Does Occupying a New Unit Mean Automatic Acceptance?

Turnover and Defect Claims in the Philippines

Executive summary

Moving into a newly delivered condo or subdivision house does not, by itself, equal legal acceptance that waives your defect claims. In Philippine law, acceptance is a legal conclusion drawn from facts—delivery, documents you sign, conduct after delivery—but many rights remain even after occupancy, especially those anchored in the Civil Code, the Subdivision and Condominium Buyers’ Protective Decree (PD 957), the Condominium Act, the National Building Code, and jurisprudential principles on hidden defects and breach of contract. This article explains how “turnover” relates to acceptance, what is and isn’t waived upon move-in, and the remedies and timelines that typically apply.

1) Key legal pillars

Civil Code (Obligations & Contracts; Sale; Work; Damages).
- The seller/developer must deliver the unit in the condition agreed (conformity of thing to contract; Art. 1244, 1256, 1191 principles).
- Hidden defects/warranty concepts; good faith, bad faith, and waiver rules; damages and rescission (Art. 1191 on rescission for substantial breach).
- Article 1723 (contracts for works): architects, engineers, and contractors can be liable for ruin/serious structural defects within 15 years from completion; acceptance by the owner doesn’t absolve them when defects are due to defects in plans, specifications, or construction.
PD 957 (Subdivision and Condominium Buyers’ Protective Decree) and its implementing rules (now administered by the Department of Human Settlements and Urban Development (DHSUD) and adjudicated by the Human Settlements Adjudication Commission (HSAC)).
- Protects buyers from misrepresentation and defective development.
- Prohibits waivers that undermine statutory protections; developers must deliver what’s in the approved plans, licenses, and advertisements.
Condominium Act (RA 4726).
- Governs separate ownership of units and undivided interest in common areas; defects may be individual (unit) or collective (common areas), with the condo corporation/association acting on the latter.
National Building Code (PD 1096) and allied regulations.
- Construction standards; occupancy permits; inspection regimes. Code compliance is a baseline, not a ceiling; a unit can be code-compliant yet still breach contract if it diverges from agreed plans/specs/finishes.
Maceda Law (RA 6552) (for sales on installment).
- Primarily about cancellation/refund rights for installment buyers—relevant to termination strategies, but not the main law on defects.

2) “Turnover” vs. “acceptance” vs. “occupancy”

Turnover is the developer’s formal act of delivering possession—usually with a Notice of Turnover, a punch-list inspection, and a turnover acceptance form.
Acceptance (in law) is the buyer’s manifestation—express (signing an unconditional acceptance) or implied (conduct showing assent)—that the delivered unit conforms to the contract.
Occupancy is physically moving in (or allowing fit-out). It is evidence that delivery occurred, but not conclusive proof that you accepted without reservations.

Practical rule of thumb

Move-in + written acceptance “as-is” = strong evidence of acceptance, but statutory and latent-defect rights survive.
Move-in + documented punch list or reservation of rights = possession with qualification, keeping defect claims intact.

3) What you may sign at turnover—and what it means

Acceptance/Turnover Certificate.
- If it states that you “fully accept” the unit without reservations, the developer may argue waiver.
- However, waivers that defeat mandatory protections (e.g., PD 957) or waive liability for future fraud or gross negligence are void.
- Best practice: add language such as “Accepted for possession only, subject to completion of the attached punch list and all contractual/statutory warranties; no rights are waived.”
Punch List / Defect List.
- This is critical. List everything observable: workmanship, leaks, hollow tiles, chipping, misalignment, GFCI outlets, water pressure, ventilation, door clearances, window weep holes, slab levels, paint and sealants, entitlements (parking, storage), meter accuracy, and as-built measurements.
- Attach photos, dates, and require timelines for rectification.
Fit-out permits / authorization to occupy.
- Signing for utilities or permits is not a waiver of defects; still reserve rights in writing.

4) Can moving in waive defect claims?

Generally, no—mere occupancy is not automatic waiver

Latent defects (not discoverable upon ordinary inspection) commonly surface after occupancy (e.g., water ingress, condensation, electrical loading, slab deflection, acoustic failure).
Article 1723 liability for serious structural defects persists regardless of acceptance if the defect falls within its scope.
For non-structural issues, acceptance may weigh against claims if you knew of the defect and still expressly accepted without reservation; but bad faith, misrepresentation, or hidden defects keep claims alive.

What can weaken your position?

Signing unconditional acceptance without a punch list.
Paying remaining balances expressly in full settlement (be careful with “full and final” receipts).
Long delay in reporting defects without reasonable excuse (risk of prescription/laches; see Section 10 below).

5) Common defects and how they’re treated

Structural (beams, columns, slabs, foundations): potentially within Art. 1723; long-tail liability.
Waterproofing and moisture (toilet/bath, balconies, roof deck): often latent; frequent basis for repair orders and damages.
MEP (mechanical, electrical, plumbing): non-compliance with plans/specs or safety codes; can be serious even if the unit passed a routine occupancy inspection.
Finishes (tiling lippage, hollow tiles, paint delamination, cabinet alignment): usually under punch-list warranties; still actionable as breach of contract if material.
Acoustics/firestopping (party walls, penetrations): code and contract issues; frequently latent.
Common areas (façade, podium waterproofing, elevators): the condo corp/HOA typically leads claims; individual owners have standing for consequential loss.

6) Your remedies (unit-level)

Specific performance (repair/rectification) with damages for delay or consequential losses (temporary lodging, ruined furniture, business interruption, etc.).
Price reduction (proportional diminution) for defects that cannot be fully cured without disproportionate effort.
Rescission under Art. 1191 for substantial breach (e.g., pervasive leaks, chronic MEP failure, material deviation from plans or area).
Damages: actual, moral (in appropriate cases), exemplary (bad faith), attorney’s fees.
Administrative relief before HSAC/DHSUD for PD 957 violations and contract/builder disputes related to subdivisions/condos.
Art. 1723 claims for serious structural defects against contractor, architect/engineer, and developer (as appropriate).

7) Your remedies (common-area defects)

Route through the condo corporation/HOA: resolution, demand on developer/contractor, expert investigations, and if needed, HSAC complaint or court action.
Individual owners can also claim personal damages if they can show causation (e.g., water intrusion from defective roof deck damaging your unit).

8) Evidence strategy

Before move-in: independent inspection report; photos/videos; levelness and moisture readings (if available); record meter baselines.
At turnover: punch list signed/acknowledged; annotate acceptance “subject to punch list and warranties.”
After occupancy: keep a defect log (dates, weather, occurrence); notify developer in writing (email + registered mail).
Expertise: engage an engineer/architect for waterproofing, structural, and MEP issues; preserve samples (e.g., failed membrane, tile cores).
Causation & quantum: invoices, hotel receipts, dehumidifiers, professional fees; mitigation steps you took.

9) Developer defenses & how to address them

“You accepted on turnover.” → Answer: Acceptance was qualified by the punch list; latent defects surfaced later; statutory warranties (PD 957; Art. 1723) cannot be waived by a generic receipt.
“Out of warranty; only 1-year defects liability.” → Answer: Contractual DLP does not limit statutory rights; structural defects and material latent defects remain actionable.
“Owner-caused damage from fit-out.” → Answer: Maintain fit-out records and contractor compliance. Independent expert can distinguish construction vs fit-out causation.
“Force majeure.” → Answer: Only shields unforeseeable, irresistible events without human negligence. Poor waterproofing isn’t force majeure.

10) Timelines & prescription (high-level guide)

Exact periods can depend on the nature of the right (contract, quasi-delict, statutory claim) and the wording of your contract. When in doubt, assert claims promptly.

Art. 1723 structural liability: defects must manifest within 15 years from completion; suit typically filed within the civil code prescriptive period applicable to your cause (often 10 years for written contracts, shorter for tort).
Contract breach (non-structural): actions on written contracts generally 10 years from breach; but earlier notice strengthens your case and may be required by contract.
Administrative complaints (HSAC): file as soon as practicable after violation/defect discovery to avoid laches and to obtain timely remedial orders.
Contractual DLP (e.g., 12–24 months): useful for free rectification but not the limit of your legal rights.

11) Special situations

Area shortfall/plan deviations: significant deviation (e.g., net floor area) can justify price reduction or rescission; keep brochures, plans, and LTS/CRF references.
Misrepresentation in marketing: PD 957 treats advertisements as part of the offer; material misstatements are actionable.
Arbitration clauses: many contracts require arbitration; you can still seek urgent injunctive relief from courts to prevent further damage (e.g., stop works causing leaks).
Mortgage take-out & full payment: even after full payment and title transfer, latent defect and statutory claims can survive.

12) Step-by-step playbook for buyers

Inspect before accepting possession. Bring a checklist; engage an independent inspector if possible.
Accept possession with reservations. Write: “Subject to punch list and all warranties/statutory rights; no waiver intended.”
Punch list thoroughly; set deadlines. Require written commitment dates and access protocols.
Follow up in writing. Email + registered mail; keep proof of receipt.
Escalate early if repairs stall. Send a final demand; consider a third-party expert report.
Choose a forum. HSAC (PD 957/condo/subdivision disputes), arbitration (if mandated), or court (damages/rescission/Art. 1723).
Claim full relief. Repairs, price reduction, rent/hotel costs, professional fees, moral/exemplary damages (where justified), attorney’s fees.
For common-area issues: coordinate with the condo corp; push for independent testing (flood tests, thermography, core sampling).

13) Guidance for developers & associations

Clarity at turnover. Provide transparent checklists, access windows, and rectification SLAs.
Do not overstate waivers. Avoid boilerplate that purports to waive statutory duties; it’s unenforceable and undermines trust.
Quality assurance. Commission third-party inspections and testing before mass turnover; address systemic issues (e.g., façade waterproofing) proactively.
Maintain records. As-built drawings, test reports, material certificates; these are crucial if a dispute arises.
Engage the association. For common-area problems, set a funded rectification plan with timelines and independent supervision.

14) Bottom line

Moving in is not an automatic, blanket acceptance of all defects.
Qualified acceptance with a punch list preserves rights.
Latent and structural defects remain actionable despite occupancy or even signed acceptance forms that attempt broad waivers.
Buyers should document, notify, and escalate methodically; developers should rectify in good faith and respect statutory protections.

Practical templates (short, adaptable)

Turnover notation:

“Received for possession subject to completion of the attached punch list and all contractual/statutory warranties (including PD 957 and Civil Code). No waiver of rights or remedies.”

Demand letter opener:

“We write to place you on notice of defects that constitute breach of contract and violations of statutory duties. Please rectify within 15 days from receipt, failing which we will pursue remedies before HSAC/courts, including damages.”

Expert engagement scope:

“Non-destructive and limited destructive tests; water ponding/flood tests; thermal imaging; moisture mapping; electrical load testing; as-built verification against approved plans.”

Final caution

This is a general overview for the Philippine setting. Facts, contract wording, and forum rules matter. For high-value or complex claims (especially structural, widespread leaks, or plan deviations), consult counsel and a licensed engineer/architect early.