Subdivision developer fails to finish construction on time



Dear PAO,
May a buyer of a house and lot in a subdivision stop paying the monthly amortizations in case the developer did not finish the constructions on time?

Dear JB,
The law applicable in your problem is Presidential Decree (P.D.) No. 957 or The Subdivision and Condominium Buyers’ Protective Decree. This law was enacted primarily to give protection to condominium and subdivision buyers from developers against their unscrupulous and fraudulent manipulations and machinations. This law aims to ensure that the developers will not renege to the representations they made to their buyers especially to the construction of the houses and condominium units, as well as to the construction and maintenance of roads, drainage and other basic requirements.

Real estate developers of condominiums and subdivisions are given by law a time limit for the construction and provision of all forms of development. Section 20 of PD No. 957 provides:

“Section 20. Time of Completion. Every owner or developer shall construct and provide the facilities, improvements, infrastructures and other forms of development, including water supply and lighting facilities, which are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters, letters or in any form of advertisement, within one year from the date of the issuance of the license for the subdivision or condominium project or such other period of time as may be fixed by the Authority.”

If the owner or developer of the subdivision where you bought the house and lot failed to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same, you may exercise any of the options provided under Section 23 of PD No. 957, to wit:

“Section 23. Non-Forfeiture of Payments. No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.” (emphasis supplied)

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.


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