Pre-selling Scams in Philippine Real Estate

In pre-selling, some developers lure investors with promises of huge returns through the purchase and sale of real estate homes. They would even promise to start construction within reasonable time and if not done, promise to pay high monthly interest on your deposit. Before long, the promoters have run away with the investors' money, leaving them with worthless documents.

Keep all the promotional materials given out by the developers. The promises on these promotion leaflets are considered part and parcel of the project. Take note of what was promised by the brokers and check them against the plans and specifications if they are included. If not, include them in the purchase agreement and the contract to sell. Be careful when signing the contract to sell; it may contain a provision overriding all the promises made by the brokers. Better yet, make the approved specification part of the contract to sell.

Some contracts to sell include some of the specifications used in the building, but not enough to protect the buyers. The contract may include the floor and wall finishes but not size of the tiles and their brand names which are more important. The same goes to the materials used for plumbing, hardware, electrical supplies, etc. The cost of these finishes may run to half the cost of the house. It could be more under the hand of an unscrupulous developer.

Philippine developers can also lure investors into investing in the project using prominent personalities during promotion. Others may be conned into lending their names to be used to enable the developers to borrow huge amounts from banks or financial institutions. Should the developer encounter problems in selling the property in Philippines, this could lead to the foreclosure of the assets used as mortgage. When the bank decides to claim ownership of the land and property, the unit buyers will be put in a dilemma because of the bank's refusal to surrender the title to the real estate property and the units. In one case, even though the HLURB has ordered the financial institution to release the titles to fully or partially paid buyers, the lender could still drag the case through the courts. It may take years to settle the case and in the meantime, the unsuspecting buyers have to suffer through no fault of their own.

Next >>

1. Pre-selling Scams in Philippine Real Estate
2. Scams with Condominium Developments
3. Check the Necessary Documents

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