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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
The National Housing Authority upon proper application therefor, shall issue to such owner or dealer of a registered project a license to sell the project if, after an examination of the registration statement filed by said owner or dealer and all the pertinent documents attached thereto, he is convinced that the owner or dealer is of good repute, that his business is financially stable, and that the proposed sale of the subdivision lots or condominium units to the public would not be fraudulent. A license to sell and performance bond shall not be required if:
(a) Sale of a subdivision lot resulted from the partition of land among co-owners and co-heirs.
(b) Sale or transfer of a subdivision lot by the original purchaser thereof and any subsequent sale of the same lot.
(c) Sale of a subdivision lot or a condominium unit by or for the account of a mortgagee in the ordinary course of business when necessary to liquidate a bona fide debt.
(Section 5 and 7, P.D. 957)
Before an owner of a subdivision or condominium project may sell, he or she is required to secure a license to sell. Presidential Decree No. 957 or the Subdivision And Condominium Buyers’ Protective Decree is instructive.
The law provides that –
License to sell. Such owner or dealer to whom has been issued a registration certificate shall not, however, be authorized to sell any subdivision lot or condominium unit in the registered project unless he shall have first obtained a license to sell the project within two weeks from the registration of such project.
The Authority, upon proper application therefor, shall issue to such owner or dealer of a registered project a license to sell the project if, after an examination of the registration statement filed by said owner or dealer and all the pertinent documents attached thereto, he is convinced that the owner or dealer is of good repute, that his business is financially stable, and that the proposed sale of the subdivision lots or condominium units to the public would not be fraudulent.
(Section 5, P.D. 957)
Aside from license to sell, are there any other requirements before an owner of subdivision/condominium project can sell?
Yes. He/she must have filed a performance bond.
Section 6 of P.D. 957 provides that, “No license to sell subdivision lots or condominium units shall be issued by the Authority under Section 5 of this Decree unless the owner or dealer shall have filed an adequate performance bond approved by said Authority to guarantee the construction and maintenance of the roads, gutters, drainage, sewerage, water system, lighting systems, and full development of the subdivision project or the condominium project and the compliance by the owner or dealer with the applicable laws and rules and regulations.
The performance bond shall be executed in favor of the Republic of the Philippines and shall authorize the Authority to use the proceeds thereof for the purposes of its undertaking in case of forfeiture as provided in this Decree.
Are there any instances where an owner is exempted from securing a license to sell and performance bond?
Yes. Section 7 of P.D. 957 provides that, a license to sell and performance bond shall not be required in any of the following transactions:
(a) Sale of a subdivision lot resulting from the partition of land among co-owners and co-heirs.
(b) Sale or transfer of a subdivision lot by the original purchaser thereof and any subsequent sale of the same lot.
(c) Sale of a subdivision lot or a condominium unit by or for the account of a mortgagee in the ordinary course of business when necessary to liquidate a bona fide debt.
When can license to sell be suspended?
Section 8 of P.D. 957 provides that, upon verified complaint by a buyer of a subdivision lot or a condominium unit in any interested party, the Authority may, in its discretion, immediately suspend the owner’s or dealer’s license to sell pending investigation and hearing of the case as provided in Section 13 hereof.
The Authority may motu proprio suspend the license to sell if, in its opinion, any information in the registration statement filed by the owner or dealer is or has become misleading, incorrect, inadequate or incomplete or the sale or offering for a sale of the subdivision or condominium project may work or tend to work a fraud upon prospective buyers.
The suspension order may be lifted if, after notice and hearing, the Authority is convinced that the registration statement is accurate or that any deficiency therein has been corrected or supplemented or that the sale to the public of the subdivision or condominium project will neither be fraudulent not result in fraud. It shall also be lifted upon dismissal of the complaint for lack of legal basis.
Until the final entry of an order of suspension, the suspension of the right to sell the project, though binding upon all persons notified thereof, shall be deemed confidential unless it shall appear that the order of suspension has in the meantime been violated.
(Sections 5-8 of the Presidential Decree No. 957 or the Subdivision and Condominium Buyers’ Protective Decree)
Read also: ON LICENSE TO SELL SUBDIVISION LOT OR CONDOMINIUM UNIT
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