The #1 Way to Avoid Real Estate Scams in the Philippines: Check the License to Sell

Buying a house or condo is one of the biggest investments you'll ever make. In the vibrant Philippine real estate market, securing your dream home should be an exciting journey, not a leap of faith. Sadly, stories of unfinished projects and fraudulent developers can cast a shadow.

But there's a powerful tool designed to protect you: the License to Sell (LTS).

This comprehensive guide will show you how checking the License to Sell is your most crucial step to ensure your investment is safe, legitimate, and leads you straight to your dream home.

Your Strongest Defense: The License to Sell (LTS)

Your primary shield against real estate scams in the Philippines is the License to Sell (LTS). This crucial document is issued by the Department of Human Settlements and Urban Development (DHSUD). You might remember its predecessor, the Housing and Land Use Regulatory Board (HLURB); the DHSUD took over its functions after Republic Act 11201 was signed into law on February 14, 2019.

The Law That Protects You: PD 957

Back in the early 1970s, the Philippine government recognized the need to protect homebuyers from fraudulent real estate practices. This led to Presidential Decree No. 957, famously known as the Subdivision and Condominium Buyer's Protective Decree (1976).

This vital law was enacted to safeguard you from developers who might fail to deliver on their promises, such as maintaining essential infrastructure like roads, drainage, sewerage, and water systems. Without these, your health and safety could be compromised. Over the years, PD 957 has been updated to keep pace with the evolving real estate landscape, with its Implementing Rules and Regulations last revised in 2009.

DHSUD: Your Government Watchdog

The DHSUD is the government agency tasked with enforcing PD 957. Before its current form, regulatory functions passed from the National Housing Authority (NHA) to the Human Settlement Regulatory Commission, which then became HLURB, and is now the DHSUD.

This powerful department houses various bureaus, including those focused on environmental planning, urban development, housing and real estate development regulation, and even homeowner associations. The HLURB was also reconstituted into the Human Settlements Adjudication Commission to handle disputes.

Every developer of subdivision and condominium projects, along with anyone involved in real estate transactions, must be registered and licensed by the DHSUD. The agency oversees the issuance, suspension, and revocation of these crucial documents and acts as the primary body for resolving disputes between buyers and developers.

First Layer of Protection: The Developer's Certificate of Registration

Before any project can even begin, developers must obtain a Certificate of Registration from the DHSUD. This certification confirms they meet the established Subdivision Standards and Regulations.

As per Section 4 of PD 957, the landowner intending to convert their property into a subdivision must submit their plan to the DHSUD. The agency only approves it after verifying that the plan fully complies with the applicable standards.

The registration process, detailed in Section 7, Rule IV of the Revised Implementing Rules and Regulations for PD 957, requires developers to submit comprehensive information, including:

• Developer Profile, Business Address, and Financial Capacity: For corporations, this includes articles of incorporation and SEC authorization.

• Approved Plans: Comprehensive subdivision or condominium plans, including electrical, zoning certificates, environmental compliance certificates, and all necessary permits.

• Approved Advertisements: Copies of all advertising materials, like circulars or brochures. Recent DHSUD Board Resolution No. 922 even requires developer approval before advertising.

• Approved Contract to Sell: A sample of the Contract to Sell, along with an affidavit agreeing to necessary future changes.

• Title of Property: Proof that the property title is free from liens or encumbrances. If mortgaged, the mortgagee must agree to release the mortgage upon full payment of the purchase price.

  
  

These strict requirements ensure that only credible developers with the financial muscle to complete their projects successfully receive a Certificate of Registration. This certificate must be displayed prominently in the developer's office as required by law. The DHSUD actively monitors compliance, imposing penalties and even issuing Cease and Desist Orders (CDOs) for non-compliant projects—stop all construction and marketing of the subdivision or condo project.

Sample of Registration Certificate issued to the Developer

Second Layer of Protection:

The Project's License to Sell

While a developer might be registered, they cannot legally sell any subdivision lot or condominium unit without first securing a License to Sell for that specific project.

Section 5 of PD 957 is very clear: "An owner or dealer with a registration certificate cannot sell any subdivision lot or condominium unit without first obtaining a License to Sell within two weeks from the project's registration."

Your second, and equally vital, layer of defense against fraudulent transactions is this project-specific License to Sell. Like the Certificate of Registration, it must be displayed prominently in the developer's office.

The DHSUD protects buyers by:

• Issuing the License to Sell only to reputable developers.

• Ensuring all requirements are met before issuance.

• Requiring prominent display of the License to Sell.

• Allowing you to verify the License to Sell for any property directly with the DHSUD.

Sample of License to Sell for Specific Condo or Subdivision Project

Your Action Plan: Always Verify!

Both the Certificate of Registration and the License to Sell are indispensable tools that confirm a developer's legal and financial capacity to undertake a project. Remember, the LTS is project-specific, so always ensure you're checking the License to Sell for the exact project where your unit is located.

The DHSUD's role goes beyond just issuing licenses; they actively monitor compliance through site visits, impose penalties for violations, and crucially, resolve disputes between buyers and developers.

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This content is for educational purposes only. Consult a lawyer for legal advice tailored to your specific case. For any questions or free assistance with finding your ideal residential lot, house-and-lot, or condo unit in Cebu, feel free to contact us at 0920 207 5035 or email cebuhousefinder@yahoo.com.