License to Sell Requirement for Subdivided Lots (Philippines)

A full-spectrum legal guide in the Philippine context

1) What is a “License to Sell” (LTS)?

A License to Sell (LTS) is the government’s authorization allowing a developer or owner to offer or sell lots (and/or house-and-lot packages) in a subdivision project to the public. In the Philippines, subdivision projects are regulated primarily under the Subdivision and Condominium Buyers’ Protective Decree (PD 957) and related rules. Today, regulatory functions formerly handled by the HLURB are performed by DHSUD (Department of Human Settlements and Urban Development) and its regional offices, with LGUs playing critical roles on planning and permitting.

Rule of thumb: No LTS, no selling or advertising. Offering, pre-selling, reserving, or advertising subdivision lots without an LTS is unlawful.

2) When is an LTS required?

An LTS is required before any public offering (including pre-selling and accepting reservations) of:

Raw lots within a planned residential subdivision, whether with or without house construction contracts.
Mixed-use or themed subdivisions where residential lots are offered to the public, even if the project includes commercial components.
Socialized/economic housing subdivisions (BP 220 projects) as well as open-market subdivisions.

You also need an LTS for each phase if a large project is segmented and offered in stages.

Caution: “Soft marketing,” online postings, flyers, or brokers’ teasers that solicit interest are already advertising and typically require a separate advertising permit—and, as a prerequisite, the underlying Certificate of Registration (CR) and LTS.

3) What projects are outside the LTS regime or typically exempt?

The LTS requirement focuses on projects intended for sale to the public. Commonly outside scope or eligible for exemption/clearance (case-by-case, often with documentary proof) are:

Pure partitions among co-owners or heirs (no development, not offered to the public).
One-time sale of an entire property to a single buyer (no lot-by-lot public offering).
Isolated sales of individual parcels not part of a development project.
Institutional/government projects where specific statutes provide special regimes.

Tip: If you think your case is exempt, don’t assume. Seek a formal exemption/clarificatory ruling from the regulator or secure a “non-coverage” certification before marketing.

4) What must be secured before applying for an LTS?

While exact checklists vary by region and project type, expect the regulator to require proof that the project is lawful, feasible, and servable. Typical prerequisites include:

A. Land and land-use compliance

Proof of ownership/rights (e.g., TCT, deed, authority from owners).
Clean encumbrance status or disclosure of existing mortgages plus lender’s release undertaking for buyer-paid lots.
Locational/Zoning Compliance from the LGU consistent with the CLUP/ZO.
Land conversion (if agricultural), if applicable.
Right-of-way access and perimeter/road plans.

B. Development approvals

Subdivision plan signed/sealed by licensed professionals.
LGU Development Permit for the subdivision (roads, drainage, open spaces, etc.).
Environmental compliance (ECC or proof of non-coverage, as applicable).
Utility commitments (water, power, telecom) and wastewater/drainage plans.
Open space/parks allocation and amenities per standards (PD 957 or BP 220).

C. Financial assurance

Performance bond/guarantee (cash, surety, or bank) to secure completion of development works within committed timelines, especially if works are not yet substantially completed.

D. Corporate/administrative

Certificate of Registration (CR) for the project (a step usually paired with or preceding the LTS).
Corporate papers (SEC/DTI), tax clearances, brokerage/agency disclosures.

5) The LTS application in practice

Assemble the project dossier Land, permits (zoning, development), environmental and utility clearances, engineering plans, financial guarantees, corporate documents.
File with the proper DHSUD Regional Office Large or special projects may have central endorsements, but regional processing is standard.
Technical and legal evaluation The regulator checks completeness, conformity with standards, serviceability, and buyer protection safeguards (bond, disclosures, mortgage release commitments).
Issuance of CR and LTS The LTS specifies the project/phase, number of saleable lots/blocks, and conditions. The LTS number and validity must appear in contracts and advertisements.
Advertising Permit Separate approval is normally required for promotional materials (brochures, websites, model units, digital ads). All ads must carry the LTS number and faithfully reflect approved plans/specs.

6) What are developers not allowed to do without an LTS?

Advertise, pre-sell, reserve, or sell subdivision lots to the public.
Collect reservation fees or down payments tied to specific lots.
Represent or promise amenities, completion dates, or specifications beyond the approved plans.
Mortgage or encumber any lot already sold/reserved without proper disclosures and required consents/undertakings ensuring title release to buyers upon full payment.

7) Minimum development & ongoing obligations

Even after securing an LTS, the developer must:

Complete roads, drainage, water and electrical distribution, and other utilities per approved timetable or as secured by the performance bond.
Deliver titles (or deed of absolute sale + title transfer) upon buyer’s full payment and fulfillment of conditions.
Maintain transparency: disclose any project amendments and seek regulatory approval for changes that affect buyers (e.g., re-blocking, facility downsizing, phasing changes).
Comply with open space and amenity standards and turn-over obligations to the LGU or homeowners’ association (as applicable).

8) Consequences of selling without an LTS

Selling or advertising without an LTS can trigger:

Cease-and-desist orders and administrative fines.
Criminal liability under PD 957 (fines and/or imprisonment).
Contractual consequences in buyer suits: rescission or cancellation, full or proportional refunds of payments with legal interest, and damages/attorney’s fees, depending on circumstances.
Collateral risks: reputational damage; complications with banks, escrow, buyers’ title transfers; possible blacklisting for public bids or future permits.

For brokers/agents: Participating in the sale/advertising of unlicensed projects also exposes you to administrative and criminal sanctions, plus PRC/licensure issues.

9) Buyer remedies when there is no LTS or there is project non-compliance

Buyers may:

File a complaint with the regulator for rescission and refund, interest, and damages.
Invoke PD 957 protections (e.g., failure to develop within the committed period, misrepresentation in ads, non-delivery of facilities).
Where the sale was on installment, consider rights under the Realty Installment Buyer Act (Maceda Law) (e.g., cancellation rules and cash surrender value), without prejudice to stronger remedies available under PD 957 for regulated projects.
Suspend further payments when legally justified by material breach (follow regulator or court directives).
Seek title clearance if the lot was mortgaged contrary to safeguards (e.g., compel mortgage release upon full payment).

10) Contracts & disclosures you should see after LTS issuance

Reservation Agreement and Contract to Sell/Deed of Sale stating the LTS number, project/phase details, lot area, block/lot numbers, and approved plans.
Annexed maps/plans (site development, utilities, block/lot).
Development timetable and turnover conditions.
HOA/Deed restrictions (easements, setbacks, architectural controls).
Mortgage disclosures (if land is encumbered) and title release undertaking.

11) Special notes for economic/socialized subdivisions (BP 220)

Standards (lot sizes, road widths, open spaces) are calibrated for affordability but still require development permits, CR, and LTS.
Regulators may allow bond-backed pre-selling earlier in the construction cycle, but buyer protection (performance bond and truthful advertising) remains non-negotiable.
Utility provisioning (level of water/power, drainage) must meet the minimum serviceability standards for the project category.

12) Practical compliance roadmap for developers/landowners

Feasibility & land due diligence Title status, liens, conversion/land-use, right-of-way, utilities.
Concept & permitting Secure locational clearance → LGU development permit → environmental/utility clearances.
Project registration & bonding Apply for CR and LTS with DHSUD; post the performance bond (or reach required completion level per rules).
Controlled marketing Get Advertising Permit. Ensure all ads show the LTS number and mirror approved plans/specs.
Sales administration Use regulator-conforming contracts, escrow/collection protocols, and mortgage release undertakings.
Project delivery & turn-over Build to standard, comply with open-space/amenity obligations, deliver titles, turn over facilities/roads/parks to the proper entity.

13) Quick checklist (pin to your wall)

Before selling anything:

Valid title/ownership documents on land.
Locational clearance & LGU development permit.
Environmental & utility clearances/commitments.
Project CR and License to Sell issued by DHSUD.
Performance bond (if development not yet completed).
Advertising Permit; all materials show LTS number.

During sales:

Contracts attach approved plans and LTS number.
Disclose mortgages/encumbrances and title-release conditions.
Collect payments via compliant instruments (official receipts, proper ledgers).

After sales:

Complete development works on schedule.
Transfer titles upon full payment and compliance.
Turn over roads/open spaces/utilities as required.
Keep a variation log; seek approvals for material plan changes.

14) FAQs

Q: Can I accept “expressions of interest” before LTS? Not if they induce a sale or reserve a specific lot or require payment. Even “no-commitment” ads generally need an Advertising Permit, which in turn presupposes CR/LTS.

Q: My land is mortgaged. Can I still get an LTS? Possibly—if the mortgagee issues a release undertaking ensuring individual lot titles will be freed upon buyers’ full payment and if all other requirements are met and disclosed.

Q: What if I change the site development plan midstream? Material changes (e.g., re-blocking, open space reduction, amenity downgrades, timeline extensions) typically require prior regulator approval and may trigger buyer consent and re-disclosure.

Q: How are phases handled? Each phase marketed to the public normally needs its own LTS; do not sell a future phase based solely on another phase’s LTS.

15) Key takeaways

The License to Sell is the gatekeeper for buyer protection in subdivision projects.
Do not market or sell without an LTS (and related advertising approval).
Secure land-use legality, development permits, environmental/utility compliance, and financial guarantees first.
Non-compliance exposes developers and agents to administrative, criminal, and civil liability; buyers can obtain rescission, refunds, and damages.
When in doubt about coverage or exemption, obtain a formal ruling before proceeding.

If you want, I can tailor a project-specific LTS checklist (based on your city/municipality and project class) or draft a buyer-side demand/rescission letter for selling without an LTS.