Still considered as a vibrant economy, the Philippines continues to nurture a growing real estate market. Specifically for resort clubs, condominium buildings, and subdivisions, where the market has been notably shrinking, the competitive landscape is fiercely contested.
We see a proliferation of sales agents distributing leaflets at busy intersections, inside malls and other places where people who are likely to buy shares of stocks in upcoming resort clubs, condominium units being constructed, or dream houses in just-cleared lands, can be found.
The sales agents have excellent pressure selling techniques that are able to convert curious, prospective customers is to hooked buyers, albeit sometimes reluctantly, and often at a cost.
Buyers usually sign contracts without the full knowledge of the terms and conditions that come with what they are buying, or worse, the real condition of the property or share they have pledged to pay through monthly installments for years.
Unfortunately, all those frustrating stories of unfulfilled agreements are made known only when the duped buyers are already in a similar situation.
Sad stories
How many have gone through the agony of sad stories where, after making the down payment and a couple of monthly installments, the buyer discovers that work on the property has stopped and what remains are unfinished roads and a broken promise.
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Or the now familiar case of buyers, after several years of religiously paying monthly installments until fully paid, could not get the title to their respective lots because the “mother title” that covered all the lots is still hocked with the bank since the mortgage on the entire property has been not fully paid by the developer.
One real case involves members of a supposedly exclusive golf club nestled in the hills south of Metro Manila who were surprised to see their club facilities closed after the bank foreclosed on the property. After several months, the club was reopened to the public, but the exclusivity promised to shareholders was no longer there.
Delinquent club
Another often repeated story involves golf or resort clubs where the member, after paying the full membership share, is not able to sell what he bought because the club could not deliver the stock certificate since the club developer had not complied yet with some requirements by the Bureau of Internal Revenue.
This is the same experience of lawyer Juan M. Castillo, an avid reader of this column, and a former colleague at Pilipinas Shell where I worked for more than three decades.
He had bought and fully paid a membership share of a popular beach resort located at Nasugbo, Batangas in October 2009. A contract to sell (covering the purchase and sale of a club share was signed by Mr. Castillo and the resort club stating that “the stock certificate shall be issued by the club within 60 days from the date of full payment by the purchaser.”
However, sometime in 2012, Castillo attempted to sell his share in the club. Due to the absence of a stock certificate, he could not do so. He sent several letters to the club demanding delivery of the stock certificate. After several demand letters, the club finally responded by claiming there was a delay in the issuance of the share due to an examination by Bureau of Internal Revenue (BIR).
Protecting buyers
Based on the advice of some lawyers (one of them is Rosabel Castillo-Cui, his daughter), Castillo learned that buyers who are frustrated by the failure of a property owner, resort or club to issue the share certificate(s) after full payment (as provided by the contract to sell) have the option to file for a rescission of contract.
The lawyers referred to a Supreme Court ruling citing that failure to deliver the club stock certificate in a buyer’s name, within reasonable time after full payment is a substantial breach of contract.
And this is what Castillo did, after feeling exasperated with the years of inaction by his club.
Unfortunately, not all cases involving sellers’ broken promises have remedial solutions that can be coursed through the justice system. Of course, Castillo’s case can still be expected to drag on for years. His only recourse for a speedy resolve is, fingers crossed, for his club to voluntarily give back in full what he had paid for.
Other cases where buyers are victimized
In other cases where contracts have loopholes in favor of the seller (or real estate developer), the course of action becomes more complicated.
High transaction costs, red tape and time-consuming loan and purchase approval processes continue to plague buyers. But after signing off a housing contract, for example, problems involving land titling and registration, construction quality issues, and lack of infrastructure and amenities later crop up.
The government agency that should handle such problems is the Housing and Land Use and Regulatory Board (HLURB), but almost everyone knows that it is often unable to deal with consumer complaints since it continues to be overwhelmed just by processing applications for new real estate projects.
The HLURB says that they need to maintain a detailed approval process for new real estate projects to protect consumers. And yet, so many contract lapses have been noted on approved projects because of regulatory incompetence.
Rushing may turn dream into nightmare
The best advice that prospective buyers should heed is to not to give in to pressure selling techniques and not to rush into a buying commitment without thoroughly reading the whole contract, preferably with advice from a good lawyer. One homeowner found out too late that what he had bought was just the house, without the land.
Read up on cases about new real estate owners’ problems on social media and the internet, and of course, what the reputation of the real estate firm is. In other words, learn to protect yourself first before getting into the whole process of buying that dream piece of real estate or club share – before it becomes a nightmare problem.
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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net.
