PD 957 for house-and-lot buyers: what the law gives you
Presidential Decree 957, the Subdivision and Condominium Buyers' Protective Decree, governs subdivision lots and condominium units sold to the public. A resale by the first buyer is exempt from the license to sell (Section 7). Buying a house and lot from a developer, you have rights under it from the reservation to the title. This is each one, with the section it comes from.
Who enforces it now
The decree names the National Housing Authority as its regulator. Since Republic Act 11201 of 2019, that role belongs to the Department of Human Settlements and Urban Development (DHSUD), formed from the housing coordinating council and the Housing and Land Use Regulatory Board. Disputes went to a separate body: the board's adjudication became the Human Settlements Adjudication Commission, whose Regional Adjudicators hear buyers' claims (RA 11201, Sections 4, 12, 16 and 25). DHSUD answers common questions in its PD 957 legal FAQs.
Your PD 957 rights, from reservation to title
Each row gives the right, its figure or condition, and the section it comes from.
Before you pay
| Right | Figure | Source and condition |
|---|---|---|
| The project is registered and the seller holds a license to sell | no license, no sale | PD 957 Sections 4 and 5; the license is not issued without a performance bond for the roads, drainage, water and lighting (Section 6) |
| What the brochure and the ads promise is part of the deal | a sales warranty | PD 957 Section 19: the owner or developer is liable for facilities and improvements promised in advertisements |
Once you sign
| Right | Figure | Source and condition |
|---|---|---|
| The contract to sell or deed of sale is registered by the seller | Register of Deeds | PD 957 Section 17, whether or not the price is paid in full |
While it is built
| Right | Figure | Source and condition |
|---|---|---|
| Roads, water, lighting and the promised facilities are finished | 1 year, or the period the regulator sets | PD 957 Section 20: counted from the issue of the license to sell, unless the regulator fixes another period |
| The approved roads and open spaces are not changed | regulator and buyers must agree | PD 957 Section 22: needs the regulator's permission and the written consent of the homeowners association, or, where there is none yet, of most lot buyers |
| Open space in a project of a hectare or more, roads and community facilities included | 30 percent | PD 957 Section 31 as amended by PD 1216, counted on the gross area; the green part, parks and playgrounds, takes 3.5, 7 or 9 percent depending on density, and cannot be sold or built on |
| The developer starts a homeowners association | required | PD 957 Section 30 |
| A mortgage on your lot needs approval, and you are told | written approval | PD 957 Section 18: you may pay your installments straight to the lender so the lot can be titled on full payment |
If the developer fails
| Right | Figure | Source and condition |
|---|---|---|
| After notice, you may stop paying and your payments are not forfeited | no forfeiture | PD 957 Section 23: where the developer fails to develop to the approved plans within the time limit; you may ask for all payments back, amortisation interest included and delinquency interest excluded, with interest at the legal rate. If a bank loan paid the price, the lender is joined in the claim (RA 11201 Section 16) |
If you fall behind
| Right | Figure | Source and condition |
|---|---|---|
| After at least two years of installments | a month of grace per year paid | RA 6552 Section 3, applied by PD 957 Section 24: down payments and deposits count toward the two years; the grace is usable once every five years; on cancellation a refund of half of what was paid, rising by 5 percent a year after five years, to 90 percent at most |
| After less than two years of installments | 60 days of grace | RA 6552 Section 4: no refund is provided; the seller may cancel only 30 days after you receive a notarial notice |
On full payment
| Right | Figure | Source and condition |
|---|---|---|
| The title is delivered to you | no fee for the title beyond registering the deed | PD 957 Section 25: a mortgage on the lot is redeemed by the developer within six months of the title's issue |
| Real property tax is the developer's until the title passes | until the title passes | PD 957 Section 26: if you take possession and occupy the lot first, you owe the developer the tax from the following year |
If it goes wrong
| Right | Figure | Source and condition |
|---|---|---|
| Where a buyer's claim is heard | HSAC | RA 11201 Sections 15 and 16: Regional Adjudicators of the Human Settlements Adjudication Commission hear refund and development claims against the owner, developer, dealer, broker or salesman, with appeal to the Commission |
The two rights buyers lean on most
When the developer does not build to the approved plans on time
“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.”
The order matters: notice to the developer first, then stopping payment. Your payments are not forfeited, and you may ask for them back with interest at the legal rate. Promises made in brochures and advertisements are a separate warranty under Section 19. Section 23 does not cover a buyer who stops paying for reasons of their own; that is the next case.
If a bank or other lender financed the price, the lender is made a party to the claim (RA 11201, Section 16). Stopping payment to a developer is not the same as stopping payment on a housing loan, so see a lawyer before you stop paying a lender.
When you fall behind on the installments
Section 24 of PD 957 sends a buyer who defaults for reasons of their own to Republic Act 6552, often called the Maceda Law. With at least two years of installments paid, counting down payments and deposits, you earn one month of grace for every year paid, usable once every five years, and if the contract is cancelled the seller must refund half of what you paid, rising by 5 percent a year after the fifth year, to 90 percent at most. Cancellation takes effect only 30 days after you receive a notarial notice and the refund is paid in full (Section 3). With less than two years paid, you get at least 60 days of grace but no refund, and cancellation again needs a notarial notice and 30 days (Section 4). Either way you may sell or assign your rights, or bring the account up to date, during the grace period and before the contract is actually cancelled (Section 5). The Maceda Law guide reads the Act section by section, with the grace period and refund by years paid.
What the law does not check for you
PD 957 protects the purchase. It says nothing about whether the model house suits your family, whether the lot drains, whether the house can be extended later, or what the subdivision's deed restrictions allow you to build. Those are the questions to settle before the reservation fee, and they are design questions:
- The lot. Orientation, drainage and the neighbours' levels, in the guide to choosing a lot, and how much of it a house may cover, in the lot coverage calculator.
- The house. Whether its rooms meet the code, in the room size checker, and what adding a storey later involves, in the house extension guide.
- Moving in. The developer's house still needs its certificate of occupancy, explained in the occupancy permit guide.
Arktektura's consultation for future home buyers covers these on site, before you sign.
What this page does not cover
- A dispute over your contract. How these rights apply to one sale turns on the contract, the payments and the dates. For that, a lawyer reads the documents, and claims go to the Human Settlements Adjudication Commission.
- Life in the subdivision after you move in. The homeowners association's powers and your rights as a member are in the RA 9904 guide.
- Condominium ownership. Units are covered by PD 957 too, but the Condominium Act adds its own rules on common areas and the corporation.
- The implementing rules. DHSUD's rules add detail to the decree, including subdivision design standards, and are not summarised here.
Sources, as published by the Lawphil Project: Presidential Decree No. 957, Presidential Decree No. 1216, which rewrote Section 31, Republic Act No. 6552, and Republic Act No. 11201.