The Securities and Exchange Commission (SEC) has introduced regulations on the sale of condominium, hotel, resort, dormitory and other real estate assets with rental pool arrangements, citing the need to protect investors’ interest amid the rising trend of property developers pitching investment returns. This month, the corporate watchdog released Memorandum Circular 12 series of 2024 detailing the guidelines for rental pool deals. READ: Buying a residential condominium unit on installment It outlines the rules for the issuance of investment contracts, certificates of participation, profit-sharing agreements and other forms of securities issued by real estate developers in relation to rental pool arrangements.
In rental pool arrangements, buyers acquire units from real estate projects that will be collectively managed by the developer or a third-party operator. These pooled units will then be rented out and the property buyers will have a share in the rental income. This kind of investment contract is deemed as a security based on the definition set by the Securities Regulation Code.
As such, these certificates should be registered with the SEC before the developers could offer them to the public, the regulator said. This means that on top of the current requirements to get a license set by the Housing and Land Use Regulatory Board, as well as the permitting process at the local government unit, developers intending to sell rental pool assets must now seek clearance from th.