Ownership Rights & Foreign Restrictions
Learn about condominium ownership rights under RA 4726 including unit boundaries, exclusive rights, and the critical 60-40 foreign ownership restriction on condominium purchases.
The 60-40 Foreign Ownership Rule
“where the common areas in the condominium project are owned by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens, or corporations at least sixty percent of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession. Where the common areas in a condominium project are held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limits imposed by existing laws.”
What This Means
This is the key provision governing foreign ownership of condominiums in the Philippines. There are two structures: (1) If common areas are co-owned directly by unit owners. foreigners are completely prohibited from buying (only Filipino citizens or 60% Filipino-owned corporations can buy). (2) If common areas are held by a condominium corporation. foreigners can buy, but foreign ownership in the corporation cannot exceed 40%. In practice, most condominiums use the corporation structure, allowing foreigners to own units as long as the building's total foreign ownership stays below 40%.
- Two structures determine foreign ownership eligibility
- Co-owned common areas: foreigners CANNOT buy at all
- Corporation-held common areas: foreigners can buy up to 40% of units
- The 40% limit is on the corporation, not on individual units
- Exception: hereditary succession (inheritance) bypasses the restriction
Real-World Scenario
A Korean national wants to buy a condominium unit in Makati. The building has 200 units, and 78 units (39%) are already owned by foreigners. The common areas are held by a condominium corporation.
Can the Korean national buy a unit?
What You Own: Unit Boundaries
“The boundary of the unit granted are the interior surfaces of the perimeter walls, floors, ceilings, windows and doors thereof. The following are not part of the unit bearing walls, columns, floors, roofs, foundations and other common structural elements of the building; lobbies, stairways, hallways, and other areas of common use, elevator equipment and shafts, central heating, central refrigeration and central air-conditioning equipment, reservoirs, tanks, pumps and other central services and facilities, pipes, ducts, flues, chutes, conduits, wires and other utility installations, wherever located, except the outlets thereof when located within the unit.”
What This Means
Your unit ownership extends to the INTERIOR SURFACES of your walls, floors, ceilings, windows, and doors. essentially the "inside skin" of your unit. The actual walls, columns, floors, and structural elements belong to the common areas. This means the concrete wall between your unit and your neighbor's unit is NOT yours. only the paint/finish on your side is. Similarly, all pipes, ducts, wires, and utility installations running through your unit are common areas. except the outlets (sockets, faucets) inside your unit.
- Unit boundary = interior surfaces of walls, floors, ceilings, windows, doors
- Structural elements (bearing walls, columns, foundations) are NOT part of the unit
- All central services (elevators, HVAC, pumps) are common areas
- Pipes, ducts, wires passing through your unit are common areas
- Only the outlets (sockets, faucets) within the unit belong to you
Real-World Scenario
A unit owner discovers a water leak in a pipe running through their ceiling. The pipe serves multiple floors above. The owner wants the condominium corporation to pay for repairs, but the corporation says "it's inside your unit, it's your responsibility."
Who is responsible for the pipe repair?
Exclusive Rights of Unit Owners
“Each condominium owner shall have the exclusive right to mortgage, pledge or encumber his condominium and to have the same appraised independently of the other condominiums but any obligation incurred by such condominium owner is personal to him.”
What This Means
Each owner has full exclusive rights over their unit: they can mortgage it, pledge it, or encumber it independently. without needing consent from other owners or the corporation. The unit can be appraised on its own, separate from other units. Crucially, any obligation (like a mortgage default) is PERSONAL to that owner. it does not affect other unit owners or their properties. This means one owner's financial problems cannot drag down other owners. Additionally, owners have the right to refinish interiors (Section 6(e)) and sell freely (Section 6(g)).
- Each owner can mortgage/pledge their unit independently
- Unit can be appraised separately from other condominiums
- Obligations are PERSONAL. do not affect other unit owners
- Owner has exclusive right to refinish interior surfaces (paint, tile, etc.)
- Owner has absolute right to sell, subject only to right-of-first-refusal if in master deed
Real-World Scenario
Unit owner A mortgages her condo unit to Bank X for P3 million. She defaults on the loan. Bank X forecloses and acquires the unit. Other unit owners worry that the bank now "controls" part of their building and may refuse to pay assessments.
Does the foreclosure affect other unit owners?
Frequently Asked Questions
Can a foreigner buy a condominium unit in the Philippines?
Yes, if the common areas are held by a condominium corporation AND foreign ownership in that corporation does not exceed 40%. Under Section 5 of RA 4726, this is the standard structure for most Philippine condominiums. The developer should track the foreign ownership percentage and refuse sales that would breach the 40% limit.
Do I own the walls of my condo unit?
Only the interior surfaces (the paint/finish side facing you). Under Section 6(a), your unit boundary is the "interior surfaces of the perimeter walls, floors, ceilings, windows and doors." The actual structural walls, bearing walls, and columns are common areas owned by all unit owners collectively.
Can I mortgage my condo unit without the corporation's consent?
Yes. Section 6(f) gives each owner "the exclusive right to mortgage, pledge or encumber his condominium" independently. No consent from other owners or the condominium corporation is required. The obligation is personal to you and does not affect other unit owners.