Wala Pang License To Sell o LTS, Wala Pang Refund??
Can Real Estate Developers Refuse Refund If project Has No License To Sell. Is this legal?
So this is the 3rd video I made regarding license to sell and I feel that our real estate buyers, especially the new ones, need to be constantly educated in terms of managing their investment, even at the early stage. I cannot stress enough the importance of asking for a license to sell from your real estate agent or the developer even before you begin to get excited about the condo itself.
So what is a license to sell?
A License to Sell (LTS) is a certificate obtained by a property developer from the Department of Human Settlement and Urban Development or DHSUD. This is a mandate under The Presidential Decree No. 957 under Section 5 which mentions that:
“Such owner or dealer to whom has been issued a registration certificate shall not, however, be authorized to sell any subdivision lot or condominium unit in the registered project unless he shall have first obtained a license to sell the project within two weeks from the registration of such project.”
To make it simple, developers cannot legally sell properties without the license to sell.
What developers do instead is ask buyers to submit a letter of intent to them. A letter of intent (LOI) is a document declaring the preliminary commitment of the buyer to the property. Developers may or may not include holding fee, which can be converted to a reservation fee when the LTS is issued.
But, what if a developer goes ahead with the actual reservation and starts collecting equity payments even without license to sell. Does this make the sale valid?
Now going back to the impact of not having a license to sell, that while developers may get away with beginning to accept reservation fee and equity payment, they cannot begin construction.
In short, you may have been paying equity for a year or maybe you are almost done paying the full equity, and to your surprise, construction has not even begun. And this maybe the first thing you noticed, and you begin to ask questions only to be told that developer do not have a license to sell.
So naturally, you get nervous and demand for a full refund. But will developers give you the refund because they did not have a license to sell?
I really wanted to say yes because it should be the right thing to do but unfortunately, the answer is no.
Having no certificate of registration and license to sell at the time the contract was entered into, do not nullify the sale. In fact, there is no mention on this under PD 957.
There can be a violation by the developer under PD 957 however, these are just administrative sanctions through imposition of fines or penalties and are ordered to cease and desist from selling and from collecting amortization from its buyers. It does not cover the contract to sell entered between you and the developer. As such, the sale remains valid.
And since it is valid, developers are not obliged to give you a refund.
So what can you do? There are 3 things you can do.
Option 1. You can extend your patience until an LTS can be issued and they can finally begin construction. As I mentioned, getting a license to sell can take a long time.
Option 2. You and your agent, if you will, can go to the developers office or submit a letter to the developer requesting for a refund. Now, even if, having no license to sell do not automatically render the sale invalid, there are developers that are willing to give you a refund. You just need to ask.
Option 3. But if there is a loss of trust and confident to the developer and you would rather invest somewhere else, you may file a verified complaint with the Regional Adjudication Branch of the the Human Settlements Adjudication Commission to which the adjudicatory functions of the defunct HLURB has been transferred.
In the end, I really hope that you can avoid this headache by doing your due diligence. Just ask for these 3 letters, LTS. I know the real estate industry is booming and there is a great demand for residential units, but nothing replaces a peace of mind knowing that your investment is in good hands.
And, if you are a real estate agent or a broker, watching this, you should not offer projects without license to sell to your clients. It is your responsibility to protect your buyers from falling into this difficult situation.
So there you have it and I hope you learned something new, once again this is George Ryan Sarmago, unit manager from Filipino Homes, thank you for watching, stay safe, stay at home and peace.
#LTS #refund #realestate
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OSHDP Affordable Housing Summit 2021: The Home EveryJuan Deserves
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