Can You Sell Property Under the Social Housing Finance Corporation? Consent and Title Individualization Rules in the Philippines

Introduction

In the Philippines, the Social Housing Finance Corporation (SHFC) plays a pivotal role in addressing the housing needs of low-income families through programs like the Community Mortgage Program (CMP). Established under Republic Act No. 6846, as amended by Republic Act No. 7835 and further strengthened by Executive Order No. 272, SHFC facilitates access to affordable housing by providing financing to organized communities for land acquisition, site development, and house construction. However, properties acquired under SHFC programs are subject to specific legal restrictions to ensure they benefit the intended underprivileged sectors and prevent speculative practices. This article explores the rules governing the sale of such properties, the requirement for consent from SHFC, and the process of title individualization, drawing from relevant Philippine laws, including Republic Act No. 7279 (Urban Development and Housing Act of 1992) and SHFC's implementing guidelines.

Background on SHFC and Socialized Housing Properties

The SHFC administers socialized housing initiatives primarily through the CMP, which allows informal settler families to form community associations and secure loans for purchasing land from private owners or government entities. The program is designed for families earning below the poverty threshold, as defined by the National Economic and Development Authority (NEDA). Properties under CMP are initially titled in the name of the community association or held under a master deed, often referred to as a "mother title."

Key features of SHFC-financed properties include:

Affordability Focus: Loans are amortized over 15 to 25 years at subsidized interest rates, with community associations acting as originators and collectors.
Beneficiary Selection: Participants must meet eligibility criteria, such as being Filipino citizens, not owning other residential properties, and belonging to the low-income bracket.
Anti-Speculation Measures: To protect the program's integrity, laws impose moratoriums on the resale or transfer of these properties, ensuring they remain with bona fide beneficiaries.

These properties fall under the broader category of socialized housing as defined in RA 7279, which mandates that at least 20% of housing projects be allocated for socialized housing.

Restrictions on Selling SHFC Properties

The sale of properties financed by SHFC is heavily regulated to prevent profiteering and ensure long-term occupancy by qualified beneficiaries. Under Section 27 of RA 7279, beneficiaries of socialized housing programs are prohibited from selling, transferring, or disposing of the property for a period of ten (10) years from the date of award or execution of the deed of sale, unless with prior written approval from the appropriate government agency—in this case, SHFC.

Key Provisions on Sale Restrictions:

10-Year Moratorium: This period begins from the date the beneficiary receives the property or signs the loan agreement. During this time, any sale, lease, mortgage, or encumbrance without SHFC consent is null and void.
Rationale: The restriction aims to discourage "professional squatters" or individuals who acquire properties solely for resale at a profit, thereby defeating the social welfare objective.
Exceptions to the Moratorium:
- Inheritance: Transfer by succession to legal heirs is allowed without consent.
- Force Majeure: In cases of natural disasters or unavoidable circumstances leading to relocation.
- Government Buy-Back: If the beneficiary defaults, SHFC may repurchase the property.
Post-Moratorium Sales: After the 10-year period, the property can be sold freely, but the seller must ensure the buyer complies with any remaining loan obligations if the title is not yet individualized.

Violations of these restrictions can result in administrative sanctions, including cancellation of the beneficiary's rights, forfeiture of payments made, and potential criminal charges under RA 7279, which prescribes penalties such as fines up to PHP 100,000 or imprisonment up to six years.

Consent Requirements for Sale or Transfer

If a beneficiary wishes to sell or transfer the property within the restricted period, obtaining SHFC's consent is mandatory. The process involves a formal application to SHFC, supported by justifications such as financial hardship, relocation for employment, or health reasons.

Steps to Obtain Consent:

Application Submission: The beneficiary submits a letter of intent to SHFC's regional office, along with documents like the Certificate of Eligibility, Loan Agreement, and proof of valid reason for transfer.
Evaluation: SHFC reviews the application to ensure the proposed transferee is also a qualified low-income beneficiary. This includes income verification and confirmation that the transferee does not own other properties.
Approval and Conditions: If approved, SHFC issues a Consent to Sell or Transfer, which may include conditions like assumption of remaining loan balances by the buyer. The original beneficiary must settle any arrears.
Notarization and Registration: The deed of sale must be notarized and registered with the Registry of Deeds, annotating SHFC's consent on the title.

SHFC may deny consent if the transfer appears speculative or if the buyer does not meet eligibility criteria. The processing time typically ranges from 30 to 60 days, and fees may apply for administrative costs.

In cases where the property is under a community association, additional approval from the association's board may be required, as per the association's by-laws and SHFC guidelines.

Title Individualization Rules

Properties under SHFC programs often start with a collective or mother title held by the community association to facilitate group financing. Title individualization refers to the process of subdividing the land and issuing separate titles to individual beneficiaries, which is crucial for unrestricted ownership and potential sale.

Prerequisites for Individualization:

Full Payment of Loan: The community must have fully paid the SHFC loan, including interest and any surcharges.
Subdivision Plan Approval: A subdivision survey and plan must be prepared by a licensed geodetic engineer and approved by the Local Government Unit (LGU) and the Department of Environment and Natural Resources (DENR).
Compliance with Requirements: All beneficiaries must have settled internal dues to the association, and there should be no pending disputes over lot allocations.

Process of Title Individualization:

Community Resolution: The association passes a resolution requesting individualization and submits it to SHFC.
SHFC Endorsement: SHFC verifies loan repayment and endorses the request to the Registry of Deeds.
Subdivision and Titling:
- The mother title is canceled, and individual Certificates of Title (e.g., Transfer Certificates of Title or Original Certificates of Title) are issued.
- This involves payment of real property taxes, capital gains tax (if applicable), and documentary stamp tax.
Annotation of Restrictions: Even after individualization, the 10-year moratorium is annotated on the individual title to enforce resale restrictions.
Timeline: The process can take 6 to 12 months, depending on LGU efficiency and document completeness.

Once individualized, the title provides the beneficiary with full ownership rights, subject to the moratorium. SHFC assists communities through technical support, but costs for surveying and registration are borne by the beneficiaries or association.

Challenges in Individualization:

Delays: Common issues include incomplete documentation, boundary disputes, or unpaid taxes.
Costs: Fees for surveying (approximately PHP 5,000–10,000 per lot) and registration can burden low-income families.
Legal Remedies: If disputes arise, beneficiaries can seek mediation through SHFC or file cases with the Housing and Land Use Regulatory Board (HLURB, now part of the Department of Human Settlements and Urban Development).

Penalties and Enforcement

Non-compliance with sale restrictions or unauthorized transfers can lead to severe consequences:

Administrative: SHFC may revoke the beneficiary's status, demand repayment of the loan subsidy, or repossess the property.
Civil: Invalid transfers can be annulled through court action, with the property reverting to SHFC or the association.
Criminal: Under RA 7279, violations are punishable by fines and imprisonment. The Department of Justice may prosecute cases involving fraud or misrepresentation.

Enforcement is typically initiated by complaints from community members or SHFC monitoring. Beneficiaries are encouraged to report irregularities to maintain program integrity.

Conclusion

Selling a property under the Social Housing Finance Corporation in the Philippines is permissible but strictly regulated to uphold the program's social objectives. The 10-year moratorium, consent requirements, and title individualization process ensure that these homes remain accessible to those in need. Beneficiaries should consult SHFC or legal experts for guidance to navigate these rules effectively. By adhering to these regulations, the SHFC continues to foster sustainable communities and equitable housing opportunities across the nation.