There is a type of contract that can be made to make it happen, but I’m not a lawyer. Don’t ask me about the contract itself or any of the details. All I can do is basically explain what I know about it.
With this type of contract, either of the parties can become a victim if everything isn’t done exactly right. Even then, it’s something I would never recommend to either party.
The phrase, in Tagalog, is sangla tira. The first word is sometimes pronounced “sanla”, “sanlang” or “sanglang”. I don’t believe there’s an official spelling. “Sangla” means pawn or mortgage and “tira” means residence or dwelling. Regardless of spelling, it means to pawn a house and the contract is called a Sangla Tira contract.
The contract allows an owner to pawn a house to another party. The other party pays the loan amount and gets to live in the house, as a rent-free tenant, as interest on the loan for the length of the contract. If the owner pays the “tenant” at the end of the contract, the owner gets the house back. Otherwise, the tenant gets to continue living in the house indefinitely (I don’t know how long the contract takes to be in default).
From what I understand, this type of contract is specific to Olongapo (and maybe Angeles as well). The phenomena started when the bases closed and American homeowners, through their wives, had to dispose of their homes somehow before leaving the country. As I understand it, Americans aren’t allowed to own property in the Philippines unless it’s as a surviving spouse. The Filipino spouse usually owns it.
When Josie and I first moved to the Philippines, we looked for a home before deciding to build our own. People living under sangla tira contracts occupied every house we looked at. One house had a contract on top of another contract. The tenants had pawned it again themselves. I don’t even think they had a legal contract but again, I’m not a lawyer.
The original owner is in a bind if a pawned home is pawned again. How can the owner make sure the second party pays off the third party? What happens if the rabbit hole goes even deeper?
For Josie and I, there’s always a last resort. Something unexpected could happen, and we might have to leave the country permanently. If that ever happens, and if we can’t sell our house outright, the next best thing would be to pawn it for as much as we can get for it.
That amount, unfortunately, would probably be a small fraction of what it’s worth. The last resort would to be to just leave it as it is. When you consider that we’ve put way more into the house than the 2.5 million pesos we invested in the beginning, it would be such a waste for us and such a boon for her relatives. One or more of them would undoubtedly move into it shortly after our departure.
Edited and updated. Originally published at one of my other websites in January 2017.