What are Hidden Charges?
Let's define first the word hidden- not shown or undisclosed. This could mean any additional payments hidden or not disclosed to buyers before and during their reservations are considered as hidden charges.
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When is the Developer accountable for Hidden Charges?
Before anything else, I always recommend a proper project briefing before making reservations because there are a lot of things needed to be clarified and discussed. Making reservation on the site or at main office for proper briefing is recommendable but if you have a trusted and credible seller / agent then it is okay if you meet up somewhere else to reserve.
The price set up of developers in the Philippines is different from one another, depending on the projects or classifications of properties. Price setup includes the selling price and the miscellaneous expense, generally, if the developer is going to process the title. Miscellaneous expense varies based on selling price as it includes processing of documents like the transfer of title, documentary stamps, real property tax and others.
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- During the reservation of property you will be provided with an official computation. It should be discussed upon signing the reservation agreement and payment scheme must be discussed in detail and any difference on the price set up could be a hidden charge.
- Another case is when the buyer availed a property and made a spot cash payment for faster processing of documents and for faster turnover then later found out they need to pay move-in fees before the property is turned over. If during project briefing or before making reservation this concern was not raised or disclosed, then it could be hidden charges.
- Another hidden charge instance: If you availed a property and you paid the full price then you find out that you are going to process the transfer of title and other documents - if this concern was not discussed before or during reservation then could be a hidden charge.
The miscellaneous or transfer of title might be more than 10% of the selling prices and is a big amount of money that sometimes equivalent to a down payment. So, before making reservation buyers must be detailed on this price setup.
To give you some idea here are some of the price setup available in buying properties:
- Property Price = Selling Price + Miscellaneous
- Property Price = Selling Price (excludes of Miscellaneous but still payable to developer - in separate payment)
- Property Price = Selling Price (excludes of Miscellaneous still payable plus Move-in Fees during turnover)
- Property Price = Selling Price (excludes of Miscellaneous and Move-in Fees - the buyers will process the transfer of title plus to pay the Move in Fees during turnover)
Any of the above price setup is not a problem; the price setup is a marketing strategy of developers that generate different reactions from buyers and may be beneficial for developers to out-stand competition because a property price without miscellaneous expense looks affordable. A hidden charge takes place if there is future additional payment that have not been properly disclosed, verbal or written, that may influence buyer’s decision to avail.
I just want to make it clear, whatever price setup is okay because an expense is an expense, only undisclosed additional payments makes a hidden charge.
When is the Seller or Agent accountable for Hidden Charges?
The seller committed non-disclosure of hidden charges if before or during reservation he purposely or intentionally hid future additional payments like miscellaneous or move in fees to persuade buyers to make the purchase.
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The buyer should never base on a sample computation especially those found on the internet because those were made for example purposes only to give buyers an idea, thus, it contains few details. With so many price setups above, it is really hard to tell how they arrived at the result of the sample computation. Property buyers should have due diligence by being aware, should make a research and clarify the details to developers main office before making reservations.
Better to avail with developer a property with complete package that includes all processing of transfer and with no move-in fees.
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