Quick answer

A buyer of a preselling condominium is protected principally by Presidential Decree No. 957, the Subdivision and Condominium Buyers’ Protective Decree. Before offering units for sale, the project generally must be registered and covered by a valid License to Sell issued by the Department of Human Settlements and Urban Development (DHSUD). The developer must deliver the project, unit, facilities, and improvements according to the approved plans, advertisements, and promised completion period.

If the developer fails to develop or complete the project as required, a buyer who gives due notice may suspend further installment payments and may seek reimbursement of the total amount paid, including amortization interest but excluding delinquency interest, plus interest at the applicable legal rate. If the buyer simply cannot continue paying for reasons unrelated to a developer breach, the different—and usually more limited—protections of the Maceda Law may apply.

A delayed turnover, missing License to Sell, unauthorized mortgage, material change in the approved plans, or misleading sales promise should be documented immediately. Do not stop paying, sign a waiver, accept a replacement unit, or execute a quitclaim without first checking the contract, the project’s official records, and the legal effect of that step.

What “preselling” means

A preselling purchase is made before the condominium unit is completed and ready for occupancy. The arrangement may begin with a reservation agreement and later proceed to a contract to sell, installment plan, deed of sale, or similar instrument.

For purposes of PD 957, a sale is defined broadly. It can include an offer or solicitation, option, contract to sell, contract of purchase and sale, exchange, or other disposition for value. Calling a payment a “reservation fee” does not necessarily place the transaction outside the law; its treatment depends on the documents and the actual purpose of the payment.

The core protection: project registration and a License to Sell

As a general rule, the owner or dealer may not sell condominium units in a project without first registering the project and obtaining a License to Sell.

The license is project-specific. A developer’s well-known name, SEC registration, mayor’s permit, building permit, accreditation, or license for another development is not a substitute. Likewise, a broker’s Professional Regulation Commission credentials do not prove that the particular project or phase has a License to Sell.

Before paying, ask for and independently verify:

The exact registered project and tower or phase name;
The DHSUD Certificate of Registration and License to Sell numbers;
The name of the registered owner and developer;
The approved condominium plan and development timetable;
The land title and annotations affecting the property;
The project’s approved advertisements, brochures, and price schedule;
The authority and credentials of the broker or salesperson; and
Any official order suspending, revoking, or restricting the license.

PD 957 recognizes limited exempt transactions, including a sale of a condominium unit by or for a mortgagee in the ordinary course of liquidating a bona fide debt. Do not assume that a developer’s preselling activity falls within an exemption.

Selling without the required license is a regulatory violation. Its effect on a particular contract and the buyer’s entitlement to cancellation, refund, damages, or other relief still depends on the pleadings, evidence, and applicable law; absence of a license should not be treated as an automatic answer to every contractual issue.

Promises in advertisements can become enforceable warranties

Advertisements must state the real facts and must not mislead or deceive the public. Under Section 19 of PD 957, facilities, improvements, infrastructure, and other development represented or promised in brochures, advertisements, and other sales materials form part of the sales warranties enforceable against the owner or developer.

This may matter when the delivered project differs from what was sold, such as:

A materially different unit layout, floor area, location, or view;
Missing parking, access, elevators, open areas, or recreational facilities;
Downgraded finishes or building systems;
A promised amenity that disappears from the project;
A change in the represented use, density, or number of structures; or
Turnover or completion commitments that are not met.

Not every marketing statement creates the same legal obligation. General praise or obvious sales language may be different from a definite representation shown in an approved plan, signed document, price quotation, brochure, email, or advertisement. Preserve the exact material that influenced the purchase.

Completion and turnover rights

Under Section 20 of PD 957, the developer must construct and provide the facilities and improvements shown in the approved plans or promised in brochures and advertisements within one year from issuance of the License to Sell, or within another completion period fixed or officially approved by the housing regulator.

For a specific purchase, examine all of the following:

The completion date appearing in the License to Sell;
The contract’s construction and turnover provisions;
Any officially approved extension or revised completion period;
The promised date for delivery of the individual unit;
Conditions stated for turnover, such as full payment or loan takeout; and
Whether the project, tower, common facilities, and unit are actually ready for their intended use.

“Turnover” is not necessarily established merely because the developer sends a notice. The facts may include whether the unit can lawfully and safely be occupied, whether required approvals have been issued, whether the unit conforms to the contract and approved plan, and whether material defects remain.

A developer may invoke force majeure or another lawful basis for delay, but the label alone is not conclusive. The event, its actual effect on construction, the developer’s own conduct, contractual wording, regulatory approvals, and notices to buyers must be examined.

When the developer fails to develop the project

Section 23 of PD 957 protects a buyer who stops paying because the owner or developer failed to develop the condominium project according to the approved plans and within the applicable period.

The buyer must first give due notice to the owner or developer. When the statutory conditions are met:

Installment payments already made may not be forfeited;
The buyer may desist from further payment; and
At the buyer’s option, the buyer may seek reimbursement of the total amount paid, including amortization interest but excluding delinquency interest, with interest at the applicable legal rate.

This remedy is different from a voluntary withdrawal. The buyer should be able to connect the decision to stop paying with a legally significant developer failure.

Before suspending payment, send a clear written notice identifying:

The project, unit, and contract;
The promised and applicable completion obligations;
The acts or omissions constituting the alleged failure;
The buyer’s reliance on Section 23 of PD 957;
Whether the buyer is suspending installments, demanding performance, requesting a refund, or reserving remedies; and
A reasonable period for a written response, where appropriate.

Use a delivery method that proves receipt. If payments are made through postdated checks, automatic debit, a bank loan, or another financing arrangement, coordinate carefully. A unilateral payment stop may create separate consequences unless the relevant parties receive proper notice and the buyer’s legal position is sound.

When the buyer—not the developer—cannot continue paying

If the project is being developed as required and the buyer defaults for a personal or financial reason, Section 24 of PD 957 points to Republic Act No. 6552, commonly called the Maceda Law.

For covered residential real-estate installment purchases, the general rules are:

If at least two years of installments have been paid

The buyer is generally entitled to:

A grace period of one month for every year of installment payments made, without additional interest, exercisable once every five years during the contract and its extensions; and
If the contract is canceled, a cash surrender value equal to 50% of total payments made, plus 5% for every year after five years of installments, up to a maximum of 90%.

Actual cancellation requires both:

Thirty days from the buyer’s receipt of a notice of cancellation or demand for rescission made by notarial act; and
Full payment of the required cash surrender value.

Down payments, deposits, and option payments are included in determining the total number of installment payments made.

If less than two years of installments have been paid

The buyer is generally entitled to a grace period of at least 60 days from the installment’s due date. If the amount remains unpaid after that period, the seller may cancel only after 30 days from the buyer’s receipt of a notarized notice of cancellation or demand for rescission.

The statute does not provide the same mandatory cash surrender value for this category.

Reinstatement, assignment, and advance payment

During the statutory grace period and before actual cancellation, a covered buyer may reinstate the contract by updating the account or sell or assign contractual rights through a notarial act. The buyer may also pay installments or the entire unpaid balance in advance without interest and have full payment annotated on the title.

Contract terms contrary to these protections are void. However, the Maceda Law has statutory exclusions, and disputes can arise over whether a transaction is an installment sale, a straight sale funded by a separate loan, or another arrangement. Financing documents must therefore be reviewed together with the purchase contract.

Developer breach and buyer default are not interchangeable

The source of the problem determines the remedy:

Situation	Principal protection
Buyer stops paying because the developer failed to develop according to approved plans and the applicable completion period	Section 23 of PD 957; possible non-forfeiture and reimbursement of the total amount paid
Buyer defaults for reasons unrelated to development failure	Maceda Law grace periods, cancellation requirements, and any applicable cash surrender value
Developer makes misleading or unfulfilled project representations	Sections 19 and 20 of PD 957, contractual warranties, and other available remedies
Developer or owner mortgages the unit or project contrary to regulatory requirements	Section 18 of PD 957 and remedies within HSAC jurisdiction
Fully paid unit remains untitled	Section 25 of PD 957 and possible claim for delivery or specific performance

A buyer should not describe a voluntary change of mind as “developer delay” without evidence. Conversely, a developer should not treat a Section 23 suspension as an ordinary default merely by issuing a cancellation notice.

Changes to the unit, amenities, or project plan

Check whether a proposed change appears in the DHSUD-approved plan and whether regulatory approval was obtained. Section 22 of PD 957 expressly restricts changes to roads, open spaces, infrastructure, facilities for public use, and other subdivision development without regulatory permission and the required buyer or association consent. Condominium disputes also require examination of the approved condominium plan, License to Sell, master deed, declaration of restrictions, sales documents, and applicable regulations.

Do not rely solely on a salesperson’s statement that a change is “management’s prerogative.” Ask for:

The revised approved plan;
The DHSUD approval or order;
The technical comparison between the original and revised plans;
The contractual provision relied upon;
The effect on the unit’s area, value, use, access, or amenities; and
The consent or approval records required by law or the governing documents.

A broad contractual clause allowing changes does not authorize the waiver of PD 957. Section 33 declares void a contractual provision waiving compliance with the decree or its implementing rules.

Mortgages and protection against project liens

A project mortgage deserves careful attention because the buyer needs the unit released from the developer’s debt.

Under Section 18 of PD 957:

The owner or developer may not mortgage a unit or lot without prior written approval from the housing regulator;
Approval requires, among other matters, that the loan proceeds be used for project development;
The loan value allocated to each covered unit must be determined; and
An existing buyer must be notified before release of the loan.

The buyer may have the option to pay installments directly to the mortgagee for application to the mortgage debt allocated to the unit. Section 16 of Republic Act No. 11201 also places actions to annul mortgages executed in violation of Section 18 within the original and exclusive jurisdiction of the appropriate HSAC Regional Adjudicator.

Before full payment, obtain an updated certified copy of the land title and ask for written confirmation of the process and amount required to release the unit from any mortgage.

Contract registration, title delivery, and taxes

PD 957 requires the seller to register contracts to sell, deeds of sale, and similar instruments covering condominium units with the Register of Deeds, whether or not the purchase price has been fully paid.

Upon full payment, the developer must deliver the unit’s title. No fee may be collected for issuance of the title other than charges required for registration of the deed of sale. If a project mortgage remains outstanding when title should be issued, the developer must redeem the mortgage or the portion covering the fully paid unit within six months from that point so the title can be secured and delivered.

Real-property taxes and assessments generally remain the owner’s or developer’s responsibility while title has not passed to the buyer. If the buyer has actually taken possession and occupied the unit, the buyer becomes liable to the owner or developer for the tax and assessment beginning in the year following possession and occupancy.

Review the contract separately for legitimate closing expenses, transfer taxes, registration fees, association dues, utilities, insurance, and other charges. A charge is not valid merely because it appears on a turnover statement; request its contractual and legal basis and an itemized computation.

What condominium ownership includes

The Condominium Act, Republic Act No. 4726, treats a unit together with its appurtenant interest in the common areas or corresponding membership or shareholding in the condominium corporation. That associated interest generally cannot be transferred separately from the unit.

The registered master deed and declaration of restrictions are central documents. They can identify:

The unit and its approximate dimensions;
The land, buildings, common areas, and facilities;
The ownership structure for common areas;
Permitted and restricted uses;
The management body and voting rules;
Assessment powers and allocation of common expenses;
Maintenance and insurance arrangements; and
Conditions affecting transfers or dissolution.

Foreign buyers must also consider constitutional and statutory land-ownership limits. A foreign national’s acquisition must not cause foreign ownership or the corresponding foreign interest in the condominium corporation to exceed the legally permitted limit. Citizenship, dual-citizenship status, succession, corporate ownership, and the project’s existing ownership mix can affect the result.

The familiar claim that every condominium automatically expires after 50 years is inaccurate. The Condominium Act describes specific, cumulative conditions under which partition or dissolution may be pursued; age alone does not automatically terminate all condominium ownership.

Inspect before accepting turnover

Before signing an acceptance, waiver, conformity, or “unit received in good condition” document:

Compare the unit with the signed plans, specifications, and schedules;
Measure material dimensions and document discrepancies;
Test electrical outlets, plumbing, drainage, ventilation, doors, windows, appliances, and safety equipment;
Inspect for leaks, cracks, water intrusion, uneven finishes, and defective fixtures;
Check parking and storage allocations;
Confirm access to promised common facilities;
Take date-stamped photographs and videos;
Prepare a numbered punch list acknowledged by the developer; and
State in writing that acceptance, if necessary, is subject to listed defects and reserved rights.

For significant structural, waterproofing, electrical, mechanical, or area discrepancies, consider an independent architect or engineer. Do not conceal or alter a suspected defect before it has been documented and the developer has had a fair opportunity to inspect it.

Evidence to preserve

Keep originals and backed-up digital copies of:

Reservation agreement, contract to sell, deed, disclosure forms, and amendments;
Official receipts, bank records, postdated-check records, and statements of account;
License to Sell and Certificate of Registration details;
Approved plans, floor plans, specifications, and completion schedule;
Brochures, advertisements, website captures, showroom photographs, and sales presentations;
Emails, messages, call summaries, and written promises by authorized representatives;
Notices of delay, turnover, cancellation, default, price adjustment, or plan revision;
Title records, mortgage annotations, and release documents;
Inspection reports, punch lists, photographs, and videos;
Courier records, registry receipts, email delivery confirmations, and acknowledgments; and
Names, positions, and authority of every person who made a material representation.

Preserve native electronic files when possible. Screenshots should show the date, sender, recipient, URL, or account information needed to establish authenticity and context.

Practical steps when a problem develops

1. Identify the legal issue precisely

Determine whether the issue is lack of a license, delayed development, an unapproved change, misleading advertising, defective turnover, improper cancellation, an unauthorized mortgage, title delay, or an incorrect charge. Different issues require different evidence and remedies.

2. Verify the project’s regulatory record

Contact the DHSUD regional office covering the project. Request confirmation of the License to Sell, registered owner and developer, approved completion date, approved extensions or amendments, and relevant regulatory orders.

3. Review every connected agreement

Read the reservation form, contract to sell, payment schedule, financing documents, addenda, disclosure forms, master deed, and declaration of restrictions together. Confirm whether the person who signed for the developer had authority.

4. Send a documented written demand or notice

State the facts chronologically, cite the relevant contract provisions and legal rights, attach essential documents, specify the requested remedy, and preserve all rights. Avoid insults, unsupported fraud accusations, and statements that could be treated as an unconditional cancellation by the buyer.

5. Keep the payment issue under control

If relying on Section 23, make the required due notice clear and obtain advice before stopping automatic debits or loan payments. If the problem is personal inability to pay, calculate the Maceda Law grace period and cancellation requirements promptly.

6. Use the correct government channel

DHSUD performs regulatory functions, including project registration and licensing. Claims for refunds, specific performance, statutory or contractual obligations, unsound real-estate business practices, and specified mortgage disputes generally fall within the original and exclusive jurisdiction of an HSAC Regional Adjudicator under Republic Act No. 11201.

Use the current forms, fee schedule, filing methods, and territorial instructions published by HSAC. If the purchase price is financed through a bank or another financing institution and the claim arises under Section 23 of PD 957, the financing institution must be impleaded as a necessary party.

7. Observe appeal and other deadlines

A Regional Adjudicator’s decision, award, or order generally becomes final and executory unless appealed to the HSAC Commission within 15 calendar days from receipt. A Commission decision becomes final and executory after 15 calendar days from receipt and may be elevated to the Court of Appeals under Rule 43.

Those appeal periods do not define the filing deadline for every original claim. Prescription may depend on the remedy, contract, accrual date, notices, and applicable law. Seek advice promptly rather than assuming that a long contractual period remains available.

Common mistakes to avoid

Paying based only on a reservation form or salesperson’s assurance;
Treating a building permit as a License to Sell;
Verifying the developer but not the precise project, tower, or phase;
Assuming every payment is automatically refundable;
Stopping payment without the notice and factual basis required by Section 23;
Confusing Maceda Law cancellation rights with a refund for developer breach;
Relying on verbal turnover extensions or verbal refund promises;
Signing a quitclaim, waiver, replacement-unit agreement, or restructuring document without understanding what it releases;
Accepting a developer’s internal completion date without checking the regulatory record;
Failing to preserve advertisements and online representations before they change;
Addressing a legal demand only to the broker instead of the contracting developer or owner;
Ignoring a notarized cancellation notice; and
Waiting until the developer becomes insolvent, the license is revoked, or the appeal period expires.

When legal help is urgent

Consult a Philippine lawyer promptly if:

You have received a notarized cancellation or rescission notice;
The developer threatens forfeiture, collection, or litigation;
You intend to suspend substantial installment or bank-loan payments;
The project appears abandoned or construction has materially stopped;
The developer offers a quitclaim, waiver, restructuring, or substitute unit;
The land or unit is mortgaged, foreclosed, or subject to an adverse title annotation;
The same unit may have been sold or promised to another buyer;
Turnover documents require acceptance despite major defects;
The developer or seller appears insolvent or is disposing of assets;
Several buyers may need coordinated relief;
A decision or order has been received and an appeal period is running; or
Criminal conduct, falsified documents, or deliberate double selling is reasonably suspected.

For qualifying individuals, legal assistance may also be sought from the Public Attorney’s Office, subject to its mandate and eligibility requirements.

Frequently asked questions

Can a developer collect a reservation fee before obtaining a License to Sell?

PD 957 defines a sale broadly enough to include offers, solicitations, options, and contracts to sell. A developer should not use the label “reservation” to evade project registration and licensing requirements. Whether a particular preliminary activity or payment violated the law depends on the documents, timing, project status, and any applicable exemption.

Does delayed turnover automatically entitle me to a full refund?

Not automatically. A Section 23 refund requires a developer failure to develop according to the approved plans and within the applicable period, due notice from the buyer, and supporting evidence. The License to Sell, officially approved completion period, contract, extensions, and cause and extent of delay must be examined.

May I stop paying as soon as the project is late?

Do not stop informally. Section 23 requires due notice, and the factual basis must be defensible. A bank-financed account may involve obligations to a financing institution as well as the developer.

If I changed my mind, can I demand everything back?

Usually not on that fact alone. If the developer has not breached its development obligations, the Maceda Law and the contract may govern. The available grace period and cash surrender value depend principally on how long installments were paid and whether the transaction is covered.

Can the developer cancel by email or ordinary letter?

For cancellation based on a buyer’s default under the Maceda Law, the statute requires a notice of cancellation or demand for rescission by notarial act and a 30-day period from the buyer’s receipt. Where at least two years of installments were paid, the required cash surrender value must also be fully paid before actual cancellation.

Are reservation fees and down payments counted under the Maceda Law?

Down payments, deposits, and options on the contract are included in computing the total number of installment payments made. Whether a particular charge belongs in the statutory computation may depend on the transaction documents and payment records.

Can the developer change the unit or amenities?

A minor, properly authorized change is not necessarily equivalent to a material breach. But approved plans, definite sales warranties, regulatory permissions, governing documents, and any required consent must be checked. A contract cannot validly waive compliance with PD 957.

Who handles a refund complaint?

Claims by condominium buyers for refunds, specific performance, statutory or contractual compliance, and unsound real-estate business practices generally belong before the appropriate HSAC Regional Adjudication Branch. DHSUD handles the project’s regulatory and licensing side.

Must I hire a lawyer to file with HSAC?

Parties should check the current HSAC Rules of Procedure and Citizen’s Charter. Even where personal filing is procedurally possible, legal assistance is valuable when large amounts, bank financing, multiple contracts, contested notices, prescription, or urgent interim relief are involved.

Is a condominium automatically demolished or terminated after 50 years?

No. The Condominium Act does not create automatic expiration based solely on age. Partition or dissolution requires the statutory or registered conditions to be satisfied.

Official sources

This article provides general legal information, not legal advice or a prediction of any case’s outcome. Rights and remedies depend on the contract, payment history, regulatory records, notices, financing arrangements, and specific facts. Laws, procedures, and official guidance were checked as of September 12, 2026.