The foreclosure of properties due to unpaid dues is a common occurrence in the Philippines. In the context of housing, the Home Development Mutual Fund, more commonly known as the PAG-IBIG Fund, plays a significant role in providing affordable financing options to Filipino citizens. However, when borrowers default on their loan payments and association dues, the PAG-IBIG Fund may foreclose on the properties and offer them for sale to recover the outstanding debts. In such cases, a crucial question arises: is the buyer responsible for settling any unpaid arrears, particularly association dues, when purchasing a foreclosed property from the PAG-IBIG Fund? This article delves into the relevant legal provisions and explores the buyer’s responsibilities in this situation.

Legal Framework

The primary legal basis for PAG-IBIG Fund’s foreclosure and sale of properties can be found in Republic Act No. 9679, otherwise known as the “Home Development Mutual Fund Law of 2009.” This law governs the PAG-IBIG Fund’s operations and includes provisions related to foreclosure proceedings.

PAG-IBIG Foreclosure Process

When a borrower defaults on their PAG-IBIG loan payments, the Fund initiates foreclosure proceedings as a means to recover the outstanding debt. The foreclosure process typically involves several steps, including:

1. Demand Letter: The PAG-IBIG Fund issues a demand letter to the borrower, notifying them of the outstanding arrears and giving them an opportunity to settle the debt within a specified period.
2. Notice of Sheriff’s Sale: If the borrower fails to settle the debt during the grace period provided in the demand letter, the PAG-IBIG Fund may proceed to publish a Notice of Sheriff’s Sale, announcing the public auction of the foreclosed property.
3. Public Auction: The foreclosure sale takes place through a public auction where interested buyers can bid on the foreclosed properties.
4. Transfer of Ownership: After a successful bid at the auction, the winning bidder becomes the buyer of the foreclosed property, and the property’s ownership is transferred to them.

Buyer’s Responsibility for Unpaid Arrears: In the Philippines, the general rule is “caveat emptor” or “buyer beware,” which means buyers should exercise due diligence and be aware of all aspects of the property they intend to purchase.

However, concerning the responsibility for unpaid arrears, including association dues, there is a specific provision that protects the buyer, particularly in the context of homeowners’ associations.

Section 99(o) of the 2021 Revised Implementing Rules and Regulations of Republic Act No. 9904, also known as “The Magna Carta for Homeowners and Homeowners Associations,” addresses the issue of buyer responsibility for unpaid dues.

According to this provision, a buyer intending to purchase a property within a subdivision or village, or a subsequent homeowner, is not obligated to pay the dues and other charges left unpaid by the former homeowner or member, except when there is a written agreement between the former homeowner and the buyer or subsequent homeowner for this specific purpose.

This provision is intended to protect buyers from inheriting the outstanding financial liabilities of the previous property owner. However, it also emphasizes the importance of having a written agreement in place if the buyer willingly assumes responsibility for settling any unpaid dues or charges.

Due diligence is a must

When buying a foreclosed property from the PAG-IBIG Fund in the Philippines, the buyer is generally not responsible for any unpaid arrears, including association dues, left by the former homeowner or member. However, should the buyer wish to take on this responsibility, they must do so through a written agreement with the former homeowner.

It is essential to remember that legal provisions and policies may evolve over time, and thus, buyers should consult with legal experts or contact the PAG-IBIG Fund directly for the most up-to-date information regarding the specific procedures and responsibilities involved in purchasing foreclosed properties.