Josie, my wife, and I own our house in the Santa Rita suburban barangay (subdivision) of Olongapo City. We would never pawn the house (except in an unusual circumstance), but it can be done.
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 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 right. Even then, it’s something I would never recommend to either party.
The term, in Tagalog, is sanglang tira. It took me a few tries to get things to work out in Google Translate. It wanted me to enter “sangla ng tira”, which is actually the same thing. The “ng” part is almost always added to the end of a word when it’s written out.
The word “sangla” means mortgage, pawn and other related words. The term “sangla ng tira” translates to “mortgage residual” in Google Translate. Regardless, it can give you an idea about what it really means.
The contract allows you to pawn a house to another party. The other party gets to live in the house, rent-free, as interest on the loan for the length of the contract.
From what I understand, this type of contract is specific to Olongapo City (and maybe Angeles City 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.
When Josie and I first moved to the Philippines, we looked for a home before deciding to build our own. People living under sanglang tira contracts occupied every house we looked at. One house had a contract on top of another contract. The people who bought the loan had pawned it again themselves.
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 deeper?
For Josie and I, there’s always a last resort. Something unexpected may happen where we may have to leave the country permanently. If that happens and 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 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 of them would undoubtedly move in shortly after our departure.