A pre-selling unit can be good value, but you are paying for something that does not exist yet. Check these five things before your first payment.
Check that the developer may sell
A developer may only sell units in a project registered with the Department of Human Settlements and Urban Development (DHSUD) and covered by a license to sell. Ask for the license number and check it with DHSUD. If there is no license yet, any reservation is a risk you carry.
Read the contract to sell, not just the brochure
The reservation agreement and the contract to sell set the real terms: the price, the payment schedule, the turnover date and what happens if either side is late. Look for the turnover date in writing and for what the developer owes you if it is missed.
Know your rights under the Maceda Law
If you buy on installments and later cannot pay, Republic Act 6552, the Maceda Law, protects you. After at least two years of installments, you are entitled to a grace period and, if the sale is cancelled, a refund of at least half of what you paid, rising with the years paid. With less than two years paid, you still get a grace period of at least sixty days before the developer can cancel.
Check the mother title
The land under the project has a title at the Registry of Deeds. A certified true copy shows who owns it and whether it is mortgaged. A mortgage is common during construction, but the developer should be able to show how it will be released before units are titled.
Plan for the costs after turnover
Buyers often forget the transfer costs: documentary stamp tax, transfer tax, registration fees and sometimes the developer’s own charges for processing the title. Ask for an estimate in writing before you sign, so the last payment is not a surprise.
Questions to ask the sales agent
Ask when the building permit was issued, how far construction has progressed and what the developer’s track record is on its last three projects. Visit one of those projects if you can and talk to the people who live there. Ask whether the price includes parking, and whether association dues start at turnover or only once you move in.
If the turnover is late
Keep every receipt, statement and email. If the developer misses the turnover date in the contract, write to it formally and ask for the new date and its reasons. Depending on the contract and the length of the delay, you may be able to suspend payments, ask for a refund or claim damages before DHSUD. A lawyer’s letter early on often settles the matter without a case.
This guide is general information, not legal advice. Every contract is different; have yours reviewed before you pay.