In the Philippine real estate landscape, the dream of homeownership can quickly turn into a legal nightmare if the project lacks the necessary government mandates. For any prospective buyer, the most critical step before handing over a reservation fee is verifying the License to Sell (LTS).
Under Philippine law, specifically Presidential Decree No. 957 (The Subdivision and Condominium Buyers' Protective Decree), the LTS is the primary document that authorizes a developer to offer units for sale to the public.
1. The Legal Foundation: P.D. No. 957
The Department of Human Settlements and Urban Development (DHSUD), formerly the Housing and Land Use Regulatory Board (HLURB), is the regulatory body tasked with overseeing real estate trade.
- Section 5 of P.D. 957 states that no owner or developer shall sell any subdivision lot or condominium unit without first obtaining a License to Sell.
- Purpose: The LTS ensures that the developer has the financial capability to finish the project, legal title to the land, and has complied with all environmental and zoning regulations.
2. Difference Between a Certificate of Registration and an LTS
It is a common pitfall for buyers to be shown a "Certificate of Registration" and mistake it for a License to Sell.
- Certificate of Registration (CR): This simply recognizes the project as a registered real estate development. It does not grant the right to sell.
- License to Sell (LTS): This is the specific permit issued after the CR, once the DHSUD has verified that the project meets all technical and legal standards. Selling without an LTS is illegal.
3. Key Information Found in an LTS
When you inspect a License to Sell, it should contain the following verifiable details:
- LTS Number: A unique registration number (e.g., LTS No. 12345).
- Project Name: The exact name of the subdivision or condominium.
- Owner/Developer Name: Must match the entity you are contracting with.
- Location: The specific address or lot/block details of the project.
- Expiry/Issue Date: To ensure the license is current.
4. How to Verify a License to Sell
There are three primary ways to verify the authenticity of an LTS in the Philippines:
| Method | Process |
|---|---|
| DHSUD Website | Visit the official DHSUD website and navigate to the "List of Projects with License to Sell" section. You can search by project name or developer. |
| Physical Inspection | Section 19 of P.D. 957 requires developers to display a copy of the LTS in a conspicuous place in their main office and at the project site. |
| Direct Inquiry | You may visit or call the DHSUD Regional Office having jurisdiction over the area where the project is located to request a certification. |
5. Red Flags to Watch For
If a developer or broker exhibits the following behavior, exercise extreme caution:
- "Pre-selling" without an LTS: While pre-selling is common, it is legally prohibited unless the LTS has been issued.
- Requesting "Reservation Fees" early: Accepting any form of payment for a lot or unit before the LTS is issued is a violation of the law.
- Incomplete Documentation: If the developer claims the LTS is "in process," they are legally barred from marketing the property.
6. Consequences of Buying from a Non-Licensed Project
Buying from a project without an LTS places the buyer at significant risk:
- Non-Completion: The developer may lack the funds or permits to finish the project.
- Title Issues: You may never receive a Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) because the land itself may be encumbered or improperly subdivided.
- Administrative Delays: The project could be issued a "Cease and Desist Order" (CDO) by the DHSUD, freezing all construction and transactions.
7. Remedies for Buyers
If a buyer discovers that a project does not have an LTS after payments have been made, they are protected under the law:
- Refund of Payments: Under Section 23 of P.D. 957, the buyer has the right to stop payments if the project is not developed according to the approved plan.
- Filing a Complaint: Buyers can file a formal complaint with the Human Settlements Adjudication Commission (HSAC) for the refund of the total amount paid, including amortization interests, without any deductions.