Quick answer

A buyer of a preselling residential condominium in the Philippines is protected principally by the Subdivision and Condominium Buyers’ Protective Decree (Presidential Decree No. 957). Before offering units for sale, the developer generally must register the project and obtain a License to Sell from the Department of Human Settlements and Urban Development (DHSUD). The developer must follow the approved plans, honor material promises in advertisements, complete the project within the approved period, properly handle any project mortgage, and deliver the condominium title after full payment.

If the developer fails to develop or complete the project according to the approved plans and authorized timetable, a buyer who gives due notice may stop paying and seek reimbursement under Section 23 of PD 957. If the buyer—not the developer—is the one who defaults, the different grace-period, cancellation, and refund rules of the Realty Installment Buyer Act or Maceda Law (Republic Act No. 6552) generally apply to covered residential installment purchases.

The precise remedy depends on the contract, payment history, approved project records, reason for cancellation, and whether an extension or plan alteration was officially authorized. Do not simply stop paying without first documenting the legal basis and giving proper written notice.

What “preselling” means

A preselling condominium is sold before the unit is completed or ready for occupancy. The buyer usually signs a reservation agreement and later a contract to sell, then pays a down payment or installments while construction proceeds.

Preselling is lawful when the project and sale comply with housing, land-registration, building, and condominium regulations. It nevertheless carries risks that do not arise in the same way when buying a completed unit, including:

Failure to obtain or maintain the necessary government approvals;
Construction or turnover delays;
Changes to the unit, amenities, density, or project design;
Misleading advertisements or sales representations;
A mortgage affecting the project land or unit;
Disputes over refunds, forfeiture, or cancellation;
Failure to deliver a clean condominium title after full payment; and
Differences between the showroom, marketing materials, contract, and finished unit.

Check the project before paying

Verify the License to Sell

Ask for the project’s:

Certificate of Registration;
License to Sell number and date;
Exact registered project name;
Approved condominium plan and development schedule;
Name of the registered owner and developer; and
Approved tower, phase, and unit details.

Confirm the information independently through the DHSUD’s official List of Projects with License to Sell. Also check the agency’s list of projects covered by cease-and-desist orders.

A brochure stating that an application is “pending,” “for processing,” or “to follow” is not the same as an issued License to Sell. Under Sections 4 to 6 of PD 957, project registration alone does not authorize public selling; a License to Sell is ordinarily required, supported by a performance bond. Limited statutory exemptions exist for specific transactions, such as certain mortgagee sales, and should not be assumed to cover an ordinary developer preselling units to the public.

Confirm that the License to Sell actually covers the relevant tower, phase, and project—not merely another component of a larger development.

Verify the land and any mortgage

Obtain a recent certified true copy of the land title from the proper Registry of Deeds or through an authorized Land Registration Authority service. Compare:

The registered owner’s name;
Title and lot numbers;
Technical description and project location;
Mortgages, adverse claims, notices of levy, or other annotations; and
Any discrepancy between the title owner and the company receiving payment.

Under Section 18 of PD 957, a developer may not mortgage a covered lot or unit without prior written regulatory approval. The buyer must be notified before the loan is released, and the mortgage structure must provide a route for the particular unit to be released as the corresponding obligation is paid. A project mortgage is therefore not automatically unlawful, but it must comply with these safeguards.

If the seller says the land belongs to an affiliate, landowner, joint-venture partner, or another corporation, request the documents establishing the seller’s authority and have them reviewed before paying a substantial amount.

Investigate the developer and seller

Check the developer’s exact corporate identity and current registration. Verify that the broker is properly licensed and that any salesperson is operating under a qualified broker. Payments should be made only to the entity and account identified in official project documents and the contract.

Be cautious if an agent:

Refuses to provide the License to Sell;
Pressures you to pay before showing the contract;
Requests payment to a personal account;
Promises terms that are absent from the written documents;
Describes the payment as “fully refundable” without written conditions; or
Asks you to sign incomplete forms, undated documents, or blank pages.

Your core rights under PD 957

The project must have regulatory authority to sell

The developer ordinarily cannot lawfully offer or sell units in a registered condominium project without first obtaining a License to Sell. DHSUD handles the regulatory and licensing functions formerly exercised by the Housing and Land Use Regulatory Board.

A License to Sell is an important safeguard, but it is not a government guarantee that construction will finish, the investment will appreciate, or the developer will always remain solvent. Independent due diligence is still necessary.

Advertised promises may be enforceable

Project advertisements must be truthful and non-deceptive. Facilities and improvements promised by the developer or its agents may become enforceable sales warranties under Section 19 of PD 957.

Whether a particular statement is enforceable may depend on its wording, materiality, source, and relationship to the approved plans and contract. General sales enthusiasm is not necessarily equivalent to a definite warranty. Specific written representations—such as an identified amenity, unit feature, or completion commitment—are far more useful evidence.

The project must follow the approved plans and completion period

Section 20 requires the developer to provide the development shown in approved plans and offered in project materials within the period fixed by law or the housing regulator. For a current project, the controlling date should be confirmed from the License to Sell, approved development schedule, amendments, and any formally granted extension. The decree’s general language should not be used to disregard a different period lawfully fixed by the regulator.

A sales agent’s explanation that “all projects are automatically extended” is not proof of an authorized extension. Request the actual DHSUD approval and determine whether it applies to your tower or phase.

Material project changes are regulated

Developers cannot treat approved plans and advertised commitments as freely changeable. The exact approval and consent requirements depend on what is being altered and the applicable project rules. If the developer announces a significant change, request:

The revised approved plan;
DHSUD’s written approval;
The date and scope of approval;
An explanation of how the change affects your unit and common areas; and
Any buyer or association consent relied upon.

Do not sign an acceptance, waiver, or contract amendment until you understand whether it releases existing claims.

Payments cannot be forfeited when the developer fails to develop as required

Section 23 of PD 957 protects a buyer who, after due notice, stops further payment because the developer failed to develop the project according to approved plans and within the applicable period. The buyer may choose reimbursement of the total amount paid, including amortization interest but excluding delinquency interest, with interest at the applicable legal rate.

This is not an unconditional change-of-mind refund. The buyer must be able to connect the decision to stop paying with a legally relevant failure by the developer. The approved project records and official completion timetable are therefore critical.

The Supreme Court has also recognized that the statutory option belongs to the buyer when the requirements of Section 23 are established. But whether a delay, incomplete amenity, design change, or other breach is sufficient remains fact-dependent.

The title must be delivered after full payment

Under Section 25 of PD 957, the developer must deliver the title to the unit after full payment. It may not collect an additional “title issuance” fee apart from charges required to register the deed of sale.

If an outstanding project mortgage prevents title delivery, the developer must redeem the mortgage or the portion affecting the fully paid unit within the statutory period stated in Section 25. Buyers should distinguish legitimate registration taxes and Registry of Deeds expenses from an unsupported fee merely for releasing the title.

The contract should be registered

Section 17 requires the seller to register contracts to sell, deeds of sale, and similar instruments involving covered units with the Registry of Deeds, whether or not the price has been fully paid. Ask the developer for evidence of registration and have any unexplained refusal reviewed.

The developer generally bears real-property tax before title transfer

Under Section 26, real-property tax and assessments generally remain the developer’s responsibility while title has not passed to the buyer. If the buyer has actually taken possession and occupied the unit, the buyer may become liable to reimburse the developer beginning in the year following possession and occupancy.

This rule should be distinguished from condominium dues, utility charges, insurance contributions, transfer taxes, and other contractual expenses, which may have different legal and contractual bases.

Statutory protections cannot simply be waived

Section 33 declares void a contractual provision waiving compliance with PD 957 or its implementing rules. Signing a standard-form contract does not automatically validate a clause that defeats a mandatory buyer protection.

A waiver of a particular disputed claim after it arises, however, may raise different issues. Obtain advice before signing a quitclaim, settlement, revised turnover agreement, or deed containing a broad release.

When the buyer defaults: the Maceda Law

PD 957 itself directs that when nonpayment results from a reason other than the developer’s failure to develop, the buyer’s rights are governed by RA 6552 where that law applies.

If at least two years of installments have been paid

For a covered residential installment purchase, the buyer is entitled to:

A grace period of one month for every year of installment payments made, without additional interest on the overdue installments. This statutory grace right may be used only once every five years during the life of the contract and its extensions.
If the contract is canceled, a cash surrender value equal to 50% of total payments made. After five years of installments, the refund increases by 5% for each additional year, up to a maximum of 90%.
Actual cancellation only after 30 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 options on the contract are included in determining total installment payments under Section 3.

If less than two years of installments have been paid

The seller must grant a grace period of at least 60 days from the date the installment became due. If the overdue amount remains unpaid after that period, cancellation may occur only after 30 days from the buyer’s receipt of a notice of cancellation or demand for rescission by notarial act.

The statute does not grant the same mandatory cash-surrender-value refund to a buyer who has paid less than two years. A refund might still arise from the contract, another applicable law, or the developer’s own breach.

Rights before valid cancellation

During the applicable grace period and before actual cancellation, the buyer may:

Reinstate the contract by updating the account; or
Sell or assign the contractual rights to another person through a notarial act.

The buyer may also pay installments or the full unpaid balance in advance without interest, subject to Section 6 of RA 6552.

Important distinction: developer breach versus buyer default

Situation	Principal protection
Buyer stops paying because the developer failed to develop according to approved plans and the authorized timetable	Section 23 of PD 957 may support non-forfeiture and reimbursement after due notice
Buyer cannot or no longer wishes to continue for personal or financial reasons	RA 6552 grace-period and cancellation rules generally govern covered installment purchases
Developer and buyer disagree over whether there was a qualifying project failure	The result depends on the approved records, contract, notices, evidence, and findings of the proper adjudicatory body
Purchase concerns a commercial unit or another transaction outside RA 6552	Maceda Law protection may not apply; the contract and other laws must be examined

The label used by the developer is not always decisive. A document called a “reservation agreement” may or may not be part of the installment sale, depending on its substance, the parties’ acts, and the later contract. Never assume that every reservation fee is automatically refundable—or automatically forfeitable.

What to do if turnover is delayed

1. Identify the controlling completion date

Collect the License to Sell, contract, approved development schedule, turnover notices, and any DHSUD-approved extension. Distinguish among:

The construction-completion date;
The target turnover date;
The date the unit becomes ready for inspection;
The date occupancy is legally allowed; and
The date title must be delivered.

These dates are not necessarily the same.

2. Request documents and an explanation in writing

Ask the developer to provide:

Current construction status;
The reason for delay;
The revised completion and turnover dates;
The legal and contractual basis for any extension;
Copies of regulatory approvals; and
Available remedies, including continued performance or refund.

Do not rely solely on a phone call or verbal promise.

3. Choose a remedy carefully

Depending on the facts, a buyer may seek completion or specific performance, continue the purchase subject to an acceptable written arrangement, or pursue reimbursement and other appropriate relief.

A buyer seeking the Section 23 remedy should send a clear written notice identifying the unit, contract, developer’s failure, relevant approved timetable, decision to desist from further payment, and requested reimbursement. Use a delivery method that proves receipt.

Because an unjustified payment stoppage can expose the buyer to default and cancellation, have the records reviewed before withholding installments whenever the developer disputes the breach.

4. Avoid accepting the unit blindly

During turnover inspection:

Bring the contract, floor plan, finish schedule, and saved advertisements;
Photograph and video every room and defect;
Test doors, windows, locks, outlets, plumbing, drains, ventilation, and installed equipment;
Measure the unit where practical;
Inspect the parking slot and storage area, if included;
Record missing or substituted finishes;
List defects precisely in the punch list; and
Keep a signed copy showing the developer received it.

If the unit is materially incomplete or inconsistent with the contract, avoid signing a document stating that it is complete and accepted without exceptions. If keys must be accepted for security or inspection, note written reservations where appropriate.

Evidence to preserve

Keep originals and backed-up digital copies of:

Reservation agreement and official receipt;
Contract to sell and all annexes;
Payment schedules, statements of account, and proof of every payment;
License to Sell and Certificate of Registration;
Approved plans, specifications, and development timetable;
Brochures, flyers, showroom photographs, advertisements, and webpages;
Emails, text messages, chat records, and letters;
Notices of delay, default, cancellation, restructuring, or turnover;
Proof that each important notice was delivered and received;
Loan documents and communications with the financing institution;
Photographs and videos showing construction status or defects;
Inspection and punch-list records;
Copies of title documents and annotations;
Receipts for taxes, registration costs, dues, and other charges; and
A dated chronology of events and conversations.

Screenshots should show the sender, recipient, date, and surrounding conversation—not just an isolated sentence.

Where to complain

Regulatory concerns—such as selling without a License to Sell, misleading project information, or possible violations of project approvals—may be reported to the appropriate DHSUD regional office. DHSUD maintains official information for condominium and subdivision buyers.

Disputes involving refunds, unsound real-estate business practices, specific performance, unlawful project mortgages, and other buyer-developer claims within the statutory categories generally fall within the original and exclusive jurisdiction of a Regional Adjudication Branch of the Human Settlements Adjudication Commission (HSAC). This allocation follows Sections 12, 15, and 16 of the Department of Human Settlements and Urban Development Act (Republic Act No. 11201).

Use the HSAC’s official complaint and procedure portal to obtain the current verified-complaint requirements, governing Rules of Procedure, regional office information, forms, and fees. HSAC issued revised Rules of Procedure in 2025, so an old HLURB checklist or pleading template may no longer be reliable.

A complaint usually requires a verified pleading stating the parties, material facts, legal grounds, and relief requested, together with supporting documents and compliance with the current filing and service rules. Confirm the proper regional branch and current filing channel before submission.

If the claim under Section 23 of PD 957 involves a purchase price paid through a bank or other financing institution, RA 11201 requires that institution to be included as a necessary party. Leaving it out can complicate or delay the case.

A Regional Adjudicator’s decision, award, or appealable order becomes final and executory unless appealed to the Commission within 15 calendar days from receipt. A Commission decision may be reviewed by the Court of Appeals under Rule 43 of the Rules of Court. Appellate deadlines are strict; seek legal help immediately upon receiving a decision or final order.

DHSUD regulatory reporting and an HSAC claim serve different purposes. Reporting a violation to DHSUD does not necessarily substitute for filing the proper adjudicatory case to obtain a refund or order compelling performance.

Common mistakes to avoid

Paying before independently confirming the License to Sell;
Checking only the developer’s name and not the exact tower or phase;
Treating a reservation receipt as the complete agreement;
Relying on oral assurances that contradict the contract;
Failing to save advertisements and early project materials;
Assuming every delay automatically produces a full refund;
Assuming every buyer cancellation qualifies for a Maceda Law refund;
Stopping payments without due notice or proof of developer breach;
Ignoring notarized cancellation notices;
Missing the 15-calendar-day HSAC appeal period;
Signing a turnover acceptance, waiver, or quitclaim without recording defects;
Accepting unexplained changes to the unit or amenities;
Paying agents through personal accounts;
Filing in the wrong forum; and
Waiting until records, messages, and construction evidence have disappeared.

When legal help is urgent

Consult a Philippine lawyer experienced in real-estate and HSAC proceedings promptly if:

The project appears to have no License to Sell;
The developer issues a notarized cancellation or forfeiture notice;
You plan to stop paying because of delay or nondevelopment;
The unit or project is affected by foreclosure, insolvency, rehabilitation, or competing claims;
The developer asks you to sign a waiver or substitute-unit agreement;
A mortgage prevents release of your fully paid unit;
The finished unit materially differs from approved or promised specifications;
You discover a possible double sale or serious title defect;
A bank continues collecting despite a disputed developer breach;
You receive an HSAC decision or appealable order;
Several buyers are affected by the same project failure; or
A prescriptive, contractual, or procedural deadline may be approaching.

Frequently asked questions

Can a developer presell without a License to Sell?

Ordinarily, no. PD 957 requires project registration and a License to Sell before public selling, subject only to limited statutory exemptions. Verify the exact project, tower, and phase through DHSUD rather than relying on the agent.

Does a License to Sell guarantee that the project will be completed?

No. It shows that DHSUD authorized sales after regulatory requirements were addressed. It does not eliminate construction, financing, market, or insolvency risk.

Can I demand a full refund whenever turnover is delayed?

Not automatically. Section 23 may support reimbursement when the developer failed to develop according to the approved plans and applicable completion period and the buyer desists after due notice. An officially approved extension, the severity of the delay, the project’s actual status, and the documents can materially affect the result.

Can I stop paying immediately when construction appears slow?

That is risky. First establish the controlling completion deadline, determine whether an extension was approved, document the failure, and give proper written notice. If the developer contests your basis, obtain legal advice before withholding payment.

Does the Maceda Law always require a 50% refund?

No. The statutory 50% cash surrender value generally applies only to a covered residential installment buyer who has paid at least two years of installments and whose contract is canceled in accordance with RA 6552. A buyer who paid less than two years receives the statutory grace period and notarized-notice protection, but not the same mandatory refund under that law.

Can the developer cancel by email or an ordinary demand letter?

For a buyer-default cancellation governed by RA 6552, the law requires the applicable grace period and a notice of cancellation or demand for rescission by notarial act. Where at least two years of installments have been paid, actual cancellation also requires payment of the cash surrender value. Other termination situations must be assessed under their own governing law and contract.

Are brochures and chat messages legally useful?

Yes. PD 957 makes the developer answerable for certain represented or promised facilities and improvements. Their legal weight depends on authenticity, specificity, context, and consistency with the approved plans and contract, so preserve complete copies.

Who handles a buyer’s refund case?

A qualifying condominium buyer’s refund or specific-performance claim against a developer generally belongs initially before the appropriate HSAC Regional Adjudication Branch, not an ordinary trial court. Jurisdiction still depends on the parties, property, and nature of the claim.

What if the unit is financed by a bank?

Review both the sale and loan documents. For a Section 23 claim where the purchase price was paid through a bank or financing institution, the institution must be joined as a necessary party in the HSAC case. Do not assume that a dispute with the developer automatically suspends loan collection.

When should the title be delivered?

PD 957 requires delivery after full payment. The timing and steps also depend on execution and registration of the deed of absolute sale, payment of legitimate taxes and registration expenses, completion of title requirements, and release of any approved mortgage affecting the unit.

Can a contract waive PD 957 protections?

No contractual provision may validly waive compliance with PD 957 or its implementing regulations. However, the effect of a settlement, quitclaim, or later compromise can be fact-sensitive and should be reviewed before signing.

Official legal sources

This article provides general legal information, not advice for a particular transaction or dispute. Contracts, approved project records, financing arrangements, notices, and procedural dates can change the legal result. Official sources and current procedures were checked as of September 15, 2026.