PINAS REALTY

Before Buying

1. Check if the Project has a License to Sell.
   You should ask the seller or broker/agent of the owner/developer if the project is registered and has a License to Sell issued by HLURB:
• This can be verified in the HLURB website (www.hlurb.gov.ph) for list of projects with approved Certificate of Registration and License to Sell;
• Or you may go to the nearest HLURB Regional Office for this information (Click here for the names and addresses of HLURB Regional Officers with its telephone number).
2. Conduct a personal visit to the subdivision/condominium, where the house and lot or condo unit to be purchased is located;
   If the project has a License to Sell, you may already enter into a Contract to Sell with the owner/developer. However, there are things which must be checked:
3. The date of completion of the project as indicated in the License to Sell;
4. If the property is mortgaged, it should have a Clearance to Mortgage from the HLURB;
5. That the facilities and amenities represented in the advertisement flyers/ brochures are in accordance with the approved subdivision and condominium plan on file with HLURB.

When Buying

1. Check if the broker/agent is registered with HLURB;
2. Check if the property has not been sold to other buyers;
3. Look into your source of income whether you can afford to pay the equity and the monthly installments;
4. Check if the materials of the house conform with the development standards and approved construction specifications submitted to HLURB;
5. Check who would pay the cost of the water and electric meters, the subdivision perimeter fence, etc;.
6. Check who would eventually operate the subdivision water system.

Before Signing the Contract to Sell

1. Don’t sign any blank form of the Contract to Sell;
2. Read thoroughly all the contents of the Contract to Sell more especially the terms and conditions in fine print;
3. Secure a copy of the Contract to Sell and all other documents that you signed;
4. Make sure that the Contract to Sell would be registered by the owner/developer to the Register of Deeds;
5. Pay directly to the owner/developer or the marketing agent authorized by said owner/developer only; and
6. Ask an official receipt on all payments for your file.

Right to a Clean Title

The buyer of a subdivision lot or condominium unit shall have a right to a clean title of said lot or unit upon the full payment of the purchase price. If the lot or unit is mortgaged, the owner/developer shall redeem the mortgage within six months from full payment so that the title could be delivered to the buyer. The only fee collectible from the buyer is the registration fee for the deed of sale in the Registry of Deeds.

Time of Completion of the Project

The two most pressing questions an excited or anxious buyer would ask are:

1. When will the project be completed?
2. What are the facilities and amenities that go with my purchase of a unit?

Non-Forfeiture of Payments

A buyer’s payment for a subdivision lot or condominium unit cannot be forfeited by the owner or developer when he desists paying on the ground that the project is not develop per approved plans and within the time limit for development. He must, however, notify the owner or developer of his decision to suspend payments.

Failure to Pay Installments

In case the buyer fails to pay his installments for other reasons not attributable to the non-development of the project i.e. he failed to raise the needed money, he may avail of his rights under Republic Act 6552, Realty Installment Buyer Protection Act. This is so provided under Section 24 of PD 957, thus:

SECTION 24. Failure to Pay Installment. – The rights of the buyer in the event of his failure to pay the installment due for reason other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552.

Where the transaction or contract was entered into prior to the effectivity of Republic Act No. 6552 on August 26, 1972, the defaulting buyer shall be entitled to the corresponding refund based on the installments paid after the effectivity of the law in the absence of any provision in the contract to the contrary.

Rights of a Defaulting Buyer under RA 6552

Realty Installment Buyers Protection Act (MACEDA LAW)
FROM HLURB WEBSITE

Right to update payments without additional interest or in the alternative a refund of cash surrender value.

There are two categories of buyers accorded protection under this law:

1. a buyer with at least 2 years of installments under Section 3 RA 6552, and
2. a buyer with less than 2 years of installments under Section 4 RA 6552

Buyer with at least two (2) years of installment – Section 3 RA 6552
If the buyer in this category defaults in the payment of his succeeding installments, he is entitled to the following rights:

1. to pay without additional interest the unpaid installments due within the total grace period earned by him. Said grace period is equal to one (1) month for every year of installment payments he has made. Here the buyer has at least two (2) months grace period for he should have paid at least two (2) years of
   installments to avail of the rights under this section.
   
   This right can be exercised by the buyer only once in every five years of the life of the contract.
2. to be refunded of the cash surrender value of his payments equal to 50% of his total payments if the contract is cancelled. But if he has paid five years or more, he is entitled to an increase of 5% every year and so on but the cash surrender value shall not exceed 90% of his total payments.
   
   The actual cancellation of the contract referred to above shall take place only:
1. after 30 days from receipt by the buyer of the notice of cancellation or demand for rescission, AND
2. upon full payment to the buyer of the cash surrender value.

In the computation of the total number of installment payments the following are included:

1. down payment and
2. deposit or option money

Section 3 of RA 6552 provides, thus:

“SECTION 3. In all transactions or contracts, involving the sale or financing of real estate on installment payments, including residential condominium apartments … where the buyer has paid at
least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

“(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him, which is hereby fixed at the rate of one month grace period for every one year of installment payments made; provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

“(b) if the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made; provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

“Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.”

Buyer with less than 2 years of installments Section 4 RA 6552
If he has paid less than two (2) years of installments, he still has the right to pay within a grace period of not less than sixty (60) days from the date the installment became due.

If the buyer fails to pay the installment due at the expiration of the grace period, i.e. 60 days, the seller may cancel the contract after 30 days from receipt by the buyer of the notice of cancellation or demand for rescission of the contract by a notarial act.

Here the buyer is not entitled to any refund.

Section 4 of RA 6552 provides, thus:

“SECTION 4. In case where less than two years of installments were paid the seller shall give the buyer a grace period of not less than sixty days from the date the installment become due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.”

Right to Assign/Reinstate Contract

The buyer has a right to sell or assign his rights over the lot or unit to another person or reinstate the contract by updating the account provided this is done during the grace period and before actual cancellation of the contract.

Section 5 of RA 6552 states:

“SECTION 5. Under Sections 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by upgrading the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.”

Right to Advance Payment without Interest and Annotation of Full Payment in the Title Subject of the Sale

The buyer has the right to pay in advance any installments or the full unpaid balance without interest any time and have such full payment annotated in the title.

Section 6 of RA 6552 states:

“SECTION 6. The buyer shall have the right to pay in advance any installments or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.”

Sanctions for Violating PD 957

A violation of the provisions of the decree and its implementing rules and regulations will carry administrative and penal sanctions. The liability extends to controlling persons in cases where the violator is a partnership or corporation. The violation usually carries administrative and criminal penalties. The HLURB as a quasi-judicial entity has jurisdiction over administrative aspect of the case while the criminal aspect is lodge before the fiscal’s office and accordingly if there is a finding of probable cause a criminal action is filed in the civil courts.

Section 38, 39 and 40 of PD 957 provides:

“SECTION 38. Administrative Fines. – The Authority may prescribe and impose fines not exceeding ten thousand pesos for violations of the provisions of this Decree or of any rule or regulation thereunder. Fines shall be payable to the Authority and enforceable through writs of execution in accordance with the provisions of the Rules of Court.

“SECTION 39. Penalties. – Any person who shall violate any of the provisions of this Decree and/or any rules or regulation that may be issued pursuant to this Decree shall, upon conviction, be punished by a fine of not more than twenty thousand (P 20, 000.00) pesos and/or imprisonment of not more than ten (10) years: Provided, that in the case of corporations, partnership, cooperatives, or associations, the President, Manager or Administrator or the person who has charge of the administration of the business shall be criminally responsible for any violation of this Decree and/or the rules and regulations promulgated pursuant thereto.

“SECTION 40. Liability of controlling persons. – Every person who directly or indirectly controls any person liable under any provision of this Decree or of any rules or regulation issued thereunder shall be liable jointly and severally with and to the same extent as such controlled person unless the controlling person acted in good faith and did not directly or indirectly induce the acts constituting the violation or cause of action.”

Venue for Filing of Cases for Violation of PD 957

A violation of the provisions of PD 957, as amended, carries civil and criminal liabilities which are punishable primarily under PD 957 and other applicable penal laws.

An aggrieved buyer of a subdivision house and lot or a condominium unit may file the civil aspect of the violation with the HLURB, a quasi-judicial government agency for housing and land development. The proceedings on the civil case is governed by Rules of Procedure of HLURB. The proceedings is summary in nature and the provisions of the Rules of Court is not applicable except in a suppletory character.

Task Force to Monitor Investment Scheme in Real Estate Project.

There are news of buyers who have invested hard earned money in the purchase of lots or condominium units but find themselves short changed has been a cause for alarm. They found that projects were either not existing or the housing units badly constructed.

Relative to this the Office of the President issued Administrative Order No. 185 creating an Investor Protection Task Force (IPTF).

The IPTF has the power to monitor and give public warning on questionable schemes and products and investigate and recommend prosecution of the perpetrators with the Department of Justice.

Administrative Order No. 185

“Administrative Order No. 185. Creating an Investor Protection Task Force

Section 1. There is hereby created an Investors Protection Task Force (IPTF) to monitor investment schemes, including real estate projects, especially those marked to the public and Overseas Filipino Workers.

Section 2. THE IPTF shall be headed by the Department of Finance, with the following as members:

Securities and Exchange Commission
Department of Trade and Industry
National Bureau of Investigation
Department of Labor and Employment
Housing and Land Use Regulatory Board

Section 3. The IPTF shall undertake the following activities:

1. Monitor investment schemes and products;
2. Give public warnings on questionable schemes and products;
3. File evidence and recommend prosecution to the DOJ; and
4. Recommend appropriate legislation and regulations for investor protection”