Women are a major force in the Philippine housing market, making important decisions and contributing more financially than ever before. Even though big purchases are usually made together, women’s voices are crucial in the home-buying process, and real estate professionals know this.
Studies show that many potential property buyers are women, and they have a big say in how much they spend on their homes. This is because Filipino women are becoming more financially independent. With more jobs and better access to money, women make a big difference to their families’ incomes and are often seen as a way to secure their future.
When purchasing real estate, it’s crucial to conduct thorough due diligence and familiarize yourself with the applicable laws. In this article, we’ll explore some precautions and propose actions to address developers who fail to deliver the property on time.
Subdivision and Condominium Buyers’ Protective Decree
Recognizing the vulnerability of property buyers, including women, President Ferdinand Marcos, Sr. enacted Presidential Decree No. 957, also known as the “Subdivision and Condominium Buyers’ Protective Decree,” in 1976. This decree aimed to safeguard and protect buyers’ rights, particularly in the face of prolonged delays. It established rules and regulations governing the sale of subdivision lots, houses, and condominium units, placing obligations on developers while granting buyers crucial rights.
Certificate of Registration. Developers must register their subdivision and condominium projects with the now Department of Housing and Urban Development (DHSUD) Regional Office that has jurisdiction over the project’s location, as per Republic Act No. 11201 and its Implementing Rules and Regulations. This registration process involves submitting project plans, specifications, and other relevant documents and requirements. The plans will also be used to assess the actual development of the project, allowing buyers to compare the delivered units and the overall project with the developer’s promises. Any significant deviation from the plans without proper justification and buyers’ consent can be considered a violation, providing buyers with the right to seek recourse.
Prerequisite of a License to Sell (LTS). Developers must obtain a License to Sell (LTS) from the same Regional Office before legally marketing, advertising, and selling subdivision lots and condominium units. The process of obtaining an LTS involves a review of the developer’s track record, project plans, and financial capacity. The issuance of the LTS signifies the DHSUD’s assessment of the project’s viability and the developer’s ability to deliver, providing assurance to prospective buyers.
Completion and Timely Delivery. The developer must complete the subdivision or condominium project in accordance with the DHSUD-approved work program and the specified completion time, as outlined in the License to Sell. However, this timeline may be adjusted if approved due to “force majeure” or other extraordinary events, such as during the COVID-19 pandemic. Additionally, developers are obligated to deliver the property to the buyer within the agreed-upon period in the Contract to Sell or any other purchase agreement. If no specific delivery date is mentioned, the completion and delivery of the housing unit shall not exceed one year from the date of purchase.
Legal Recourse. Any unreasonable delays could trigger PD 957’s protective mechanisms, giving buyers the option to rescind the agreement. Under certain conditions, buyers can demand the contract’s rescission, which means the cancellation of the sale and a refund, if the developer fails to complete the project as approved.
The Civil Code of the Philippines (Republic Act No. 386) provides additional safeguards while balancing the parties’ obligations and contractual obligations. These provisions include but are not limited to, Article 1170 (Liability for Breach), which holds individuals or entities accountable for failing to fulfill their obligations, including delayed delivery due to negligence, bad faith, or breach of contract. Additionally, Article 1191 (The Right to Rescind Reciprocal Obligations) empowers buyers to demand the developer’s completion and delivery of the lot or unit, or rescind the contract, if one party fails to fulfill their obligation.
Furthermore, the Maceda Law (Republic Act No. 6552) safeguards buyers of residential real estate, including subdivisions and condos, who make payments in installments. While primarily focused on buyers’ rights in default cases, buyers who have made the minimum number of installments may be entitled to a refund of a portion of their payments.
Ways forward
Before making a purchase, a buyer should conduct thorough due diligence. This involves verifying the developer’s track record and ensuring that a License to Sell (LTS) has been issued for the desired project. Additionally, the buyer should carefully review the contract to sell, paying close attention to delivery timelines, other terms and conditions, and remedies for breach.
If a buyer encounters an unreasonable delay in project delivery, he may consider the following options:
Engage in open and documented communication with the developer. Send a demand letter expressing your concerns and requesting an explanation. Maintain a record of all correspondence.
Seek assistance from DHSUD’s Regional Office. The Department can mediate disputes. This offers a cost-effective alternative to quasi-court litigations.
File a case with the Human Settlements Adjudication Commission (HSAC) Regional Office.
Note: The above article is intended to broadly explain your rights and possible recourse. It is advisable to seek professional help to properly guide you with your specific case.
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Henry L. Yap is an Architect, Fellow of both Environmental Planning and Real Estate Management, and one of the Undersecretaries of the Department of Human Settlements and Urban Development.
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