March 16, 2023

Understanding Co-buying A House in The Philippines


Purchasing a house can be tricky and confusing. However, when you choose to purchase a house with another person or people, it gets more complicated. Also known as co-ownership, this type of home ownership often has specific contract requirements that must be followed.

What is Co-buying or Co-ownership?

The act of having more than one person own a piece of real estate is known as co-ownership. Co-ownership can be divided into three types: joint ownership, tenancy by the entire, and tenancy in common.

Joint ownership rights

Tenants are said to have equal ownership rights when there is joint ownership, also known as joint tenancy with rights of survivorship (JTWROS). This holds even if only one person paid for the property — anyone listed on the deed has ownership of the complete property. All tenants are granted their deeds at the same time and, upon death, agree to pass the property on to their co-owners via survivorship rights to avoid probate. Owners must demonstrate the “four unities” to qualify:

  • Time — all joint tenants’ ownership interests must begin at the same time.
  • Interest — Each tenant must have an equal stake in the property.
  • Title — In the deed, all tenants must be given the same title.
  • Possession — entails having access to and using the property.

Tenancy In Common or joint tenancy in common

Tenants-in-common is a type of property ownership in which co-owners do not specifically mention their share when purchasing. While tenants in common are co-owners of a property, they do not automatically inherit their deceased co-owner’s share. Instead, the property will be divided upon future death according to terms specified by the deceased in his or her will.

Tenancy In Entirety

Joint tenancy can be established only by married couples. If one spouse dies, the other automatically assumes ownership of the entire property, just as if he or she had originally been listed on the title. Like joint tenants, a tenant in its entirety must occupy the property at the same time through one sale deed and equal interest. Furthermore, only both parties to it can sell it—not just one of them. A tenancy in its entirety can be terminated by divorce, death, or mutual agreement.

Advantages of Co-ownership or co-owned property

By dividing the down payment, mortgage payments, and other household maintenance expenses, property ownership becomes more affordable.

You’ll have the opportunity to start building up equity in a home early in life.

The co-ownership arrangement saves money on utilities and other household maintenance costs.

When a split occurs, the asset is divided in a predetermined manner.

Disadvantage of Co-ownership

The buyer with the lowest credit score determines the interest rate.

If one co-buyer is unable to make the required payments, the other co-buyer is obligated to do so.

Co-ownership in the Philippines

Co-buying, also known as co-ownership in the Philippines, occurs when two or more people purchase a home and decide to split ownership. A couple, a relative, longtime friends, a group of individuals or businesses, or a mix of both, might be the property owner in a co-buying setup. Being an owner is the same as being a co-owner, with the exception that the co-share buyer is proportional to his or her interest.

Co-owning is frequently faced with issues such as the payment of expenses for repairs and taxes, the costs of improvements, management, and administration fees, mortgage amortization payments for the property jointly owned, and litigation or legal expenses, among others. If these issues are not resolved promptly, the co-owners may disagree.

Equally important are the co-rights owners to alienate, mortgage, enjoy the fruits and benefits of the property, allow a third party to enjoy or use it, be reimbursed for the expenses advanced for the property co-owned, or demand partition.

Source of Co-ownership agreement

  • By law
  • By contract
  • By chance
  • By occupation or occupancy
  • By succession or will

Characteristics of co-ownership or joint ownership

  • There must be more than one subject or owner
  • There is one whole physical divided into ideal shares
  • Each outstanding share is definite in amount but is not physically segregated from the rest
  •  Regarding the physical whole, each co-owner must respect each other in the everyday use, enjoyment, or preservation of the physical whole
  •  Regarding the ideal share, each co-owner holds almost absolute control over the same
  •  It is not a juridical person
  •  There is no mutual agency
  •  There is no extinguishment upon the death of any co-owner
  •  A co-owner is in a sense a trustee for the other co-owners

Documents and information that should be prepared by a real estate lawyer for co-ownership

What kind of title do you want for your home?

Who will pay what portion of the down payment and mortgage?

How will the shares be allocated?

What will happen to the shares in the event of a death?

What will you do if one of the co-owners is no longer able to make payments?

What to do if a co-owner wishes to dissolve the partnership?

Considerations for legality and technicalities when co-buying in the Philippines

Article 489 of the Civil Code states that one co-owner may make repairs at their discretion to preserve jointly owned property, but they must first notify the other co-owners of the need for those repairs, if practicable. This list may include repairs for clogged or collapsed drains, leaky faucets, leaning concrete fences, and defective electrical wiring.

Article 494 of the Civil Code states that no co-buyer is required to remain a co-owner. Each co-buyer has the right to demand the division of the shared asset at any moment, as far as his share is concerned. However, the co-owners may decide to retain the property undivided for a maximum of ten years.

According to Civil Code Article 496, the parties may decide to divide the property through an agreement or a legal process.

Article 498 about Article 495 of the Civil Code: The decision to distribute the property between the parties may be made amicably or legally. If the property is fundamentally indivisible and the co-owners cannot agree on who should receive it in exchange for protecting the interests of the others, the property will be sold and the proceeds divided among them.

Rule 69 of the 1997 Rules of Civil Procedure states that if co-owners are unable to reach an agreement to divide the property they share, a judicial partition action may be properly brought.

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