philippines, there is a growing concern on how much Koreans can buy in terms of property. Will Filipinos be wiped out in the face of their own motherland if Koreans continue to thrive in the country amassing house and lots and condominiums?
The 60-40 rule answers this myth. Or is it really a myth?
The demystifying continues after the jump. Click "Read More" to read the rest of this entry.
Statement 1: The 60-40 rule applies to condominiums because once the project is complete, the condominium corporation must be set up, which corp. will be comprised of the unit owners. In the Philippines, only Filipinos may own real estate. (subject to certain exceptions like a former Filipino who is now a foreign citizen who inherits from his Filipino parents etc.). In the case of a corporation, it is deemed a Filipino corporation if 60% of its shares are owned by Filipinos.
Question for Statement 1: I'm not sure what you mean when you stated above that "60-40 rule applies to condominiums". Are you referring to the whole condo dev't/building (Venice project for instance) or individual units? Can a foreigner 100% own an individual condo unit? Or should an individual condo unit be owned 60% by a Filipino and 40% by a foreigner?
Question for Statement 1 Answered: Philippine law states: Only filipinos may own land or real property in the Philippines. Filipinos are comprised of:
Corporations are governed by 60-40 rule. 60% Filipino shareholders, 40% Foreigners.
Hence, foreigners may own their condo unit 100%. What the 60-40 rule covers is the entire development. As stated earlier, a condominium corporation is formed when a condominium is built. Being a corporation, it is deemed a Filipino corp. if its shareholders are at least 60% Filipinos and 40% foreigners. In this case, i.e. Venice development for example, 60% of the units of the entire project must be at least owned by Filipinos.
Statement 2: We have to make the distinction between an individual condominium unit from the land or property that these condominiums sit on. I know that the 60-40% rule will apply to whoever will end up owning the land.
Now if the open spaces in the whole Venice development already make up 60% of the total land area then each of these condominiums can really be 100% foreign-owned since the condominiums will only occupy 40% of the total area.
60%= open spaces (100% Filipino)
40%= condominiums (100% foreign)
100% 60-40 rule is not violated
Additional info for Statement 2: 60-40 rule applies to the whole condominium and the lot it occupies.. the land where the condominium sits will either be leased or owned.. open spaces in the lot will be part of the condominium property.. individual condo units can be owned 100% by foreigners.. foreigners cannot own more than 40% of the total number of units in a condo.