Developer Obligations & Homeowners
Learn about developer obligations under PD 957 including prohibited fees, right of way requirements, open space donations, and the mandate to organize homeowners associations.
Prohibited Fees & Charges
“No owner or developer shall levy upon any lot or buyer a fee for an alleged community benefit. Fees to finance services for common comfort, security and sanitation may be collected only by a properly organized homeowners association and only with the consent of a majority of the lot or unit buyers actually residing in the subdivision or condominium project.”
What This Means
Developers are banned from charging buyers "community benefit" fees. Only a properly organized homeowners association. not the developer. can collect fees for common services like security, sanitation, and maintenance. Even then, it requires majority consent from actual residents. This prevents developers from indefinitely extracting fees from buyers under the guise of "association dues" when no real association exists.
- Developers CANNOT levy any "community benefit" fee on buyers
- Only a properly organized HOA can collect service fees
- HOA fees require consent of the majority of actual residents
- Covered services: common comfort, security, and sanitation
- Developer-controlled "associations" collecting fees violates this provision
Real-World Scenario
Grand Estates subdivision has been collecting P2,500/month from each lot buyer for "community maintenance and security" since lots were first sold in 2021. There is no registered homeowners association. the developer itself manages the security guards and maintains common areas. Buyers who refuse to pay are threatened with denied gate access.
Is the developer's fee collection legal under PD 957?
Open Spaces, Roads & Right of Way
“The registered owner or developer of the subdivision or condominium project, upon completion of the development of said project may, at his option, convey by way of donation the roads and open spaces found within the project to the city or municipality wherein the project is located. Upon acceptance of the donation by the city or municipality concerned, no portion of the area donated shall thereafter be converted to any other purpose or purposes unless after hearing, the proposed conversion is approved by the Authority.”
What This Means
Once a subdivision is fully developed, the developer may donate the roads and open spaces to the local government. This is optional ("at his option"), but once donated and accepted, those areas are permanently protected. they cannot be converted to other purposes without a hearing and Authority approval. Additionally, subdivisions without access to a public road must secure and develop a right of way (Section 29), and no owner can deny free access to government offices within the subdivision (Section 28).
- Developer may donate roads and open spaces to the LGU upon project completion
- Donation is optional, not mandatory
- Once donated, the areas cannot be converted without Authority approval
- Subdivisions must have a right of way to a public road (Section 29)
- No person can be denied free access to government offices within the subdivision
Real-World Scenario
A subdivision developer donated the roads and open spaces to the city in 2020. In 2025, the city council passes an ordinance allowing the construction of a commercial building on the donated open space to generate revenue. No hearing was conducted with DHSUD.
Is the city council's action valid?
Mandate to Organize Homeowners Association
“The owner or developer of a subdivision project or condominium project shall initiate the organization of a homeowners association among the buyers and residents of the projects for the purpose of promoting and protecting their mutual interest and assist in their community development.”
What This Means
PD 957 places the responsibility of initiating the homeowners association on the developer. not on the buyers. The developer must take the first steps to organize the HOA, whose purpose is to protect the mutual interests of buyers and residents and assist in community development. This is significant because many buyer protections under PD 957 (like Section 22 on plan alterations and Section 27 on fee collection) require an organized HOA to function properly.
- The DEVELOPER must initiate the organization of the HOA
- Purpose: promote and protect mutual interest of buyers/residents
- Also for assisting in community development
- HOA is needed for Section 22 (plan alteration consent) and Section 27 (fee collection)
- Developer cannot refuse or delay HOA organization as it is their legal duty
Real-World Scenario
Buyers in Maple Grove subdivision have been asking the developer to help them form a homeowners association for 3 years. The developer keeps delaying, saying "there aren't enough residents yet." Meanwhile, the developer continues collecting P3,000/month "maintenance fees" directly from each buyer.
Is the developer complying with PD 957?
Frequently Asked Questions
Can a developer charge monthly "association dues" if there is no homeowners association?
No. Section 27 prohibits developers from levying any "community benefit" fee on buyers. Only a properly organized homeowners association, with the consent of the majority of actual residents, can collect fees for security, sanitation, and common services. If no HOA exists, the developer must initiate its organization per Section 30.
What happens to subdivision roads and open spaces after the developer is done?
Under Section 31, the developer may donate roads and open spaces to the local government upon project completion. Once donated, these areas are protected and cannot be converted to other purposes without DHSUD approval after a hearing. Even before donation, Section 22 prohibits altering these areas without DHSUD permission and HOA/buyer consent.
Is it the developer or the residents who should form the homeowners association?
Under Section 30, the DEVELOPER is required to "initiate the organization" of the homeowners association. It is the developer's legal obligation to take the first steps. The HOA serves to protect buyers' mutual interests and is essential for exercising rights under Sections 22 and 27.