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The Importance of the License To Sell (LTS)

Buying a property is such a big decision, since a big deal of money is involved. This is even more so if the property you are considering would be the one and only such realty you will buy in your lifetime. Buyer statistics in Cebu actually show that a vast majority buy only once, usually for their own and their family’s use.  That is why there is little or no room for mistakes.  Fortunately, we can learn from the mistakes of others as told below.

The Case of Susan and George

It was love at first chat for Susan and George, who eventually married after their first “eye ball” in Cebu a few years ago.  With his wife on the family way, George thought he should buy a house and asked for Susan to buy one while he was in his tour of duty in Iraq.  To his dismay, the title was still not transferred to their name more than a year after he fully paid for the property. It was even more upsetting that not a single brick had been mounted for their simple single storey house.  At a certain point, George, never hearing of such horrors from the first world, could not believe that such a long delay could happen and had suspected Susan had misused the money.  What had started as a perfect international romance was turning into shambles.

Yes, it was actually Susan’s fault, at least in part, not so much because she did intentionally misuse the money, as much as her failure to do a basic background check of the company from which she bought the property.  As it turned out, the developer had no License To Sell (LTS) for the property, until only recently.  Susan could have simply asked for a copy of the LTS and it would have made a big difference in their decision making.

In their case, the lot which they bought was still under litigation and was subject of a court restraining order, together with the other adjacent lots, because there was a problem with the conversion of the land to a residential subdivision. The LTS is issued by the HLURB or the Housing and Land Use Regulatory Board to certify that certain properties being sold by a developer is free from encumbrances and complications that would otherwise be disadvantageous to a buyer and that the developer has complied with all the other requirements of a subdivision, e.g., water system, drainage system, DENR clearance, etc. 

Even if a developer has an LTS, one should still check if the particular property you are buying is covered by the said LTS.  LTS are issued for particular properties in a subdivision. This means that there are some properties in the subdivision which may not be covered. In fact, there are subdivisions where certain portions are still under litigation and are being claimed by individuals.

Absence of an LTS does not mean, however, that a developer cannot sell their properties.  Neither does it mean that it is necessarily unwise to buy the property, because there too could be advantages to buying such.  The LTS, in actuality, is a mere license that HLURB issues to give the developer the permission to actively market the property to the public.  That is why, if one notices, one uses a document called “Offer to Buy” when buying properties without an LTS.  In a sense, it is the buyer who offers to buy the property, supposedly with the full knowledge that there is no LTS yet and that there could be specific risks involved in the transaction. 

Without the LTS, an individual should, theoretically, have the right to get a refund for the payments made with limited and reasonable deductions, if s/he decides to back out from the sale.  For the fickle minded, this would be an advantage. This is also useful in case there are family emergencies that require reallocation of funds. Properties with no LTS are also the choice of many experienced investors and speculators, because these are usually priced very low and usually appreciate in value sharply once the LTS is available and developments are put in place.

For now, it is important to note that, sad as it is, it is the burden of the buyer to check the company which they are buying their properties from, as we await the improvement of our government systems to ensure that only the worthy developers are operating.


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