AUG 24, 2015

NR # 3936B

Bill bans reservation fees for real estate and condominium

Buyers of real estate and condominium units will no longer have to pay reservation or
other fees prior to their submission of documentary requirements.
Rep. Scott Davies S. Lanete (3rd District, Masbate) filed House Bill 5964, which bans
reservation fees for real estate and condominium units to ensure the protection of the buyers.
The bill amends Presidential Decree 957 or The Subdivision and Condominium Buyers
Protective Decree, which regulates the sale of subdivision lots and condominiums.
Lanete said the usual practice of developers is to require a prospective buyer to pay a
certain amount as a reservation fee.
They require such prospective buyer to submit numerous documents and subject them to
various background checks, Lanete said.
Lanete said the failure of a prospective buyer to submit the requirements automatically
leads to forfeiture of the reservation fee.
In the end, once a prospective buyer fails to abide by the process, they lose their hardearned money through no fault of their own, Lanete said.
Likewise, Lanete disclosed that a number of developers have been constructing real estate
and condo projects right above near fault lines and they have been concealing this fact from
prospective buyers as a business strategy.
This has placed a lot of real estate and condo owners/tenants at risk of losing their lives
to potentially disastrous earthquakes; same goes when living within a flood-prone and/or
calamity-prone are. Thus, a lot of owners/tenants are left at a quandary as to how they will
resolve the problem, Lanete said.
The bill mandates owners or developers to provide the buyer with information, certified by
the concerned governmental agency, about the location of nearby fault lines and their exact
distance from the real estate or condo project as well as whether said real estate or condo is
situated in a flood and/or calamity-prone area.
Under the bill, the buyer shall pay no reservation fee or down payment until all the
documentary requirements are processed and accepted by the developer as valid and complete.
The bill provides a fine of not less than P500,000 but not more than P1 million to
violators. (30) mvip