In Cebu, you can buy a parcel of land, in a subdivision project, through an installment sale without interest for 5 years (or longer term). It is popularly known as "Yuta data data ang bayad" scheme. No need to apply for bank loan or Pag-IBIG loan as it is financed by the developer/seller. No income requirement as long you can pay the monthly amortization. In short, this scheme of acquiring a residential lot is the best deal in town. In this blog, let us discuss this scheme and major issues and concerns that you must consider before you buy the property.
THE "LOT ONLY" SUBDIVISION
The "Yuta data data ang bayad" or "lot for installment sale" scheme, is marketed as a subdivision project sans the housing component. The project has the basic requirements for a subdivision: entrance gate with guard house, concrete road system, concrete gutter and underground drainage, concrete perimeter fence, water and power facilities. Some projects have additional amenities such as clubhouse, swimming pool, basketball court, children playground, etc. You buy only the residential lot and later on, you build your dream house.
Some subdivision projects also offer "lot only" aside from the house-and-lot units. The residential lot is sold is spot cash or financing (bank loan or Pag-Ibig loan). The price per square meter is much higher than the price offered in the "Yuta data data ang bayad" scheme.
In "Yuta data data ang bayad", you can buy a residential lot for as low as P3,500 per square meter. And you pay the property in installment without interest for 5 years or more. Hassle-free land buying experience. Since it does not require a bank loan, you don't need to undergo the strict credit investigation. It is financing or installment without interest. You don't need to submit proof of income as proof that you can repay your home loan. As long as you can afford the monthly amortization of the residential lot, you can buy the property.
The sale of the property is evidenced by the notarized Contract to Sell. Your payments for the reservation and monthly installments are covered by an official receipt of the developer/seller. The process is simple:
Visit the proposed project location (some are not yet developed; other are starting to develop). You have an idea about the location of the subdivision and its accessibility.
Select the lot(s) in the subdivision map (provided by the developer).
Reserve the selected lot(s). If payment is required, pay the required reservation fee (usually P5,000) and this amount is included in the total purchase of the property. You signed the reservation agreement and the developer will issue its official receipt.
Start paying your monthly amortization 30 days after the date of reservation.
Issuance, signing and notarizing the Contract to Sell.
Continue paying your monthly amortization until you fully paid the total contract price.
Once the development is ready, you can start building your dream house.
Transfer of title under your name.
Sample: Project: YANESSA COUNTRY HOMES Location: Tolo-tolo, Consolacion, Cebu
License to Sell: DHSUD LTS NO. 032796 Price: P7,400 per sqm Term: 6 years Interest: 0% Lot area: 100 sqm Reservation Fee: P10,000 Monthly amortization: P10,139 For a 100 sqm residential lot, you pay only P10,139 per month for 6 years. Contact 0908 301 7398 for reservation. Since this "lot only" project has License to Sell, it is safe to buy residential lots from this subdivision development. When the project was introduced in 2016, the price was P4,800 per sqm. Now, the price is P7,400 per sqm. Most of the lots are already sold. Check out the available lots.
ISSUES AND CONCERNS
(1) NO LICENCE TO SELL The License to Sell (LTS) is an important document issued by the Housing and Land Use Regulatory Board (HLURB), now Department of Human Settlement and and Urban Development (DHSUD), to the registered developer of the subdivision project. When the subdivision project has License to Sell, you can safely assumed that (a) the developer has satisfactorily complied with the Subdivision Standards and Regulations, (b) the developer has the financial and technical capacity to undertake the subdivision project, (c) the land is a residential land, (d) the property is under the name of the developer and can be readily subdivided with individual title, (e) the contract to sell is valid, etc. Even if the project is already registered, the developer must apply for the License to Sell.
No owner or dealer shall sell any disposable subdivision lot or condominium unit in the registered project without a license to sell issued by the Board within two (2) weeks from the registration of each project. Section 11 Rule IV of the Revised Implementing Rules and Regulations for PD 957
Now, here's the problem: Most of the "Lot Only" subdivision projects in Cebu have no Certificate of Registration and License to Sell. As a general rule: Avoid buying a property (lot only, house-and-lot, and condo unit) from a developer without the License to Sell. Check out our discussion on buying a property from a developer without License to Sell. If you are strict on this LTS requirement, you can rarely find a lot only project with LTS. However, I have my listing of lot only with LTS, contact me. Each developer has its own reasons why it failed to secure the License to Sell. One reason has something to do with the requirement on time of completion on land development (one year plus extension). They prefer to pay the penalties. In most cases, they plan to apply for the LTS three years after. After three years of collecting monthly payments from the buyers, they have already enough money to start full development of the project (which can be done within a year or two). Based on experience, lot only developers finished their development projects and transferred the title as promised to their buyers. Sadly, only a few of them.
(2) LAND CONVERSION ISSUE
This is not an issue if the property is already a residential area. However, if the property is still an agricultural land, there might be a problem in land conversion in the future. One of the requirements for application for subdivision development permit is certified true copy of DAR conversion order.
Related to the issue of failure to get the conversion order from the Department of Agrarian Reform is that the lot owner cannot build a house. Neither you nor the developer can apply for the construction of facilities (water, power, drainage, etc.) that are necessary for residential use. However, such restrictions are not applicable to farm lot subdivision projects. See Rules and Regulations Implementing Farmlot Subdivision Plan issued by Human Settlements Regulatory Commission (1981); see HLURB Board Resolution No. 750 series of 2003. Under this rule, the minimum lot is 750 sqm and the primary purpose is agricultural activities (e.g. crop farms/tree farms, livestock and poultry, and fish ponds and fish farms). Housing is only secondary. The developer is required to get Certificate of Registration and License to Sell prior to selling of the farm lots.
(3) LAND TITLE ISSUE
If the property is under the name of the developer or property owner, the land can be subdivided and individual title can be issued to the lot buyers. The problem occurs when the property title is not yet under the name of the developer and the land cannot be subdivided with individual titles. One of the major requirements before a developer can be issued with the Certificate of Registration and License to Sell by the HLURB/DHSUD is the property ownership. If the lot only project has no CR/LTS, it is the duty of the real estate broker to check the ownership of the property to be developed. Some brokers do not include "lot only" projects without CR/LTS in their websites and discourage their agents to sell these properties. The problems arise if the land is still under the Mother Title (the registered owner is already dead) and not yet subdivided. The issue of ownership must be settled first by the heirs through extra-judicial settlement and pay the required estate tax.
CONCLUDING REMARKS
These are the three common issues and concerns when we buy a parcel of land in a lot only subdivision project. This discussion is not final. I take some reservations, for example, regarding the restrictions on building a house and application of permit for the installation of water and power facilities. If you know the developer and it has a remarkable track record in lot only development and no problem in getting building permit, installation of water and power facilities, and transfer of land title to the buyers, buy at your own risk. For more information about this topic or any inquiries about residential lot, house-and-lot, or condo unit in Cebu, please contact us at 0908 301 7398 or email us at cebuhousefinder@yahoo.com. We help home buyers find their dream house at the best price and location.