I am no expert when it comes to real estate investment, but I have recently gained an interest in it and availed one from a less popular and small developer.
I believe I should have at least a sufficient knowledge about it. Otherwise, I might get scammed, and my hard-earned money will go to waste. I cannot afford having big regrets, only lessons, when it comes to making investments.
Real-estate is a serious investment as it involves a huge capital, and we all just want real value for our money. So, I started with these questions and dug deep into the web for helpful answers:
- What is a License to Sell (LTS)?
- Why is it important?
- Is the sale still valid without an LTS?
- What should I do if the developer does not have an LTS for the project?
- How do I check if the housing project has an LTS?
 What really is a License to Sell (LTS)? Most online articles simply define a License to Sell (LTS) as a per-project certification obtained by a property developer from the Housing and Land Use Regulatory Board (HLURB), already known as DHSUD, prior to the marketing and sales of a housing project, may it be a residential lot, a house-and-lot, or a condominium unit.
HLURB issues a license to sell for every project, and not to or per developer. Just because a project is developed by a big real estate company that it does not automatically mean it has a license to sell.
Pre-selling is sometimes allowed, through a temporary license to sell (TLS), so for the developers to conduct marketing activities and test the market viability of the project. Normally, it is valid only for just six months.
 Why is it important? As per Section 5 of the P.D. 957, also known as The Subdivision and Condominium Buyer’s Protective Decree, “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.”
Additionally, HLURB is therefore mandated to examine project applications and all pertinent documentary requirements attached.
A license to sell is then issued when the authority is convinced that (a) the owner or dealer is of good refute, (b) that his business is financially stable, and (c) that the proposed sale of the subdivision lots or condominium units to the public would not be fraudulent.
As the HLURB commissioner said (regarding the case of Century Properties in 2007), “It [a license to sell] is a reasonable assurance that the papers are in order and the developer’s warranty, approved plan, ownership, and capacity to develop are in place” (Selling Without License to Sell, BusinessWorld).
Issuance of a license to sell is a way to protect the investing public from fly-by-night developers.
 Is the sale valid without an LTS? Yes, it is VALID. As Cebu House Finder writes, the absence of the registration and license of the developer, the project, and the sales agent does not render the Contract to Sell void as it is a valid contract, provided that it bears all the legal and valid elements.
As with P.D. 957, nothing therein provides for the nullification of a contract to sell in the event that the developer, at the time the contract was entered into, did not possess a certificate of registration and license to sell.
 What should I do if the developer does not have an LTS for the project? To emphasize, a duly signed and notarized Contract to Sell bearing all the elements of a legal and valid contract makes the sale of the property valid, even without the LTS.
This contract serves as your legal remedy in case of unregistered developer and sales agent, or the project is not issued a license to sell.
Interestingly, if the developer delivers the property, transfers it to your name as promised in the contract, and no further legal issues, then there is no problem at all. You have the property in your legal ownership.
On the other hand, the problem arises when the developer fails to fulfill the promise and final transfer. If this happens, you need to seek serious legal advice and assistance.
So, what are the options if you have paid the monthly equities and amortizations, and you’ve just discovered that the developer has not secured a license to sell for the project?
Again, as per Cebu House Finder, you have two options – (a) cancel the purchase and demand a refund (review your signed contract for conditions such as the percentage deductions from your total payment) or (b) continue the purchase at your own risk.
 How do I verify if the housing project has an LTS? As a buyer and investor, it is your right to ask your real estate agent for a license to sell. Your developer might want to discuss as well their ongoing application for LTS.
As checked, the application for an LTS comes with such a long list of documentary requirements.
You may also visit the nearest regional office of the Housing and Land Use Regulatory Board (HLURB) or the Department of Human Settlements and Urban Development (DHSUD).
Housing projects that have legitimate licenses to sell and certificates of registration are also made available on their official website for instant verification. Take note, however, that the list may not be that updated.
Despite the validity of the contract to sell as discussed, the existence of the developer’s registration certificate and license to sell but gives you a peace of mind that the property being purchased is free from any legal issues and will be delivered in due time.
References and Suggested Readings:
- BATAS Natin. SALES – PD 957 Effect of Absence of Certificate of Registration or License to Sell by the HLURB.
- Business World. Selling Without Licensed to Sell (LTS).
- Cebu House Finder. Case: Developer’s No License to Sell, Is the Sale Valid?
- Fulgar Architects. The Complete Guide to Applying for A License to Sell in the Philippines.
- The LAWPHIL Project. Presidential Decree No. 957 July 12, 1976. Regulating the Sale of Subdivision Lots and Condominiums, Providing Penalties for Violations Thereof.
- ZipMatch. 7 Things You Need to Know About License to Sell to Avoid Getting Scammed.