Your Rights to a Refund for Delayed or Incomplete Subdivision and Condominium Projects in the Philippines

Can you ask for a refund when a subdivision or condominium project is delayed, or if the developer fails to complete it on time?

When a subdivision or condominium project faces delays, cancellation, or incomplete development, Filipino homebuyers have legal protections to secure their investments. This guide explains when and how you can demand a refund, referencing key regulations like the Housing and Land Use Regulatory Board (HLURB) Guidelines and Presidential Decree No. 957 (PD 957). It covers both subdivision projects, including those selling lots only, and condominium projects, ensuring you understand your rights whether you’re purchasing a lot, a house and lot, or a condo unit.

Understanding Project Delays

What Constitutes a Delay?

• For Condominium Projects: A project is considered delayed if the developer fails to complete it within the timeframe specified in the Contract to Sell (CTS), License to Sell (LTS), or promotional materials, as mandated by HLURB Board Resolution No. 926, Series of 2015 (effective February 15, 2016). This typically involves the completion of housing units and related facilities.

• For Subdivision Projects: A delay occurs if the land development, including roads, drainage, water supply, and electrical systems, is not completed within the timeframe set by HLURB, typically one year from the issuance of the License to Sell, unless otherwise specified in the Program of Work.

• For Lot Only Subdivision Projects: In this development, buyers purchase land without structures. The developer’s responsibility is limited to completing land development, including roads, drainage, water supply, and electrical systems, after which buyers can build their own homes.

  
  

HLURB 2015 Guidelines on Time of Completion

The HLURB’s 2015 Guidelines, established under Board Resolution No. 926, Series of 2015, and detailed in Memorandum Circular No. 003-16, standardize project completion timelines to ensure developers adhere to promised schedules. These guidelines apply to all projects registered with HLURB, including subdivisions and condominiums.

• General Rule: All projects must be completed within one year from the issuance of the License to Sell, unless a different period is specified in the approved plans or Program of Work.

  
  

• For Subdivision Projects:

  • Land Development: This includes infrastructure like roads, drainage, water supply, and electrical systems. Developers must apply for a Certificate of Completion for Land Development (COCLD) upon finishing this phase, typically within one year from LTS issuance.

  • Lot Only Subdivisions: The developer’s obligation is to complete land development, enabling buyers to proceed with their own construction, subject to obtaining necessary building permits.

  • House and Lot Packages: For subdivisions offering houses, separate timelines apply for land development and housing construction, as specified in the Program of Work or CTS.

    
    

• For Condominium Projects: Completion includes both land development and the construction of housing units. Developers must apply for a Certificate of Completion for Housing Component (COCHC) when units are ready for turnover, as per the CTS or within 12 months from the date of purchase if no specific timeline is provided.

  
  

• Extensions: Developers may request extensions for justifiable reasons, such as inclement weather, material shortages, sub-soil conditions requiring extra excavation, or force majeure. They must:

  • Apply to HLURB within 60 days of the event causing the delay.

  • Notify buyers in writing.

  • Provide a new bond or security if the original has lapsed.

    
    

• Amenities and Facilities: Common facilities (e.g., parks, community centers) must be completed within the approved period for land development, applicable to both subdivision and condominium projects.

Key Documents Defining Completion Timelines

Several documents establish the expected completion timelines for subdivision and condominium projects, ensuring transparency and accountability:

1. Program of Work

   • Submitted to HLURB during the application for the Certificate of Registration and License to Sell (CR/LTS).

   • Outlines the schedule for land development and, for condo projects or house and lot subdivisions, housing construction.

   • For Lot Only subdivisions, it focuses on land development timelines, including infrastructure like roads, drainage, water, and electrical systems.

2. Contract to Sell (CTS)

   • Specifies the delivery date for housing units in condo projects or house and lot subdivisions.

   • For Lot Only subdivisions, it may include the expected completion of land development but primarily outlines the sale terms for the lot.

   • If no specific timeline is provided for housing units, HLURB mandates completion within 12 months from the purchase date.

3. License to Sell (LTS)

   • Issued by HLURB, it authorizes developers to market and sell lots or units and includes the exact completion date (month, day, year) for the entire project, whether subdivision or condo.

4. Promotional Materials

   • Must clearly state the completion timeline, consistent with the LTS and CTS, ensuring buyers are informed before purchasing.

Document	Purpose	Time Frame Details
Program of Work	Outlines project schedule for land and housing development	Land: 1 year from LTS issuance; Housing: Per CTS or 12 months from purchase
Contract to Sell (CTS)	Specifies terms of sale and delivery date for housing units or land	Housing: Per stated date or 12 months from purchase; Land: Per Program of Work
License to Sell (LTS)	Authorizes sales and sets project completion date	Exact completion date (month, day, year) for entire project
Promotional Materials	Informs buyers of project timeline via advertisements	Must align with LTS and CTS timelines

Included Developments in Lot-Only Subdivisions

For lot-only subdivisions, the developer’s responsibility is limited to completing land development, enabling buyers to build their own homes. These developments, mandated by PD 957 and its IRR, include:

• Infrastructure:

  • Roads: Major roads (10.0m wide) and minor roads (8.0m wide) with carriageways, sidewalks, and planting strips.

  • Drainage Systems: Gutters and stormwater easements to prevent flooding.

  • Water and Sewage Systems: Access to utilities, either through connections or reserved spaces.

  • Lighting: Streetlights for safety and visibility.

• Common Areas:

  • Parks and Playgrounds: Minimum 3.5% of land for projects ≥1 hectare, not less than 100 sqm.

  • Community Facilities: Reserved land for multi-purpose centers in larger projects.

• Lot Preparation:

  • Clearing and grading to create level building sites.

  • Compliance with minimum lot sizes (e.g., 100 sqm for medium-cost single detached lots) and frontages (e.g., 10.0m for regular lots).

• Regulatory Compliance: Obtaining a Development Permit, LTS, and COCLD, ensuring adherence to zoning and environmental laws.

Legal Remedies for Buyers

If a developer fails to deliver on time—whether it’s the land development in a subdivision or the housing units in a condo—buyers have several legal options under PD 957 and related laws:

1. Stop Payments (Desist Payment)

   • Under Section 23 of PD 957, buyers can stop making payments if the project is not completed as per the agreed timeline. This applies to:

     • Lot Only Subdivisions: If land development (e.g., roads, utilities) is not completed.

     • House and Lot Subdivisions or Condos: If housing units are not delivered.

   • Buyers must notify the developer in writing of their intent to stop payments due to non-completion.

2. Non-Forfeiture of Payments

   • Payments made cannot be forfeited if the developer fails to complete the project, protecting buyers’ investments in both subdivisions and condos.

3. Demand a Refund

   • Buyers can demand a full refund of all payments made, excluding delinquency interest, with legal interest added, under the following circumstances:

     • Significant Delays: If land development (for subdivisions) or housing units (for condos) are delayed beyond the agreed timeline without HLURB-approved extensions.

     • Project Cancellation: If the developer cancels the project entirely.

     • Incomplete Development: If promised facilities or amenities (e.g., parks, pools) are not delivered, as required by Section 20 of PD 957.

   • Installment Buyers:

     • PD 957: Entitled to a full refund of payments (excluding delinquency interest) plus legal interest.

     • Maceda Law (RA 6552): For buyers who’ve paid at least two years of installments, if the contract is canceled due to delinquency, they’re entitled to a 50% refund of total payments, plus an additional 5% for each year beyond the fifth.

   • Fully Paid Buyers:

     • Under the Civil Code (Articles 1191 and 1385), buyers can rescind the contract and demand a full refund, including the purchase price with interest, adjusted for the property’s current market value. Legal consultation is recommended due to the complexity of these cases.

For Lot Only subdivisions, if the land development is not completed on time, buyers can exercise these remedies to protect their investment. Once land development is complete (verified by the COCLD), buyers can proceed with construction, but they must secure their own building permits, which is outside the developer’s responsibility.

Practical Steps for Buyers

1. Review Documents: Check the CTS, LTS, and promotional materials for the promised completion dates. For Lot Only subdivisions, focus on the land development timeline in the Program of Work.

2. Monitor Progress: Verify if the developer has applied for a COCLD (for subdivisions) or COCHC (for condos) to confirm completion status. For Lot Only purchases, ensure the COCLD is issued before planning construction.

3. Notify the Developer: If delays occur, send a formal written notice to the developer outlining your concerns and intent to stop payments.

4. File a Complaint: Approach the HLURB for disputes or refund requests. Visit the Department of Human Settlements and Urban Development (DHSUD) for filing guidelines.

5. Consult a Lawyer: For complex cases, especially fully paid sales, seek legal advice to explore remedies under the Civil Code or other laws.

HLURB’s Role

The HLURB monitors compliance and may issue Cease and Desist Orders (CDOs) for non-compliant projects, such as abandoned developments like the Riviera Condo near St. Joseph Mabolo Church in Cebu (check HLURB’s CDO list, last updated May 2019, via DHSUD’s website). Buyers should verify a project’s status before purchasing to avoid risks.

Remember:

The HLURB’s 2015 Guidelines and PD 957 provide robust protections for buyers of both subdivision and condominium projects. For Lot Only subdivisions, the developer must complete land development within one year from the LTS issuance, enabling buyers to proceed with their own construction plans. For condos and house and lot subdivisions, housing units must be delivered as per the CTS or within 12 months from purchase. Buyers can stop payments, prevent forfeiture, and demand refunds with interest if developers fail to deliver as promised.

Always verify project timelines, monitor progress, and consult a lawyer for tailored advice to ensure your homebuying journey is secure and stress-free.

For personalized assistance, contact us at 0920 207 5035 or email cebuhousefinder@yahoo.com.

Disclaimer: This content is for educational purposes only. Consult a lawyer for specific legal advice.