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Understanding Buyer's Rights in Subdivision Lot Purchases in the Philippines

Updated: Jun 16, 2023

Ms. J asks:


What are my rights as a subdivision lot buyer when the developer delays the property's turnover?


Understanding the Situation


In this scenario, the buyer purchased a subdivision lot and completed the down payment in June 2019. The developer initially promised the completion of construction within six months. However, the construction was delayed, and the property was completed only in September 2020, causing a significant delay. The developer offered in-house financing while the property's PAG-IBIG appraisal was pending, resulting in a higher interest rate compared to the PAG-IBIG housing loan. As a result, the property has still not been turned over to the buyer.


Now, the buyer seeks clarification on their rights and whether they are entitled to a down payment refund.


The Law and Buyer's Rights


Buyers' rights for subdivision lots in the Philippines are protected under Presidential Decree No. 957, also known as "The Subdivision and Condominium Buyers’ Protective Decree" (PD 957). While specific details from the Contract to Sell are necessary to provide a comprehensive analysis, we will discuss two general alternative rights that a buyer might have, assuming the promised turnover date was six months after the completion of the down payment.


Alternative Right 1: Demand for a Full Refund with Damages


According to Article 1191 of the New Civil Code, an injured party has the right to rescission and payment of damages due to the non-performance of an obligation by the obligor. Additionally, Section 23 of PD 957 states that if the developer fails to develop the subdivision project according to the approved plans and within the agreed time frame, the buyer can demand a refund of the total amount paid, including amortization interests but excluding delinquency interests. The refund should be made with interest at the legal rate.


Therefore, in this case, the buyer has the option to rescind the contract and demand reimbursement for all payments made, excluding delinquency interest but including amortization interests, with interest at the legal rate, considering the developer's delay.


Alternative Right 2: Proceed with the Sale


The injured party also has the option to proceed with the sale, as stated in Article 1191 of the New Civil Code, which allows for the fulfillment of the obligation by the obligor with payment of damages. In this scenario, Section 23 of PD 957 gives the buyer the right to refrain from making any future payments due to the developer's failure to turn over the property within the stipulated period. The buyer must make a demand on the developer for the delivery of the property, clearly stating that no further payments will be made due to the delay in the turnover.


Recommendations and Conclusion


Before taking any action, it is recommended to review the Contract to Sell to verify the committed turnover date. Depending on this date, you can exercise either of the alternative rights outlined above.


In summary, as a subdivision lot buyer, you have certain rights and options if the developer fails to fulfill their obligations within the agreed timeline. At Lawyers Online PH, we can connect you with experienced legal professionals who can guide you through the process and ensure that your rights are protected.


Book an appointment at https://www.lawyersonlineph.com/

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