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Philippine Realty Listings |
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Carefree
11 Posts |
 Posted - Jun 20 2025 : 07:42:14 AM
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Property Buyer Rights Protection Laws in the Philippines: A Comprehensive Overview
1. Presidential Decree No. 957 (The Subdivision and Condominium Buyers’ Protective Decree)
1.1 Overview: Presidential Decree No. 957 (PD 957) Regulates the sale of subdivision lots (and condominium units) in the Philippines. It protects buyers against unscrupulous practices by owners, developers, and sellers of real estate projects.
1.2 Key Provisions
License to Sell: Developers must secure a "License to Sell" from the Department of Human Settlements and Urban Development (DHSUD; formerly HLURB) before marketing and selling subdivision lots or condominium units. This ensures that developers comply with the minimum standards and that the project is viable.
Registration of Project: Subdivision plans and condominium plans must be registered with DHSUD. This ensures transparency regarding the project’s specifications and compliance with planning and zoning requirements.
Advertising Guidelines: Advertisements for real estate projects must be cleared with DHSUD, ensuring truthful representations regarding size, location, amenities, etc.
Refund and Rescission: Buyers have the right to cancel or rescind the contract if the developer fails to develop the project according to the approved plans or violates terms and conditions. Under certain conditions, the buyer may seek a refund (with or without deductions for necessary expenses) if the developer defaults on obligations.
Real Estate Mortgage: PD 957 restricts the developer’s right to mortgage properties without the consent of buyers if subdivision lots or condominium units have already been sold to them.
1.3 Impact on Buyers: The law grants buyers recourse if the developer fails to deliver on promised facilities and amenities or if the project is not completed on time.
2. Republic Act No. 6552 (Maceda Law)
2.1 Protects real estate buyers who purchase property on installment (excluding industrial lots, commercial buildings, and sales to tenants under agrarian laws).
2.2 Key Provisions: Minimum Grace Period: A grace period is equivalent to one month for every year of installment payments made (for residential real estate). This grace period allows buyers to cure any payment default without incurring additional interest.
Refund of Payments: If the buyer has paid at least two (2) years of installments but can no longer continue payments, the buyer is entitled to a refund of 50% of the total payments made. If the buyer has paid more than five (5) years of installments, he/she is entitled to an additional 5% refund per year, up to a maximum of 90% of total payments made.
Right to Sell or Assign: Buyers who have paid at least two (2) years of installments can sell their rights or assign the contract to another person. They may also reinstate the contract by updating payments within the grace period allowed by law.
Prohibition Against Waiver: Any stipulation in the contract that may waive protections granted by the Maceda Law is hereby null and void. Developers cannot force buyers to waive these rights.
2.3 Impact on Buyers: This Law prevents outright forfeiture of hard-earned installment payments if a buyer defaults, and balances the interests of both developers and buyers by providing a fair mechanism for refunds and contract reinstatement.
3. Housing and Land Use Regulatory Board (HLURB) & Department of Human Settlements and Urban Development (DHSUD):
3.1 Agency Evolution: In 2019, the Republic Act 11201 reorganized the Housing and Land Use Regulatory Board (HLURB) into the Human Settlements Adjudication Commission (HSAC) and the Department of Human Settlements and Urban Development (DHSUD), which handles policy, planning, regulation, and program coordination and HSAC handles adjudication and dispute resolutions.
3.2 Mandate: DHSUD/HLURB/HSAC enforces PD 957 and other housing laws. They provide guidelines, resolve disputes, and adjudicate any complaints that involve subdivision and condominium developments.
3.3 Filing Complaints: Any buyers who feels their rights were violated (delayed completion, deceptive advertising, developer's failure to honor contract terms, or any other way) may request mediation, conciliation, or adjudication. Most disputes are of contract rescission, developer project violations, and refund claims.
4. Real Estate Service Act (Republic Act No. 9646):
Regulates real estate practitioners (brokers, salespersons, appraisers, and consultants), ensuring real estate service is provided by duly licensed practitioners, and thus protecting buyers from fraudulent or incompetent brokerage services.
Buyers should ensure that brokers/agents handling their purchase are registered and licensed via the Professional Regulation Commission (PRC). Such practitioners must deal honestly and transparently with clients.
5. Other Relevant Laws:
Anti-Dummy Law (Commonwealth Act No. 108): Prohibits foreigners from owning certain types of land (except in condominium setups where 60% Filipino ownership is maintained).
Civil Code of the Philippines: Governs contracts, obligations, and property rights, as well as remedies for breach of contract.
Condominium Act (Republic Act No. 4726): Governs rights and obligations for condominium units, including condominium corporations and rules for condominium owners and developers.
Local Government Code (Republic Act No. 7160): Regulates local land use, zoning, and planning. Correct zoning classification can help protect a buyer’s investment and future use of the property.
6. Practical Tips for Property Buyers:- Verify the Developer’s License to Sell: Before making a down payment, request a copy of the project’s License to Sell from the DHSUD. Confirm that the license is authentic and valid.
- Check if developers have a Certificate of Registration: This ensures the project is properly documented and recognized by the regulatory authorities.
- Review the Contract to Sell and Other Documents: Carefully read all clauses, especially those concerning payment terms, default, refunds, and cancellation. Check if the property’s technical description, deliverables, and amenities match the marketing materials.
- Keep Records of All Payments: Request official receipts and maintain written communications with the developer or broker. Proper documentation makes it easier to file a complaint or claim a refund under PD 957 or the Maceda Law.
- Conduct Due Diligence: Verify the developer’s track record, whether there are pending disputes, or any notices of violation from DHSUD. If purchasing land, check the authenticity of the Transfer Certificate of Title (TCT) or the Condominium Certificate of Title (CCT) through the Registry of Deeds.
- Consult Professionals: Hire a licensed real estate broker and, if necessary, consult a real estate lawyer. Professional advice can help navigate complex contracts and ensure compliance with legal requirements.
7. Enforcement and Remedies: Administrative Complaints may be filed with DHSUD/HSAC against developers or brokers for any violations of PD 957, RA 6552, or other housing laws.
Civil Suits: If contractual provisions are violated (e.g., breach of contract, specific performance, rescission, damages), the buyer may also file a civil suit in regular courts.
Criminal Cases: In extreme cases of fraud/ misrepresentation, criminal charges can be filed.
Rescission or Cancellation of Contracts: Under both the Maceda law and PD 957, (in prescribed cases) buyers may rescind or cancel their purchase or may compel developers to honor their obligations.
Refund of Payments: Under both the Maceda Law and PD 957, if the developer defaults on obligations or if a contract is validly canceled, buyers may be entitled to refunds (subject to certain deductions and conditions).
The reorganization of the HLURB into DHSUD and HSAC has caused administrative changes in project approvals, regulations, and in handling complaints. Buyers should check with DHSUC/HSAC for the latest procedures.
Digital Innovations: Government agencies are gradually embracing digital platforms to streamline property registration, licensing, and complaint filing procedures. Contact local DHSUD offices for online services. |
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