A License to Sell (LTS) is a certification requirement by the Housing and Land Use Regulatory Board prior to the sale of any residential lots or condominium units. Before buying any property or getting into any property development business, a better understanding of the laws associated with this certification could help protect you from industry abuses.
Real Estate Properties in the Philippines
With its thriving economy and increasing middle class in recent years, the Philippines catapulted into one of Southeast Asia’s real estate hotspots. And probably still will be even after the pandemic due to the country’s hospitable culture, abundance in natural resources, and cheerful tropical weather.
The advent of the property development industry is thereby expected to continuously grow as the demand for multiple residential and commercial property products rises. While this industry immediately became a profitable and attractive venture, property developers must be aware of the equally high demand for know-how and capitalization both in time and financial resources.
Before offering any of their real estate projects to the public, property developers are required to secure multiple permits and documents. One of which is the License to Sell.
What is a License to Sell?
Section 5 of Presidential Decree (PD) 957, also known as the Subdivision and Condominium Buyer’s Protective Decree, recognizes the importance of acquiring a License to Sell before any commercial transaction between property buyers and developers.
Primarily, the decree serves two main purposes. One is to serve as a developer’s proof of legitimacy and financial stability to complete the project. Secondly, the license provides a level of quality assurance of the property’s building plans and specifications.
Who issues the License to Sell?
All regulations related to housing and land developments in the Philippines are governed by the Housing and Land Use Regulatory Board (HLURB). Therefore, the same agency implements the issuance of the License to Sell.
Does your project need a License to Sell (LTS)?
By default, all residential subdivision, townhouse, or condominium venture projects are mandated to apply for both a Certificate of Registration and License to Sell. Such projects include but are not limited to: residential, commercial, farm lot, and industrial subdivisions; all condominium projects: including residential and commercial condominiums; and other similar projects, including cemeteries, memorial parks, and columbaria.
What documents do you need to prepare?
A. For All Projects
- Sworn Registration Statement [PRLD.0002-A.02 or PRLD.0002-B.02]
- Certified True Copy of Transfer Certificate of Title (TCT) or Original Certificate of Title (OCT) duly stamped with original marking “CERTIFIED TRUE COPY” by the proper Register of Deeds and bearing its seal or security marker
- Duly audited balance sheet
- Articles of Incorporation, By-Laws, and latest annual corporate report to SEC
- A copy of any circular, prospectus, brochure, advertisement, or communication used/to be used for a public offering of a subject project and circulation upon arrival by this Board
- A sample copy of Contract to Sell
- Certified True Copy of Environmental Compliance Certificate (ECC) / Certified of Non-Coverage (CNC)
- Certified True Copy of Department of Agrarian Reform (DAR) Conversion Order / Exemption Clearance*
- Certification from local power provider MERALCO / Local Franchise Holder
- Permit to operate a deep well/water potability test results / Certification from Local Water District
- Program of development (bar chart with S-curve, Gantt Chart / PERT-CPM, etc.) signed and sealed by a licensed Architect or Engineer indicating work activities, duration, and cost
- Affidavit to Change Project Name [PRLD.ACPN.005.00]
- Duly accomplished and Notarized Fact Sheet [PRLD.FS.006-A.00 or PRLD.FS.006-B.00]
- The Philippine Institute of Volcanology and Seismology (PHIVOLCS) Certification
- Civil Aviation Authority of the Philippines (CAAP) Certification (if applicable, should a building exceed certain height limits)
* DAR Conversion Order shall no longer be required as a condition for issuance of Certificate of Registration and License to Sell in cases where the property involved is locate in an area already classified as residential, commercial, industrial, or other similar development purposes as provided in an updated Comprehensive Land Use Plan (CLUP) approved under E.O. No. 672, Series of 1993.
B. Additional Requirements
1. For Condominium Projects
Owners and developers of condominium projects are required to apply for Development Permit, Certificate of Registration, and License to Sell with the HLURB before actual development and selling of units therein. Below are additional documents condominium developers must prepare:
- Master Deeds with Declaration of Registration and Declaration of Restrictions evidences by the proper annotation thereof in the title(s) of the property and the certified true copy of such title(s) from the Register of Deeds.
- The complete Construction Plans with a Building Permit
- Affidavit of Undertaking to submit Condominium Certificate of Title [PRLD.CCT.004-B.00]
2. For Subdivision Projects
For owners and developers who wish to convert parcels of land into subdivision projects, they must seek approval for a Subdivision Development Permit (SDP), Certificate of Registration (CR), and License to Sell in coordination with the Local Government Unit and HLURB.
However, bear in mind that all of these must be completed before selling any unit, house, or lot. The following additional requirements must then be submitted along with the aforementioned documents:
- Two copies of Verified Survey Returns
- Sangguniang Resolution / Ordinance granting of Development Permit / Subdivision Development Plan
- Certified True Copy of resolution conferring authority to the mayor or other local government official to issue Development Permit
- Proof of Compliance to Sec. 18 of R.A. No. 7279 as amended by R.A. No. 10884
- One set of Subdivision Development Plan
- Approved Electrical Plan and Specifications
- Affidavit of Undertaking to submit Transfer Certificate of Title (parks, playground, community facilities, and other open spaces) [PRLD.TCT.004-A.00]
- Others
3. For Currently Mortgaged Properties
- Mortgagee Undertaking [PRLD.0007-A.02]
- Mortgagor Undertaking [PRLD.0007-B.02]
4. For Memorial Parks / Cemeteries / Columbarium
- Authenticated copy of the verified survey returns of the mother title, sections and blocks in each section together with the technical description of road lots, open spaces, facilities, and blocks as surveyed by a duly-licensed geodetic engineer.
- Note that an application for Certificate of Registration and License to Sell of a memorial park/cemetery shall be processed by the Office of the proponent has at least accomplished 20% of the total development of the project.
How does the application process work?
According to the Planning, Registration, and Licensing Division of the HLURB, all applications for License to Sell must undergo three stages – which altogether totals into 21 working days. All steps for each stage are enumerated below:
A. Stage 1 (Duration: 2 days)
Step 1: Applies for Certificate of Registration / License to Sell with the supporting documents (20 minutes)
Step 2: Receives the CR / LTS application and checks the completeness of the submitted supporting documents (20 minutes)
Step 3: If Incomplete: Returns the documents to the applicant (5 minutes)
Step 4: If Complete: Computes the Processing Fee and prepares the Order of Payment (OP). Records Officer shall use the data/information in the submitted Tabulation of Areas as a basis in the computation of Processing Fee. Gives the OP to the applicant (5 minutes)
Step 5: Receives the OP and pays the required Processing Fee (5 minutes)
Step 6: Accepts the full payment of the Processing Fee and prepares the Official Receipt (OR). Gives the OR to the applicant (15 minutes)
Step 7: Submits the documents to the Records Section (15 minutes)
Step 8: Receives the OR. Scans and forwards the documents to the Office of the Regional Officer (60 minutes)
Step 9: Receives and Logs the documents. Assigns and endorses the documents to the concerned unit for processing. Forwards the documents to the PRLD (10 minutes)
Step 10: Receives the documents and assigns to an evaluator/processor (5 minutes)
Step 11: Evaluates the documents submitted. Prepares the Documentation and Verification Sheet (1 day)
Step 12: If documents are Incomplete: Prepares and initials on the Notice of Deficiency (5 minutes)
Step 13: Signs the Notice of Deficiency. Logs out to the Record Section for releasing / mailing to the applicant (5 minutes)
Step 14: If documents are Complete: Fills up the Pro-forma Notice to Publish (NTP). (15 minutes)
Step 15: Reviews, Evaluates and Initials on the NTP. Logs out the NTP to the Office of the Regional Officer. (15 minutes)
Step 16: Reviews and Evaluates documents and signs the NTP. Logs out the NTP to the Records Section for release. (10 minutes)
Step 17: Receives, records, and releases the NTP to the applicant (5 minutes)
B. Stage 2 (Duration: 18 days)
Step 18: Receives the NTP. Publishes the NTP. Submits the Affidavit of Publication (AOP). Coordinates with PRLD for the conduct of Site Inspection (13 days for PD 957, 6 days for BP 220)
Step 19: Receives AOP. (5 minutes)
Step 20: Secures Clearance from the Monitoring and Adjudication Division (MAD). (5 minutes)
Step 21: If the applicant has No pending Orders: Proceed to Step 28. If the applicant has pending Orders: Advises complying with the orders. When the applicant has complied with the Orders: Secures Clearance from the MAD. (5 days)
Step 22: Conducts Site Inspection. Determines the extent of development and computes the required Performance Bond (PB). Evaluators after the review of plans and other documents shall re-check and compute the required fees collected. Prepares evaluation report and the Authority to Post Performance Bond (APB). (1 day)
Step 23: Reviews / Evaluates and Initials on the APB. Validate payment of required Processing Fees. Logs out the APB to the Office of the Regional Officer (15 minutes)
Step 24: Receives the APB. Reviews and signs the APB. Logs out the APB to the Records Section. (10 minutes)
Step 25: Receives, records, and releases the APB to the applicant (5 minutes)
C. Stage 3 (Duration: 1 day)
Step 26: Receives the APB documents and posts the required Performance Bond
Step 27: Receives Proof of Posting of Performance Bond documents and forwards to the PRLD. (5 minutes)
Step 28: Evaluates the acceptability of the PB. Prepares the Executive Brief (EB) and the Certificate of Registration / License to Sell. Include the summary of the computation of required fees collected in the EB. (4 hours / 240 minutes)
Step 29: Review documents; Signs the EB and Initials on the CR / LS. Logs out the CR / LS to the Office of the Regional Officer. (15 minutes)
Step 30: Receives the CR / LS. Reviews and Affixes signature on the CR / LS and EB. Logs out the documents to the Records Section. (15 minutes)
Step 31: Receives the CR / LS documents. Scans and records the documents. Releases the CR / LS to the applicant. Gives Feedback Form to the applicant (15 minutes)
Step 32: Receives the CR / LS and Feedback Form. Accomplishes the Feedback Form and drops the accomplished form in the Suggestion Box.
Post Application: What are your responsibilities and obligations as property developers?
The issuance of a property’s License to Sell does not automatically halt the roles and responsibilities of property developers. Hence, HLURB advises 13 pointers on observing the agency’s implementing rules and regulations. These include the following:
- Complete the project following the approved development plan therefore not later than (Indicate target date of completion) and advise buyers in writing of such a time frame for development.
- Maintain the common facilities until their turnover is authorized under PD 1216.
- Register the instrument relative to any sale with the Register of Deeds, whether or not the price is fully paid, within 180 days from execution.
- Deliver the title free from liens and encumbrance to fully paid buyers or if mortgaged redeem and deliver the same within six months from full payment.
- Secure clearance before any mortgage, alteration of plans, advertisement or change of ownership.
- Pay the real estate tax/assessment on the lot/unit until the year the title is transferred to or actual possession/ occupation is taken by the buyer.
- Refrain from forfeiting payments made by the buyers who suspend amortization after due notice to owner or developer on the ground of incomplete development or non-development.
- Submit report showing its extent of project development and changes in corporate officer within sixty days after each semester.
- Observe the prescribed maximum selling price for BP 220 projects (Economic and Socialized Housing).
- Display the registration certificate and this license in a conspicuous place in all offices of the owner and developer.
- Initiate the organization of home/unit owners.
- Refrain from levying any fee for an alleged community benefit upon the buyers; and
- Ensure the development of the Socialized Housing Project presented as compliance to Section 18, RA 7279.7
Failure to comply: Is it punishable by law?
As stated in Rule IV, Section 11 of PD 957, no owner or dealer shall sell any disposable subdivision lot or condominium unit in the registered project without a License to Sell issued by the Board within two (2) weeks from the registration of each project.
While the absence of a License to Sell does not forbid developers from selling their properties, it can ultimately hinder them from actively marketing their projects to the public. In such cases, buyers shall present a document called “Offer to Buy” which allows them to buy unlicensed properties while staying fully aware of their possible consequences. Nonetheless, achieving a seamless real estate transaction must be a collective effort among the buyer, developer, and ultimately, the local government.
For more information on the registration and licensing of subdivision and condominium developments, developers and buyers can go to the nearest regional office of the HLURB which governs over the place where the development is located. They may also seek the Rules and Standard Development Group of the same agency with their contact details stated below:
Rules and Standard Development Group Housing and Land Use Regulatory Board 2/F HLURB Building Kalayaan Avenue corner Mayaman Street Diliman, Quezon City Philippines Tel. No. (+632) 924-3386 Fax No. (+632) 927-2724 E-Mail: rsdg@hlurb.gov.ph Website: www.hlurb.gov.ph
Getting into the property development business in the Philippines could be a tricky and daunting task. Developing strategies and working with experienced professionals early in the planning stage could help you anticipate costly pitfalls. We are here to help. For any assistance in planning or designing your development projects by experienced architects consultants, please don’t hesitate to get in touch with us.
