06/08/2024
DUE DILIGENCE: TIPS BEFORE BUYING SUBDIVIDED LOTS
Common Pitfalls and Precautions
Purchasing a subdivided lot can be an exciting investment, but it comes with its share of risks. One prevalent issue faced by buyers is acquiring lots that do not have an approved subdivision plan from the Department of Environment and Natural Resources (DENR). To help you navigate this process and avoid potential problems, here are some essential tips and questions to ask before making a purchase.
Key Questions to Ask:
1. Is this lot with an individual title already and tax declaration?
- If Yes: Great! Proceed with further due diligence. It’s advisable to engage the services of a licensed broker or lawyer to assist you.
- If No: Ask if the seller plans to deliver the individual title and tax declaration for your lot.
- If Yes: This is promising, but still proceed with caution and thorough due diligence.
- If No: Be wary if the seller only promises to deliver a tax declaration because the lot is not titled yet. This likely means the lot is being sold with a paper subdivision only.
2. Is the subdivision plan approved by the DENR?
- If the seller is providing a subdivision plan, ensure that it has been or will be approved by the DENR. If not, be extremely cautious. Without DENR approval, you could face significant issues down the road.
Why Due Diligence is Crucial
The absence of an approved subdivision plan from the DENR is a common problem, particularly in provincial areas. Some sellers, driven by entrepreneurial zeal, may offer lots through simple or complex subdivisions without the necessary approvals, leading to future complications for buyers.
The Role of Professionals
We strongly recommend seeking the services of licensed brokers and/or lawyers to guide you through the due diligence process. The professional fees involved are minimal compared to the potential investment and headaches you could face in the future.
"An investment in knowledge pays the best interest." — Benjamin Franklin
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