Philippines Real Estate – Agency Laws

When searching for real estate in the Philippines, there are many places you can begin searching, like online, for your dream property. If you have real estate brokerage firms located in your area, this is a good place to begin. A good source for real estate can also be banks or mortgage companies that have inventories of repossessed properties. Many others can simply be locate by For Sale signs or through friends, relatives or neighbors. Of course, there always seems to be that self-appointed “barangay agent” that shows up as soon as the thought of buying any real estate enters your head. As “unofficial” as they may be, they can be a good source of identifying potential properties for sale. However, Proceed with Caution! When using these so-called agents, this should not preclude you from using a more competent authority to transact the sale.

Duplex for sale

Whether you are looking to find a duplex or a simple Bahay Kubo, or that perfect parcel of land to build your dream home, it is ALWAYS a good idea to use a competent agency to transact your purchase, from beginning to end. If you happened to find your property through someone who says they are a real estate agent, you should always verify their credentials to determine if that “professional” agent is legal, i.e., “licensed or certified.” This small cautionary step can make all the difference between achieving a successful real estate transaction or a complete disaster. There are many steps, and potential pitfalls, in acquiring real property in the Philippines and you should always ensure the process is completed in a timely, legal, and due-diligent fashion. I suggest in the absence of a bona-fide real estate agency in your area, you should always seek the help of a qualified attorney. By qualified I mean an attorney who has some experience in real estate law. The reason for using these “qualified” individuals is simple – it affords you the protections administered by virtue of TITLE X, Chapter 1, Agency Laws of the Philippines.

Understanding Agency Law

Simplicity of Agency Law

Just like in the U.S., agency laws in the Philippines govern professional relationships. Real estate agents and brokers must strictly abide by agency rules that dictate their fiduciary duties to clients. The term fiduciary is defined as: a relationship in which one person has a responsibility of care for the assets or rights of another person. A fiduciary is an individual who has this responsibility. The term “fiduciary” is derived from the Latin term for “faith” or “trust.” 

Agency laws and regulations in the Philippines tend to share some basic principles: Agents are obligated to act in the best interest of the client (due diligence), adhere to certain confidentiality clauses, and reveal all known material facts (honesty and full disclosure) relevant to the transaction.

First I will explain sub-agency. In the Philippines, a Sub-Agent is someone who is under the supervision and operational control of a Real Estate Broker. The Sub-Agent is not an agent of the buyer or seller per se. It is the Broker who is the agent of the buyer or seller. The Sub-Agent is a direct representative of the Broker and represents the Brokers interests. The formal position of a Sub-Agent in the hierarchy of real estate practitioners, as defined under Philippine law, is a “Salesperson.”

Agency is further broken down into three basic categories of client representation: Sellers Agents, Buyers Agents, and Dual Agency.

The Sellers Agent works only for the seller (client) and has no fiduciary duty to the buyer. The Sellers Agent works on behalf of their client to obtain the highest sale price and best sale terms possible.

The Buyers Agent works only for the buyer (client) and has no fiduciary responsibility to the seller, even if the Buyers Agent is compensated with a percentage of the commission paid by the seller. The Buyers Agent works on behalf of their client to obtain the lowest sale price and the best purchase terms possible.

In Dual Agency, the agent represents both the buyer and the seller so long as both parties consent to this arrangement. An example of dual agency would be if you called the listing agent on a “For Sale Sign” and you use that same agent in the transaction. In this case, and by law, the buyer and seller must sign a dual agency disclosure statement that documents their consent. The dual agent may not disclose any confidential information, advocate or negotiate on behalf of either of the two parties. I strongly discourage the use of dual agency. My feelings are that one fiduciary cannot fully represent two parties in a single transaction. This would be like using the same attorney to represent the plaintiff and defendant in a lawsuit. There would be no winner! Either use another agent or better yet, use a different or outside agency. (Dual Agency is outlawed in several states in the U.S. due to the inherent problems of equal representation.)

For more detailed information concerning the Nature, Form, and Kinds of Agency, you can review Title X Chapter 1 of the Philippine Law on Agency.  (Caution, you may fall asleep here so set your alarm to continue!)

No Brokerage Firms – No Problem

If you are actively looking for homes or property in an area that has no brokerage services available, seek out a competent and reputable attorney whom either practices real estate or has experience in real estate law. As licensed professionals, they too must abide by the Law of Agency set forth under Philippine Law. Just make sure the attorney you choose does not represent any conflict of interest by having a relationship with the seller!

Happy House Hunting!

8 thoughts on “Philippines Real Estate – Agency Laws

  1. So what would you say if you found a For Sale sign and had already seen the property? Find an agent to negotiate the deal. Negotiate yourself and then bring in the agent for the paperwork? Or get an agent in advance before you start to look?

    • Is the property listed with a brokerage agency? If not, you have options. In the case where no agency is involved, I would suggest using an attorney to draft up an offer/contract. First, collect all paperwork the seller has on the property and submit to that attorney for review to help you determine whether the title is clouded or clean. They would also be responsible for title work and all paperworks after the sale. You could also “hire” a brokerage firm to negotiate and handle all paperwork, but explain to the seller there would be costs involved. You could either pay out of your pocket or negotiate with the seller to cover some or all of the costs (since they are not paying a direct commission). Bottom line, you should have some professional help to avoid any pitfalls, which in the Philippines, can be many. Good luck.

  2. Good day,
    I have been reading your blog for the last few days as I’m planning to retire this year and move to Allen with family, presently we are leaving in Pampanga. My gf is from Basey and she wants we live in Samar, I like to be close to the sea (I’m a seaman) but dont like the east coast of Samar due to the danger of typhoons, I think west coast is more protected. The think is that she was in Allen when she was young for a few days when visiting an auntie and she has good memories of that place, so we decided to give Allen a chance of being our home. We cannot contact her auntie anymore. Maybe you know any Real State agency on the area or broker that we can contact. Our idea is rent something for house and then look for a house or lot for buying, if close to sea/beach better.
    Tks for your assistance.
    By the way love your blog.

    Regards
    Jose Lomas

    • Hi Jose, unfortunately there are no real estate agents in the area that I know of. Even here in Calbayog City I know of no licensed agencies or brokers. Most all real estate here is advertised with a sign and word of mouth. I would suggest reserving a room at a local hotel (or stay with family) until you find a rental. Then you could begin your search for a home or homesite. Most barangays in Western Samar and North Samar are along the coast and not far from the ocean. If I can be of any further help, please let me know.

  3. Hello many thanks for the swift reply.
    I think I will follow your advise and find hotel first.
    Nevertheless if you hear of some property for rent please feel free to give them my email or if they want I can contact them.
    I remember having read in one or your posts that in 2013 price of lots close to your place were around 50k, any idea of the actual price?
    Looking forward to meet you soon in Allen
    Jose

    • As in most real estate valuations (generally speaking), the closer you are to amenities and city conveniences, the more expensive land prices will be. While 10x10m lots in our barangay can range from P50-P70k per lot, as you move farther away from the ocean or to the north away from Calbayog City, the prices will drop. Let me know when you hit Samar Island and we can meet for coffee or lunch.

Leave a Reply

Your email address will not be published. Required fields are marked *

*
*
Website