Much ado about nothing?
ConclusionTHE CASE of property developers advertising developments even without licenses to sell, and in the process generating profits, should be a "non-issue," Colliers International Philippines Inc. director Richard Raymundo said.
"There are ways to do it in a legal way, anyway. The fact that you can announce projects, [means] you’re basically not breaking any rules," he said.
Danilo Antonio, a professor at the Asian Center for Excellence — a partner of the Asian Institute of Management — said property developers that put out advertisements with disclaimers should not be held liable.
"This is just image building and does not really put buyers at risk," he said.
Putting out advertisements before developers can sell does not really make sense financially, he added. Reservation fees, meanwhile, are "a mechanism that allows buyers to get the units they want."
"And reservation fees are usually refundable if the license to sell is not there yet. Developers [should] know better than accept non-refundable reservations," he added.
Developers, analysts and Housing and Land Use Regulatory Board (HLURB) executive officer Romul Q. Fabul said that ultimately, it is the buyers’ responsibility to find out whether the properties they plan to acquire are already covered by permits to sell.
"In the end, you still have to check if the developers have a license to sell," the Asian Center’s Mr. Antonio said.
Buyers should conduct due diligence before signing a contract and paying for the unit, Jones Lang LaSalle Philippines research head Kathy Marcelo said.
"They should check if the developer has secured all government licenses that are needed, as well as check the track record of the developer. They should make it a point to put all things in writing so that there would always be a reference in the future," she said.
Century Properties spokeswoman Terrie Fucanan agreed.
"As we have always maintained, consumers always have to be vigilant by doing a background check on the developers they are buying properties from. They should always check on the developer’s track record and ability to deliver projects on time," she said.
Mr. Fabul said buyers can always call the HLURB. They can also ask the sellers of the project to show them the license number released by the regulator, he added.
For advertisements, he said projects which have been given their permits include the HLURB license number in the ads.
Leechiu Associates senior manager Claro Cordero Jr., meanwhile, said that while a wise buyer should look for an HLURB license even before giving a deposit, "it’s not all the time that the buyer knows specifically whether the developers have been issued license to sell."
Amina Lim, who bought her condominium unit last year, said she did not know that she had to look for an HLURB number when checking out projects.
"None of the marketing people I talked to while looking for my unit told me their HLURB license number. They market their projects rather than tell buyers what needs to be done," she said.
Ms. Lim eventually settled for a condominium unit in a project that was already standing.
But advertisements that have the disclaimers would not deter her from buying the project being advertised, she said, "especially when I really like the project and it’s from a known developer."
Another condominium buyer noted that investors assume that property developers are selling when they come out with advertisements.
"Kaya ka nga naga-advertise eh, kasi nagbebenta ka (you are advertising because you’re selling the project)," he said.
Stick with the good ones
Analysts said it is best to bank on property developers’ reputations when making a purchase.
"Big developers would not risk their reputation to do a thing like that. It’s the small guys that are likely to do that," the Asian Center’s Mr. Antonio said.
The HLURB’s Mr. Fabul said that despite the number of violations, some followed the rules. Of the 180,000 units that were given selling licenses last year, the regulator only got 1,500 complaints.
"This is less than 2%," he said. The figure, however, does not include violations caught through HLURB monitoring.
Mr. Fabul said that among the companies that follow HLURB procedures are Ayala Land, Inc. and publicly listed Cityland.
"Cityland is very conservative — they always put their license numbers in the ads," he said.
Other property developers that sell condominium units that are already built also claimed to meet the HLURB’s requirement.
A DMCI Homes, Inc. official, for instance, said the firm does not need upfront money from buyers for its projects.
"Because everything is sourced from the group — the materials, the construction of the projects, etc. — we can afford not to sell immediately. Our marketing strategy is different," the official, who requested anonymity, said.
DMCI Homes is the housing arm of construction conglomerate DMCI Holdings Inc.
E. Ganzon, Inc. (EGI) President Eulalio Ganzon, meanwhile, claimed his company only sells its projects once completed.
"We are a technical company, our efforts are towards construction and planning specifications; we only do minor advertisements. We don’t work on pre-development sale," Mr. Ganzon said.
Tweaking the rules
Mr. Fabul said the HLURB is tightening its rules — where before it allowed ads meant for announcement purposes, it has decided to prohibit these as well.
"We found out that even these advertisements that say for announcement purposes only already sell. We called the numbers that were published in the advertisements and pretended to be buyers and they sold to us," he said.
Under a new memorandum signed last September, which has yet to take effect, property developers who wish to advertise projects need to file an application for advertisement approval.
Advertisements have to indicate the exact location of the project, license to sell number and date issued, project completion date, maximum selling price, and names of the owners/developer. Pictures should also be labeled properly and developers should differentiate between "actual photographs," "architect’s perspective" or "artist’s illustrations."
Disclaimers, any future development not covered by license to sell, and exaggerations or misleading information are prohibited.
Regulating and monitoring ads, said Subdivision and Housing Developers Association, Inc. Chairman Willie J. Uy, are part of the HLURB’s job.
"Although I would wish that they would be a little lenient, it is within the purview of HLURB to regulate and monitor the ads. This must be in response from buyers who were victimized by unscrupulous developers promising them heaven and earth," Mr. Uy said.
The new set of rules, however, does not change the penalties to be imposed. Whether it will lead to changes in the industry thus remains to be seen. — with inputs from Ruby Anne M. Rubio
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