With all the price increases, buying a property may seem unattainable, especially to young property seekers. However, if you are determined to invest in a property, there are plenty of ways to beat the market prices and high credit score requirements, such as co-buying.
Also known as co-ownership in the Philippines, co-buying is when two or more persons acquire a home and decide to split ownership. A couple, a family, close friends, a group of people or businesses, or a mix of both, might be the property owner in a co-buying setup. Being an owner is identical to being a co-owner, with the exception that the share of the co-buyer is proportional to his or her interest.
In Gino Olivares’ speech in Lamudi Outlook 2022, he describes co-buying as an emerging real estate trend that might be one of the solutions to the never-ending housing crisis, as co-buying allows for paying a lower mortgage, building higher equity, and saving money on utilities. However, as co-buying can still be considered a fairly new concept in the Philippine real estate industry, it might take a while to be generally accepted in the country and for the people to get used to it. Despite that, it offers positive outcomes to young property seekers of the future generation.
Furthermore, the co-buyers’ rights regarding their property share are equally significant in co-buying. These rights include the ability to enjoy the property’s fruits and benefits, mortgage, sell, demand reimbursement for any costs advanced for the co-owned property, permit a third party to use or enjoy it, and demand partition.
According to Article 494 of the Civil Code of the Philippines, co-owners may form an agreement to keep the property undivided for a maximum period of ten years. The period can be extended by renewing the agreement.
Like other buying agreements, co-buying has its advantages and disadvantages. Here are the pros and cons when you opt for a co-buying setup:
The legality and technicalities of co-buying require some knowledge of the related laws. Below are some of the legal basis for co-buying property in the Philippines.
Article 486 of the Civil Code: According to Article 486, the co-owner may use the property or right possessed in common just like any other owner. However, the co-owner may only use it for the intended purpose and in a way that does not harm the interests of other co-owners or hinder the other co-owners from using it in line with their rights.
Article 489 of the Civil Code: One co-owner may make repairs at their discretion to preserve the property owned jointly, but they must, if practical, first advise the other co-owners of the need for those repairs. Repairs for clogged or collapsed drains, leaky faucets, leaning concrete fences, and defective electrical wiring may be included in this list.
Article 491 of the Civil Code: Even though doing so would benefit everyone, none of the co-owners may change the property owned in common without the approval of the others. Alterations include changing the property’s use from a plantation to a swimming resort or from an industrial facility to a recreational facility.
Cruz v. Catapang (G.R. NO. 164110) in relation to Article 491 of the Civil Code: Any act of rigorous dominion or possession is considered a change, and any encumbrance or disposition has been assumed to constitute an alteration. Building a home on jointly owned property becomes an act of dominion.
Article 492 in relation to Article 489 of the Civil Code: A majority vote is required to decide on improvements or adornments to the property, such as building a koi pond, landscaping, or enhancing the façade. The co-owners representing the controlling interest in the co-buying setup vote to decide the majority.
Article 493 of the Civil Code: The portion that may be assigned to him following the conclusion of the co-buying setup is the only portion that is affected by the alienation or mortgage of the co-owner’s portion. The portion that may be assigned to him upon the termination of the co-ownership is the only portion that the alienation or mortgage of the co-portion owners can affect.
Torres et al. v. Lapinid et al. (G.R. No. 187987): In this case, the co-owner can legally surrender his co-owned property to Lapinid without any resistance from the other co-owners. Lapinid legally acquired the same rights as Jesus as of the date of the execution of a legal sale as the transferee. The sale is still valid even though there is no evidence that it was not perfected. It can be considered that Lapinid stepped into the shoes of Jesus as co-owner of an ideal and proportionate share of the property shared in common. If a co-owner sells his share prior to partition, the sale or alienation is not rendered void by this sale. The sale will only have an impact on his proportionate share, subject to how the split turns out.
Cabrera v. Ysaac (G.R. No. 166790): The co-owner cannot sell a specific piece of land without the approval of his or her co-owners if the alienation occurs before the partition, as was the case in Cabrera v. Ysaac. He or she might sell only the undivided interest of the jointly owned property. Furthermore, “if he is the owner of an undivided half of a tract of land, he has a right to sell and convey an undivided half, but he has no right to divide the lot into two parts and convey the whole of one part by metes and bounds.”
Article 494 of the Civil Code: No co-buyer shall be required to continue being 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.
Article 496 of the Civil Code: The parties may decide to divide the property through an agreement or a legal process.
Article 498 in relation to Article 495 of the Civil Code: The decision to distribute the property between the parties may be made amicably or legally. The property will be sold, and the money will be divided among the co-owners if it is fundamentally indivisible and they cannot agree on which one of them should receive it in exchange for protecting the interests of the others.
Rule 69, 1997 Rules of Civil Procedure: An action for judicial partition may be properly brought if the co-owners are unable to come to an agreement to divide the property they share.
Rule 74 and 90 of Special Proceedings: The deceased’s estate may be divided through a judicial or summary settlement of the estate.
Co-buying may seem overwhelming considering the various tied to the whole concept. However, there are ways to avoid conflict as much as possible. You must have a formal agreement outlining each owner’s roles and responsibilities.
These documents should be created by a real estate lawyer and contain the following details:
Co-buying doesn’t have to be as complex as it sounds as long as you lay strict rules and regulations with your co-buyers and consult a real estate lawyer regarding this matter. As the purchase price of properties continues to rise, more young property seekers opt for co-buying agreements to afford their desired property.
Photos from Deposit Photos
