Buying a condominium unit before it is completed – known as buying a preselling condo – has become a popular choice among homebuyers and investors in the Philippines, especially in Bonifacio Global City (BGC). This option offers lower prices and flexible payment terms compared to ready-for-occupancy units. However, purchasing a preselling condo also involves legal complexities that buyers must understand to protect their investment. This article explores the key legal aspects of buying preselling condos in BGC and why being informed is essential in today’s real estate market.

What Is a Preselling Condo?

A preselling condo is a unit purchased before or during the early stages of a building's development. Buyers buy on the basis of architectural plans, model units, or artist's renderings, sometimes in exchange for a reservation fee and down payment, and installment payments during construction. The last payment is typically made on turnover, when the unit is ready for occupancy.

Presold condos are usually priced lower than the cost of completed, ready-for-occupancy (RFO) units. The buyer takes the compromise of waiting for several years before he can occupy the unit, hoping that the property's value will increase by the time the construction is completed.

Why Choose BGC for Preselling Condos?

BGC is a modern business and residential hub in Metro Manila popular with young professionals, expats, and investors for its infrastructure, lifestyle, and location, offering quality urban living. The market for BGC residential units is strong, making it the most popular location for new preselling condo developments. Developers vie with each other to provide good payment terms and unit choices to capture this expanding market.

The Legal Framework Protecting Buyers

Buying a preselling condo in the Philippines is regulated by laws designed to protect buyers and ensure developers meet their obligations. The most important laws include:

Presidential Decree No. 957 (PD 957)

Also known as the Subdivision and Condominium Buyer’s Protective Decree, requires developers to obtain a License to Sell before marketing units. This law sets standards for contracts, refund policies, and buyer protections in case of project delays or changes.

The Maceda Law (Republic Act No. 6552)

This protects buyers who purchase on installment. It provides a grace period for missed payments and allows buyers to cancel the contract and get a refund of the cash surrender value after paying for at least two years.

The Condominium Act (Republic Act No. 4726)** 

This governs condominium ownership, defining rights related to individual units and common areas, and establishing rules for condominium corporations.

Department of Human Settlements and Urban Development (DHSUD)

They oversees project registration, issues Licenses to Sell, and handles buyer complaints.

Local government units (LGUs)

They issue construction permits and enforce zoning laws.

Securities and Exchange Commission (SEC)

They ensures developers are properly registered and financially sound.

Important Legal Considerations When Buying Preselling Condos

Reviewing the Contract Carefully

The contract is your primary legal protection. It should clearly state the total price, payment schedule, unit specifications, delivery timeline, and penalties for delays or defaults. Under PD 957, contracts must include refund policies if the developer fails to deliver on time or changes the project significantly.

Checking Developer Credentials

Confirm that developers have a valid License to Sell and that the project is registered with DHSUD. Avoid unlicensed developers or those with histories of delays or legal disputes. Online reviews, industry reports, and real estate professionals can provide useful insights.

Verifying Land Titles and Documentation

Make sure the land on which the condo is built has a clean, legitimate title. After completion, the developer will issue individual condominium titles, which you must register in your name. Understand how common areas are owned and managed under the Condominium Act. Keep all documents, including contracts and receipts, properly notarized and stored.

The Due Diligence Process

Researching the Project and Developer

Visit the project site, review plans, and talk to current buyers if possible. Look out for red flags like frequent delays, changes in plans, or negative feedback. Hiring a real estate lawyer or consultant can help you spot potential issues and interpret contract terms.

Understanding Payment Terms and Financing

Preselling condos usually require an initial equity payment, monthly installments during construction, and a final lump sum upon turnover. Financing options include bank loans or developer financing. It’s important to understand refund policies, especially for the equity portion, in case you decide to cancel.

Market Trends and Legal Implications

Investment Potential

Preselling condos in BGC are attractive investments due to their lower initial prices and potential for capital appreciation. Early buyers can select premium units and benefit from rising property values. However, understanding the legal safeguards is crucial to managing risks such as project delays or developer insolvency.

Regulatory Compliance and Market Stability

Strict enforcement of laws and regulations helps ensure projects are delivered on time and as promised. This boosts buyer confidence and stabilizes the market. The COVID-19 pandemic caused delays in many developments, highlighting the need for strong legal protections and government oversight.

Key Takeaway

Buying preselling condos in BGC offers exciting opportunities but requires careful legal consideration. Knowing the laws that protect buyers, verifying developer credentials, reviewing contracts carefully, and conducting thorough due diligence are essential steps to avoid problems. Always seek professional legal advice before making a purchase..