How to Verify if a Real Estate Project or Broker Is Legit in the Philippines

Updated for the current regulatory framework. This guide explains the legal bases, required permits, practical verification steps, red flags, and remedies available to buyers and investors in the Philippines.

1) The Legal Framework—Who Regulates What

  • DHSUD (Department of Human Settlements and Urban Development): Regulates subdivision and condominium projects (development permits, Certificate of Registration and License to Sell), and enforces the Subdivision and Condominium Buyers’ Protective Decree (Presidential Decree No. 957), B.P. Blg. 220 (socialized/economic housing standards), and related issuances.
  • HSAC (Human Settlements Adjudication Commission): Handles disputes and administrative cases arising from real estate sales and development (formerly HLURB adjudication).
  • PRC / PRBRES (Professional Regulation Commission / Professional Regulatory Board of Real Estate Service): Licenses real estate brokers, appraisers, consultants; accredits salespersons (through a supervising broker) under the Real Estate Service Act (Republic Act No. 9646).
  • LRA / Registry of Deeds: Issues and records TCTs (Transfer Certificates of Title) and CCTs (Condominium Certificates of Title); records liens/encumbrances; implements the Property Registration Decree.
  • SEC (Securities and Exchange Commission): Polices investment schemes (e.g., “guaranteed returns,” condotel/leaseback offerings that may be investment contracts) and corporate registration of developers/brokers’ corporations/partnerships.
  • LGUs (City/Municipality): Issue locational clearances, building permits, business permits, and occupancy permits pursuant to the Local Government Code and National Building Code (P.D. 1096).
  • DENR–EMB: Issues Environmental Compliance Certificates (ECC) for projects covered by the EIS System.
  • BIR: Requires official receipts and taxes on sales; relevant later for due diligence on legitimate business operations.

2) Verifying the Project

A. For Pre-Selling (Subdivision or Condominium)

  1. License to Sell (LTS) and Certificate of Registration (CR)

    • Absolute must under P.D. 957 before any pre-selling or advertising to the public.
    • Confirm: Project name must match the LTS; developer’s legal name must match corporate registration; LTS must still be valid and for the exact phase/tower being sold.

  2. Development Permit / Locational Clearance

    • Issued by the city/municipality (often prior to LTS). Confirms project conformity with zoning and comprehensive land use plan.

  3. Mother Title and Rights to Sell

    • Check that the land title (TCT) is in the developer’s name (or that the developer holds a valid contract to sell/deed of assignment/joint-venture duly annotated on the title).
    • Examine the title’s Encumbrances page for liens, mortgages, lis pendens, adverse claims, or restrictions.

  4. Approved Plans

    • Subdivision/condominium plan approved by DHSUD; for condos, also verify the Master Deed and Declaration of Restrictions (to be registered with the Registry of Deeds).

  5. Environmental and Safety Clearances

    • If applicable, an ECC; plus building permits per tower/phase.

  6. Advertising Materials vs. LTS

    • P.D. 957 treats ads as part of the offer; amenities and specifications publicly advertised must be consistent with approved plans.

B. For Ready-for-Occupancy (RFO)

  1. Occupancy Permit/Certificate of Completion for the specific building/house-and-lot.
  2. Individual Title (CCT/TCT) readiness and tax declaration in the buyer’s name upon full payment.
  3. As-built plans conforming to permits; homeowners’ association (if any) compliance with R.A. 9904 (Magna Carta for Homeowners).

3) Verifying the Broker or Salesperson

  1. PRC License (Broker)

    • Must hold a current PRC ID stating Real Estate Broker; check expiry.

  2. Accredited Salesperson

    • A salesperson must be accredited by the PRC through a supervising broker. Ask for the accreditation card or certificate and the supervising broker’s PRC details.

  3. Business Legitimacy

    • If dealing with a brokerage firm: SEC registration (for corporations/partnerships) and mayor’s permit.

  4. Receipts & Contracts

    • All fees must be covered by BIR-registered official receipts issued by the developer or brokerage entity—not personal accounts.

  5. No “freelance” pre-selling without LTS and proper PRC/PRBRES credentials.

4) Documents You Should See (and How to Read Them)

  • License to Sell (LTS) and Certificate of Registration (CR): Validate project name, phase/tower, developer name, issue date, validity, and DHSUD regional office.

  • TCT/CCT (Certified True Copy): Check

    • Registered owner, lot/condo unit identifiers, technical descriptions;
    • Encumbrances (mortgage, easements, adverse claims, lis pendens);
    • Annotations proving the developer’s authority if it is not the registered owner.

  • Master Deed & Restrictions (Condo): Confirm approved floor plans, common areas, use restrictions, and percentage interests.

  • Development Permit / Building Permits / Occupancy Permit: Ensure phase/tower alignment.

  • Reservation Agreement and Contract to Sell (CTS): Look for

    • LTS/CR numbers, price breakdown, payment schedule, turnover date, penalties, cancellation, refunds, force majeure, amenities and finish specs, and title delivery timelines.

  • Deed of Absolute Sale (DOAS): For full payment and conveyance; ensure notarization, taxes/fees allocation, and title transfer undertakings.

  • Official Receipts: Must correspond to the developer/brokerage, not an individual’s personal account.

5) Step-by-Step Verification Checklist (Subdivision/Condo)

Before Paying Anything More Than a Minimal Reservation:

  1. Get a copy (or reference) of the LTS and CR and verify the exact phase/tower.
  2. Obtain a CTC of the mother title from the Registry of Deeds; read the Encumbrances.
  3. Ask for the approved subdivision/condo plan and Master Deed (for condos).
  4. Confirm the broker’s PRC ID and, if dealing with a salesperson, their PRC accreditation under a supervising broker.
  5. Cross-check business permits of the selling entity (developer or brokerage).
  6. For larger projects, request proof of ECC if applicable.
  7. Align ads/brochures with the approved plans (amenities, unit areas, finishes).

Before Signing the CTS/DOAS:

  1. Read refund/cancellation provisions; ensure they reflect P.D. 957 and R.A. 6552 (Maceda Law), where applicable.
  2. Confirm turnover timelines, liquidated damages (if any), and default provisions for both sides.
  3. Clarify title transfer steps and who pays which taxes/fees.
  4. Verify presence of bank/Pag-IBIG accreditation, if you intend to finance (not mandatory, but indicates project vetting).

After Turnover (RFO):

  1. Ensure punch-listing and written acceptance; keep as-built/finishing specs.
  2. Track title transfer and tax declaration issuance timelines.

6) Red Flags (Do Not Ignore)

  • Selling or reserving without an LTS (pre-selling).
  • Mismatched project/phase/tower on the LTS vs. what’s being sold.
  • Pressure tactics: “promo ends today,” cash discounts for paying to a personal account, refusal to issue official receipts.
  • Guaranteed returns (e.g., “10% yield” or buy-back schemes) on units—may be an investment contract requiring SEC registration.
  • Title anomalies: lis pendens, heavy mortgages without clear release mechanics, or unannotated developer authority to sell.
  • Salespersons without PRC accreditation or who “can’t show” their supervising broker’s details.
  • No occupancy permit for RFO units; no approved plans matching brochures.
  • “Pondo-style,” “paluwagan,” or crypto-denominated payment arrangements outside official channels.

7) Buyer Protections & Remedies

  • P.D. 957 (Buyers’ Protective Decree):

    • Prohibits selling without an LTS; regulates advertisements; compels developers to complete amenities, deliver titles, and honor approved plans/specs.
    • You may file administrative complaints with the DHSUD and pursue disputes before the HSAC.

  • R.A. 6552 (Maceda Law):

    • Provides grace periods and cash surrender value for buyers who default on installment sales of real property (with statutory thresholds and exceptions).

  • R.A. 9646 (RESA Law):

    • Sanctions unlicensed practice and violations by brokers/salespersons; lodge complaints with PRC/PRBRES.

  • Securities Regulation Code:

    • If the offer is effectively an investment contract, report to SEC for possible unregistered securities or investment fraud.

  • Criminal / Consumer Remedies:

    • Estafa under the Revised Penal Code; deceptive sales practices under the Consumer Act; coordination with NBI/PNP for fraud.

  • Civil Actions:

    • Rescission, damages, specific performance for breach of contract; annotation of lis pendens if litigation is filed.

8) Practical Proof Points (What to Keep in Your File)

  • Clear copies/photos of: LTS, CR, permits, ECC (if applicable), CTC of TCT/CCT, Master Deed/Restrictions, approved plans, PRC IDs/accreditations, SEC certificates (corporate), mayor’s permit, official receipts, signed CTS/DOAS, turnover/punch-list, HOA documents.
  • A payments ledger with dates, amounts, OR numbers, and bank confirmation slips.
  • Correspondence trail (email/SMS/chat) memorializing material representations.

9) Special Situations

  • Assume Balance / Assignment of Rights: Ensure developer’s written consent where required; verify no arrears; confirm if a new CTS/DOAS will be executed.
  • Condotel/Leaseback: Scrutinize the income-sharing or guaranteed yield language; ask for SEC registration if it walks and talks like an investment scheme.
  • Memorial Parks/Cemeteries/Columbaria: Often also under P.D. 957—same LTS discipline applies; inspect park development plans and perpetual care provisions.
  • Socialized/Economic Housing (B.P. 220): Different minimum standards but still requires permits/LTS; check deliverables vs. brochure.

10) Quick Reference Checklists

Project Legitimacy (Pre-Selling)

  • DHSUD LTS (valid; correct phase/tower)
  • DHSUD CR
  • Mother Title (developer’s ownership or annotated authority)
  • Approved plans & (for condos) Master Deed/Restrictions
  • Development/Building permits; ECC if applicable
  • Advertising consistent with approvals

Broker/Salesperson Legitimacy

  • PRC Broker ID (validity/date)
  • Salesperson accreditation + supervising broker details
  • SEC/business permit for brokerage entity (if corporate)
  • Official receipts (BIR-registered; corporate payee)

RFO Turnover

  • Occupancy permit
  • As-built vs. promised specs
  • Title transfer timeline and tax/fee allocation

11) Contract Clauses Worth Negotiating or Clarifying

  • Turnover date and consequences of delay (e.g., liquidated damages or rent-equivalent).
  • Refund mechanics on cancellation; incorporate Maceda Law where applicable.
  • Title delivery deadline after full payment.
  • Scope of finishes/fixtures and defect liability/warranty period.
  • Association dues basis and escalation caps (if any).
  • Force majeure narrowly defined; no catch-all “developer convenience” extensions.
  • Dispute venue (avoid inconvenient fora); acknowledge HSAC jurisdiction where proper.

12) How to Verify Without Guesswork (Offline & Official Channels)

  • Visit or contact the nearest DHSUD Regional Office to confirm LTS/CR status, tower/phase coverage, and any notices of violation.
  • Request a Certified True Copy of the title from the Registry of Deeds (not just a photocopy).
  • Check PRC regional office (or via hotline) for a broker’s current license and a salesperson’s accreditation under that broker.
  • For investment-type promises, inquire with the SEC if the offer required securities registration or has advisories/alerts.

13) Frequently Asked Questions

Q: Can a developer sell during pre-selling with “pending” LTS? A: No. P.D. 957 requires a License to Sell before offering or advertising to the public.

Q: Are salespersons allowed to sell on their own? A: No. They must be accredited under a supervising PRC-licensed broker.

Q: Does the Maceda Law apply to condominium sales? A: It generally applies to sales of real estate on installments, including condos, subject to statutory conditions and exceptions. Always check your payment structure and contract type.

Q: Is a reservation fee refundable? A: Depends on the contract and applicable law (including P.D. 957 and the Consumer Act). If there was misrepresentation or no LTS, you have stronger grounds to rescind and seek refunds.

Q: The unit promises “8–10% guaranteed yield.” Is that normal? A: Guarantees of returns are a red flag; such schemes can be investment contracts requiring SEC registration.

14) Bottom Line

A legit project has an LTS/CR that exactly matches the phase or tower being sold, sits on a clean, properly annotated title, and aligns its permits, plans, and advertising. A legit seller is a PRC-licensed broker (with properly accredited salespersons) who issues official receipts and transparent contracts. If any link in that chain is missing—walk away or escalate using the remedies above.

This article is for general information and is not a substitute for legal advice. Consult a Philippine real estate lawyer for contract review or if you suspect fraud or statutory violations.

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.

Privacy Policy

Terms of Use

Lawyer Login

 
 
Privacy Policy         Terms of Use         Lawyer Login