I. Why this issue keeps coming up

Many buyers move into a subdivision (or start paying for a lot) and are surprised to receive a demand for “HOA dues,” “association fees,” or “maintenance fees” before they believe the subdivision has been “turned over.” Others accept the charges at first, then question them when they see unfinished amenities, poor maintenance, or a developer still calling the shots.

In the Philippines, the legality of collecting dues before turnover is not answered by a single yes/no rule. It depends on (a) what “turnover” means in your situation, (b) whether there is a validly existing and properly authorized homeowners association, (c) what the contract documents and disclosures say, and (d) whether the charges are being used to fund obligations that the developer is legally required to shoulder under housing and subdivision regulations.

This article explains the legal framework and the practical tests used to assess whether pre-turnover collection is lawful, abusive, or challengeable.

II. The governing legal framework (high-level map)

A. Presidential Decree No. 957 (PD 957) — “Subdivision and Condominium Buyers’ Protective Decree”

PD 957 is a cornerstone law for subdivision and condominium buyers. It regulates subdivision development and sale, including:

Licensing and regulation of developers/projects;
Delivery of promised facilities and development standards;
Buyer protection against deceptive/unfair practices; and
Requirements connected to project completion, sale, and compliance.

While PD 957 is not a “dues statute,” it is often the legal backbone of disputes where developers collect money for maintenance/services instead of fulfilling development obligations.

B. Republic Act No. 9904 — “Magna Carta for Homeowners and Homeowners’ Associations”

RA 9904 sets the modern policy framework for homeowners associations (HOAs) and their governance, including:

Recognition and regulation of HOAs (commonly through housing regulators);
Rights and obligations of members;
Internal governance, elections, transparency, and accountability; and
HOA authority to levy and collect dues/assessments subject to governing documents and due process.

RA 9904 matters because “association dues” should be tied to a legitimate HOA authority, not merely a developer’s unilateral billing.

C. Housing regulator issuances (HLURB → DHSUD system)

Historically, the Housing and Land Use Regulatory Board (HLURB) regulated subdivision projects and HOA matters. Housing regulation functions have since been reorganized under the Department of Human Settlements and Urban Development (DHSUD) and related adjudicatory mechanisms.

In practice, developer compliance, project completion/acceptance, and HOA registration/governance are heavily shaped by administrative rules and standard documentary requirements, not only statutes.

D. The Civil Code, contract law, and consumer protection principles

Even when a housing statute is involved, courts and regulators still apply baseline principles:

Contracts must be based on consent and disclosure (buyers must know what they are paying for);
Charges can be struck down if unconscionable, deceptive, or unsupported by agreement or lawful authority;
Bad faith, misrepresentation, or unfair collection tactics can create liability.

III. “Turnover” can mean different things — and the meaning changes the answer

In disputes, “turnover” is often used loosely. Legally and practically, you need to clarify which one applies:

1) Turnover of the lot/house/unit to the buyer

This is the buyer’s receipt/acceptance of the property (possession/occupancy readiness), often evidenced by:

Turnover documents, acceptance forms, keys, or site possession;
Completion of the particular unit/house (for house-and-lot);
Contract milestones.

This does not automatically mean the subdivision’s common facilities are complete or that the HOA has taken control.

2) Turnover/acceptance of subdivision facilities and common areas (project-level)

This concerns roads, drainage, open spaces, amenities, streetlights, and similar subdivision-wide features, and may involve:

Project completion or partial completion certifications;
LGU acceptance/donation processes for certain areas (common in subdivisions);
Regulator compliance steps.

3) Turnover of HOA governance/control from developer to homeowners

This is the “political turnover” homeowners usually care about:

Homeowners electing officers/board;
Developer stepping back from day-to-day control;
Transfer of records, funds, and management functions.

Pre-turnover dues disputes most often relate to #3, but developers sometimes argue from #1 or #2. A correct legal assessment starts by identifying which “turnover” is being claimed and what documents support it.

IV. Dues, assessments, and “maintenance fees” — labels don’t control legality

A. Association dues (HOA dues)

Usually recurring (monthly/quarterly/annual) contributions for:

Security
Garbage and common-area upkeep
Administrative operations
Minor repairs and community expenses

They are typically grounded in:

HOA bylaws and resolutions,
Approved budgets, and
Proper governance procedures.

B. Special assessments

One-time or time-bound collections for specific projects (e.g., clubhouse repairs, perimeter fence upgrade). These are more sensitive and often require clearer member approval and stronger documentation.

C. Developer-collected “maintenance fees”

Before the HOA is functional or before governance has been turned over, developers sometimes impose “maintenance fees” to pay for:

Guards and gate operations
Lighting, landscaping, garbage hauling
Temporary water systems or utilities support
Interim admin costs

These may be lawful if properly disclosed and justified, but they are also a frequent vehicle for abuse—especially when used to:

Fund unfinished developer obligations (e.g., roads/drainage that should have been completed under the project plan), or
Create a revenue stream unrelated to actual services.

Key point: Calling something “HOA dues” does not make it lawful. What matters is authority + disclosure + purpose + accounting.

V. Is collecting HOA dues before subdivision turnover legal?

A. The shortest accurate answer

It can be legal, but only if there is a valid legal basis and the collection is properly authorized, disclosed, and used for legitimate community expenses—not for the developer’s obligations.

Below are the most common scenarios.

VI. Scenario analysis (most common real-world patterns)

Scenario 1: A properly organized HOA exists, but the developer still has influence

When it tends to be legal

The HOA is validly constituted/recognized under the applicable regulatory framework;
Dues are levied pursuant to the HOA’s governing documents (bylaws, board/member approvals where required);
There is a real budget and accounting (receipts, audited/periodic financial reporting);
The funds are used for legitimate HOA/community operations.

Common legality issues

“HOA” exists on paper but has no real homeowner governance;
Collections are deposited into developer accounts (or commingled) without transparent accounting;
Homeowners have no meaningful access to records, budgets, or elections;
Dues are used to pay for development work the developer promised as part of the subdivision project (roads, drainage, required open spaces, etc.).

Practical test If the developer is collecting but cannot show HOA authority, resolutions, and financial statements, the collection becomes vulnerable to challenge.

Scenario 2: There is no real HOA yet; the developer is charging “maintenance fees”

When it may be enforceable

The buyer’s contract package (Contract to Sell/Deed, disclosures, reservation documents, house rules) clearly states:
- the existence of a maintenance fee,
- when it starts (e.g., upon occupancy),
- what it covers, and
- how it may be adjusted; and
The fees are tied to actual services delivered (security, garbage, lighting, basic upkeep) that homeowners are already benefiting from;
The fees are reasonable and not unconscionable;
There is at least a credible accounting of expenses.

When it becomes legally problematic

The fee was not properly disclosed at sale (surprise billing);
The developer conditions delivery of title, turnover, or essential approvals on payment of fees that were not agreed upon;
The developer charges for facilities/services not actually provided;
The developer uses fees to cover costs of completing what the developer is legally required to deliver under the approved subdivision plan and regulatory standards.

Important nuance Developers often have obligations to complete and deliver infrastructure and basic facilities per approved plans. Charging buyers “maintenance” that effectively funds completion of developer obligations can be attacked as an unfair shifting of costs.

Scenario 3: The HOA exists, but “turnover” of control has not happened (developer-run HOA)

This is common. Some projects create an HOA early, but the developer controls governance or voting until certain milestones (e.g., sale thresholds, elections).

Collection is more defensible if

Governance rules are legitimate and not used to permanently entrench developer control;
Homeowners have a pathway to elections and control as the community matures;
Financial transparency exists;
The dues fund genuine communal operations.

Collection becomes suspicious if

Elections are perpetually postponed without credible basis;
Homeowners are denied inspection rights of records;
The developer treats dues like project revenue;
The developer imposes “special assessments” to build promised amenities.

Scenario 4: The developer is collecting even after HOA turnover / project acceptance

Once governance and financial responsibility are properly turned over, continued developer collection is generally hard to justify unless:

the HOA formally contracted the developer as a property manager under clear terms, and
collections are done in the HOA’s name and accounted for as HOA funds.

If the developer is still collecting as if it owns the fees, that raises red flags.

VII. The core legal principles used to judge legality

1) Authority

Who is imposing the charge?
Is there a legitimate HOA with legal capacity to levy dues?
If it’s not the HOA, is there a contractual basis for the developer to collect maintenance fees?

2) Disclosure and consent

Was the fee clearly disclosed before purchase?
Was it included in the buyer’s signed documents (or properly incorporated by reference)?
Are the triggers for commencement and adjustment clear?

3) Purpose and allocation

Are the charges for legitimate services/operations that benefit homeowners?
Or are they paying for the developer’s obligations (completion of required facilities, correction of defects, compliance items)?

4) Reasonableness

Is the amount consistent with the scope of services and community size?
Are increases justified by budgets/expense statements?

5) Accounting and transparency

Are homeowners given budgets, statements of expenses, and governance documentation?
Is money segregated as HOA funds (not commingled with developer funds)?

When any of these elements are missing, a pre-turnover dues scheme becomes increasingly challengeable.

VIII. Red flags that often indicate illegal or abusive collection

No proof of HOA existence or authority (no bylaws, no board resolutions, no clear membership framework).
The collector refuses to provide budget, expense breakdown, or financial statements.
Fees are demanded even when homeowners cannot yet occupy or do not receive the claimed services.
Collections are treated as a condition to:
- release the title,
- allow turnover of the unit,
- approve construction/renovation,
- allow entry to the subdivision in a way that blocks access to your home.
The developer imposes “special assessments” for:
- roads/drainage completion,
- legally required facilities,
- completion of amenities promised in marketing materials and project plans.
“Penalties” are excessive or imposed without due process.

IX. What homeowners are usually entitled to request (documentation checklist)

Whether the collector is an HOA or developer, homeowners commonly ask for:

Legal identity / authority

HOA registration/recognition details (where applicable)
Bylaws and articles/formation documents
Current list of officers/board and term of office
Minutes/resolutions authorizing dues and rates

Financial transparency

Annual budget (income and expense plan)
Periodic financial statements
Breakdown of major expense items (security contract, garbage hauling, lighting, maintenance)
Bank account details showing funds are held for the association/community (not as developer revenue)
Receipts or contracts for outsourced services

Policy basis

House rules and enforcement policies
Penalty/interest policy, delinquency procedures

Turnover status

Any turnover agreements, acceptance documents, management transition plans
Inventory of common assets and records to be turned over

A collector who cannot produce basic documentation is in a weak legal position.

X. Can homeowners refuse to pay until turnover?

This is where many disputes become risky. In general:

If the charge is lawful and properly authorized, refusal to pay can lead to collection action, penalties under the governing rules, and civil claims.
If the charge is unauthorized, undisclosed, or abusive, homeowners may have grounds to contest it—but withholding payment without strategy can still trigger conflict.

A common practical approach in disputes is to:

demand documentation and accounting in writing,
dispute specific charges (or portions) that are unsupported,
propose payment of uncontested amounts while contesting the rest,
document service failures and developer noncompliance.

XI. Can the HOA or developer block entry, cut utilities, or withhold clearances?

A. Blocking entry / access

Denying a homeowner access to their own home is legally sensitive, especially if roads/open spaces are public or if denial constitutes harassment or coercion. Even in gated communities, enforcement must remain within lawful bounds and due process.

B. Cutting water/electricity

Cutting essential utilities as a collection tactic can cross into unlawful conduct unless clearly authorized and applied in a lawful manner—and even then it may be challenged when it impacts health and safety or when utilities are not under HOA control.

C. Withholding “clearances”

Some communities require HOA clearances for practical reasons (construction coordination, neighborhood rules). But using clearances as leverage for questionable fees is a frequent flashpoint. Where a clearance is required only by internal policy (not by law), refusal can be challenged as abusive if it has no valid basis.

XII. The developer’s obligations cannot be shifted to homeowners by “dues”

A recurring theme in Philippine subdivision disputes is the attempt to make buyers fund what the developer is supposed to deliver under the approved project plan and housing standards.

In principle:

Completion of subdivision facilities and compliance with the approved development plan are developer responsibilities under housing regulation.
HOA dues are meant for community operation and maintenance, not for building what was promised as part of the selling price and regulatory compliance.
If the community is paying for completion of core infrastructure, homeowners should scrutinize whether they are being charged twice: once in the purchase price, and again through “association” collections.

XIII. Remedies and enforcement pathways in the Philippine setting (typical options)

1) Internal HOA remedies (where a functioning HOA exists)

Demand inspection of books and records
Call for a meeting, question budgets, propose audits
Challenge resolutions or dues increases based on governing documents and due process requirements

2) Administrative complaint routes (housing regulator context)

Disputes tied to:

developer obligations under subdivision rules,
project compliance,
turnover and common area issues,
HOA governance disputes within the regulated framework are often brought before the housing regulator’s processes and adjudicatory mechanisms.

3) Civil actions

For collection disputes or injunction-type relief (depending on facts), courts may be involved—especially when:

coercive acts occur,
property rights/access issues arise,
monetary claims need adjudication beyond administrative scope.

4) Barangay conciliation (fact-dependent)

Some disputes may be subject to barangay conciliation requirements, but housing-regulatory disputes can have special handling. The proper forum depends on the parties, nature of claim, and applicable procedural rules.

XIV. Practical “legality checklist” (quick evaluation tool)

Ask these questions:

Who is collecting? HOA or developer?
What is the legal basis? HOA bylaws/resolution or buyer contract disclosure?
When does the fee start, per documents? Upon reservation, turnover of unit, occupancy, or HOA registration?
What services are being paid for? Are they actually provided?
Is the amount supported by a budget and expense records?
Are funds accounted for as HOA/community funds, not developer revenue?
Is the fee being used to build/complete promised facilities? (red flag)
What exactly has/has not been “turned over”? Unit, facilities, governance?

The more “no” answers you get—especially on authority, disclosure, and accounting—the weaker the legality of collection.

XV. Common FAQs (Philippine practice realities)

1) “We haven’t had elections yet. Can dues still be collected?”

Possibly, but governance legitimacy and transparency matter. Interim arrangements are not automatically illegal, yet perpetual developer control and absence of member rights are serious issues.

2) “The amenities aren’t finished. Can they still collect?”

They can collect for actual ongoing services (security, garbage, lighting) if properly authorized and disclosed. But collecting to fund completion of promised amenities or required infrastructure is highly contestable.

3) “They’re calling it HOA dues, but there’s no HOA papers.”

Labeling doesn’t substitute for authority. In that situation, the demand is usually evaluated as a developer-imposed maintenance fee, which must rest on contract/disclosure and actual services, and must not shift developer obligations.

4) “Can they require payment before they release my title?”

Using fees as leverage over title delivery is a major pressure point. The legality depends on what the contract truly provides and whether the fees themselves are lawful and disclosed. Unreasonable conditioning tactics can be challenged.

5) “Does the developer have to pay dues for unsold lots?”

Many HOAs treat unsold lots/units as assessable (because they benefit from security/maintenance or because the developer remains an owner). The exact answer depends on the HOA’s governing documents and the nature of ownership/benefit allocation.

XVI. Conclusion

In the Philippine context, collecting homeowners association dues before subdivision “turnover” is not automatically illegal, but it is lawful only when supported by proper authority or clear contractual disclosure, tied to legitimate services, and backed by transparent accounting—and it becomes highly vulnerable to legal challenge when it functions to shift developer obligations to homeowners, operates without homeowner governance, or is enforced through coercive tactics.