Co-ownership is a situation where two or more people jointly own property. Simply put, co-ownership means combining funds with others to make a down payment on a house and combining the borrowing ability of two or more people to obtain the remaining funds from a lender. Co-ownership in the Philippines may take some time before it gains widespread acceptance in the real estate market. Despite this, it helps young individuals who will eventually be looking for real estate property.
Buying a house is a little expensive, especially for young property seekers who want to purchase a house where they can settle in. However, it can be possible that even if they lack the financial means, they can invest in real estate through co-ownership. In co-ownership the owner of the property could be a family, a group of people or businesses, or a couple. The only difference between being an owner and being a co-owner is that a co-owner is based on their interests.
The rights of the co-owners to their respective property interests are also crucial. These rights include the ability to use the property’s fruits and benefits, mortgage it, sell it, seek reimbursement for any fees previously paid for the co-owned property, grant a third-party use or enjoyment of the property, and demand partition.
How does co-ownership in the Philippines legally works?
1. Joint tenants with Survivorship Rights
When each tenant owns an equal proportion of an undivided property, preventing any one tenant from owning a specific piece. Each co-owner receives an equal portion of the property’s rights due to the co-50/50 ownership split. The claim that a deceased co-owner held is immediately transferred to the remaining co-owner. In the situation of co-ownership of the property by a sibling. If you and your brother/sister purchased your home together, you and they are entitled to the “right of survivorship”. If one dies, the entire real estate will be given to the surviving and their heirs.
2. Tenancy in common on
The co-owners are therefore allowed to have various rights or interests in the property. This happens when one of the co-owners owns a specific parcel of undivided property. This is useful since it makes sure that the beneficiary, not the partner, receives the portion of a deceased renter. This would function best if one of you invested more money in the property than the other. The other co-owners are still eligible to own the property and receive the rental income even if one of you chooses to rent it out. How you and your partner will divide the property will be outlined in the “title” and “deed” paperwork you will receive when buying any property with a co-owner.
Co-ownership includes pros and cons, just like other buying arrangements. Here are the pros and cons of choosing a co-ownership arrangement:
Pros of co-ownership in the Philippines
- It is less expensive to share ownership of a home because each co-owner makes their down payment. When you join, you simply need to make one deposit rather than two. This implies that you and your family won’t have to pay any deposit fees.
- You can purchase a larger home than you could have afforded on your own – Joining a co-ownership allows you to split the cost of purchasing or building a property with other members, which is preferable if you don’t have the money to do it on your own.
- You can eliminate debt more quickly – Living debt-free is one of everyone’s top priorities, both men and women. By paying off your debt, you will stop having to make extra payments on your bills each month and be able to save more money overall.
- It can lower your monthly payment – If each member splits the cost with another individual, monthly payments can be lowered. Your monthly payments may be reduced if your payment is split up into a larger number of smaller parts.
Cons of co-ownership in the Philippines
- Since each party is responsible for paying their fair share of the costs associated with house ownership, failure to do so might lead to legal issues including tax liens and foreclosures.
- It is unclear who will shoulder the costs for home repairs if one co-owner refuses to do so. Will the owners split the expense equally? Will anyone of them have to do everything to fix it? Owners may argue about who should pay for what as a result of this.
- Homeowners may want to make changes to their home that the other owner does not agree to the changes or wish to utilize differently.
- When you purchase a home in joint ownership, each party is equally liable for making repayments on time, even if one party goes bankrupt or cannot afford their portion. One party may go bankrupt and fail to make payments. This means that if one owner fails, it can have an impact on both of them. You risk losing your investment if you don’t have insurance or enough money to cover the cost of paying down the entire mortgage yourself.
The pros and cons of the co-ownership must be carefully weighed before deciding to pool your funds with your partner. Also, before signing the legal document there must be an agreement wherein, they will set rights and duties of the owners on the property. It should specify who has the right to live there, who is accountable for paying the maintenance and mortgage, and what happens when the partner dies or go bankrupt. In the case that one co-owner sells their interest or defaults on their loan, it can be costly to dispute what was supposed to happen amongst the co-owners.
Guidelines of co-ownership in the Philippines
According to Article 494 of the Philippine Civil Code, co-owners may decide to keep the property undivided for up to ten years. The term may be extended by renewal of the Agreement. Co-ownership is only advised among the family, ideally close relatives, due to the complexity of the legal processes in the Philippines. It is not advised for two different lovers or unmarried couples to co-own homes in order to prevent bigger problems in the future. Parents, spouses of married couples, and siblings are accepted as co-owners by Philippine banking and lending organizations. It is possible to consider second-degree relatives, but both parties must be fully informed of their legal obligations.
Co-ownership doesn’t have to be as difficult as it might seem, so long as the buyer and the co-buyers set clear rules and get legal counsel. More young homebuyers are choosing co-ownership arrangements as the cost of homes continues to rise to afford their preferred property. It’s also crucial to have a good understanding of how co-ownership in the Philippines works. The payment of association dues, maintenance, and renovation should also be in the agreement. Last but not least, before agreeing to co-owner, be sure you’re ready to share a living place with someone else.
To help you find your dream home, Bria Homes offers a range of real estate properties with various types of ownership. If you’re interested in investing for your future house, Bria Homes is delighted to assist you and help you to achieve your dream house at affordable price.