Envoy hits ‘A-class’ condo sale abuses

By Federico D. Pascual Jr. (The Philippine Star), Apr. 17, 2016

WE HAVE been receiving email, mostly expressing concern, after the publication last April 12 of our Postscript titled “‘A-class’ con artists dupe condo buyers.” (The column is archived as http://tinyurl.com/z99oo36 at ManilaMail.com.)

Among the readers who have reacted was Theo Arnold, who was for five years the ambassador of the Netherlands to Manila, his last posting until his retirement from the diplomatic service in 2003. He said in his email:

“I applaud you for sharing with us this horror story, which illustrates the Wild-West schemes of the Filipino real estate sector, and the fact that the big real estate companies get away with it. xxx I hope you will continue to inform the public about the risks, in particular foreigners are taking by buying real estate in the Philippines. They often are not aware of the different values and attitudes of customer care in the Philippines. Let me explain.

“1. Final payment. Pre-construction sale is normal practice in the Philippines. The buyer pays either cash in full with a proper discount or starts with low monthly payments which increase every year and a final large outstanding payment of say 40 percent at the end upon the targeted delivery date a few years later. The practice is that every year 12 postdated checks will have to be provided in advance. A foreign buyer will not qualify for a bank loan for the final outstanding payment when over 60 years by that time. In addition the buyer will have to make an advance payment for registration, taxes, fees, etc. The calculations are based on estimates! Be sure to get a final billing. And don’t expect that eventually not cashed postdated checks can be used for the remaining balance or will be automatically returned!

“2. Inspection of the unit. Be sure to get a layout with proper dimensions upon inspection. Handy for curtains, appliances, etc. It took me three weeks to get the layout. And sign nothing before shortcomings have been repaired.

“3. Turn-over. Only after settlement of the account and signing of the deed of absolute sale a move-in clearance – handing over of the keys – will be given. It would be more efficient if the settlement of the account and the signing of the deed of sale could be done at the same time.

“4. Transfer of ownership. May take one to two years! The weak government institutions are blamed for this unacceptable state of affairs. However, the signing and notarizing of the deed of sale by the developer took three months! On purpose as part of their cash management policy, one wonders? The longer the processing steps take, the longer the developer sits on the additional advance final payment before fees and taxes will be paid. Promises of expediting the processing of the relevant documents are not being honored.

“5. Possibility of sale. How can a buyer after full settlement of the account and turnover sell his new property without proof of ownership? No copy of the signed and notarized deed of absolute sale, no proof of registration and paid property tax, no condominium certificate of title after more than a year.

“6. Lack of customer care. The predicament of buyers of condominium units may be acceptable to Filipino buyers as the Filipino way, but it is not to foreigners who are lured to the Philippines as a retirement paradise. Negligence, and shameless greed as ingredients for paradise?

“7. Good or bad investment. Last but not least, it is my experience that the purchase price of the unit as quoted six years ago turns out to be more than its value on the market today when one takes into account the additional final pay for registration and taxes, the six-percent capital gains tax which is actually a transaction tax and the documentary stamp tax of 1.5 percent. As a consequence, the unit can be sold only at a loss. A very bad investment indeed over a period of six years in a so-called booming real estate market. The number of condominiums for sale or rent in the capital region is alarming. The average office worker can’t afford these condos.

“It goes without saying that I no longer recommend my ‘A-class’ multi-awarded giant developer for ‘excellence’ in its field, to potential foreign investors as long as the above state of gross negligence is the accepted scenario in the Filipino real estate sector in a legal environment where fair justice is non-existent. My requests to discuss customer care with the management were never answered. Nobody seems to care.

“The role of the media in exposing these practices and tactics is of utmost importance.”