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Looking for a condominium to purchase will take
some time and effort. With the many condo projects existing,
being built or at the pre-selling stages, the potential buyer
has to be informed of his many options. The potential buyer has
many sources of preliminary information for his condo selection
process, such as billboards, newspaper and magazine ads and
write ups, flyers and brochures, the internet, family, friends,
associates, brokers and agents. The most important thing for the
pontential buyer is to make up his mind with regard to the
location and his budget. But due to budget limitations, many
buyers are forced to look elsewhere other than their first
choice of preferred location. This is where the help of brokers
and agents are needed. Care should be
taken when buying a condominium in the pre-development stages.
For some projects, it is really difficult to judge the outcome
since some projects are being pre-sold for years before the
building is to be completed. Check all the necessary documents
and check the site to be sure where your unit will more or less
be. By going to the site, you can see the surroundings, which
you may have overlooked or assumed otherwise. In many cases, the
brochure will show the area is near the mall, commercial
centers, etc. The brochure may not have indicated the kind of
traffic in the area, the narrow roads, the atmosphere
(industrial, residential, mix, rural) the kind of community, or
squatters nearby etc.
BUYING CHECKLIST
|
Documents
|
Check if the developer
has obtained all the necessary documents from the
concerned agencies. Although License to Sell is one of
the major requirements, it is not a guarantee that the
project will be finished. Check the other requirements
such as the Contract to Sell which one may find not to
ones liking in the contract. the CCT, latest tax
declaration and tax receipt for the condo unit. Other
documents such as Master Deed and Declaration of
Restrictions and House Rules are only showed to buyers
who have already reserved for a unit |
| Track Record of the Developer
|
Check what the past developments
were, if the project was done with the customer in mind,
if the developer or chief officer has scandalous legal
cases before. |
| Density of the
Building/Project |
The unit may be affordable but
problems may arise later on as there may be too many
residents in the building or project that it may just
look like a tenement five years from the present. |
| Parking Slot and Utilities
|
A number of parking slots are too
expensive. In majority of cases, the parking slot is not
included in the total selling or contract price of the
unit. some units are not allocated a slot or limited
only up to one or two slots depending on the unit
purchased. Some projects don't have enough water or
their phone land line will take a few years to be
operational. |
| Payment Terms
|
The payment terms may look easy but
just ask what the consequences are if one is not able to
pay up on time. There are developers who are very strict
when it comes to paying on time. |
| Miscelleneous / Transfer Fees
|
The miscellaneous (electric meter,
notarial fees, insurance, etc.) and transfer fees are
not included in the total contract price. These fees are
paid only when the buyer has fully paid for the unit or
will obtain a bank loan. |
| Association Dues
|
The dues are quite high for some
projects. The buyer will have to start to pay the dues
upon the turn over of the unit to him or even before
that, whether he will live in the unit or not. The start
of the payment is written in the Contract to Sell. In
some cases, there is a one-time membership fee to be
paid plus two months advance for the dues. |
After the initial information and
explanations, the potential buyer has to go to the site itself
to get the feel of the atmosphere. Example, buying a penthouse
unit in a twenty-storey building in one area may have a good
view for the next five years after the completion of the
building. But may be in eight years time, a taller building will
be built opposite or beside it, blocking the view, which defeats
one of the prime considerations why one chose the topmost floor
- the view, the prestige and the privacy of living on the
highest floor.
ADVANTAGES
As an end-user buyer, buying a
condominium is a great way to buy a place in a very urbanized
area. There are many advantages in buying and living in a
condominium compared to buying a house and lot. The following
advantages are:
Location.
Many condominium unit are built in an area that is convenient,
and practical. Many projects are accessible to public or mass
transportation, near commercial areas, schools and offices.
Travel time is minimized and the buyers will have more time to
do other things. At other times, the location enables the buyer
to have a breathtaking view of the sea, golf course, the city or
mountains from afar. Unlike living in a house and lot
subdivision, the view is many times limited, unless it is a
secondary or vacation house with good view of the sea or
mountains, although there are exceptions.
Amenities.
The many amenities in many mid range residential condo projects
is almost complete that the buyers don't have to go to other
places to swim, work out, relax and entertain their guests. The
people maintaining the building also will handle the maintenance
of the gardens, cleaning of the common areas and parking lots,
removal of trash, 24-hour reception and security, and screening
of people wishing to visit the occupant. Many condo units when
finished are ready to live in, with a few minor touches to do. A
building administrator for a mid cost condominium related that
there are buyers who have their own houses and apartment units,
but they prefer to live in their mid cost condo units, because
of the conveniences and security for the area. One occupant
related that he could just instruct the guard to call the taxi
for him anytime of the day or night. And the maintenance is much
cheaper than maintaining a house. Unlike living in a house, one
does not have to bother opening and closing the front gate for
the arrival or departure of the car, either by oneself of the
household help.
Price.
The price of condos is debatable. Usually it is very high for
most people. Even for the ordinary OFWs, the condominium
projects need to be accredited by the PAG-IBIG for them to be
interested in the units. The OFWs need to avail themselves of a
bigger loan with longer payment terms and lower interest from
the government. But given the convenience of the location and
the amenities, the price is generally justifiable.
Cost
of Maintenance. The monthly
association dues although high in some, condo units, are still
generally less than maintaining a house and lot. There is no
need to shoulder the cost of building and maintaining a gate and
a perimeter wall on one's own. When the condo unit occupant
wants to have some repairs and maintenance of his unit, he does
not have to look for a repairman. All he has to do is call the
in charge of the maintenance and the repairman will be there in
a few minutes. Imagine the cost of renovating the whole house
after 5 years to compare it with renovation of only the interior
of a condo unit as the exterior is already covered with the
monthly association dues
DISADVANTAGES
It is impossible to find a
perfect residential condominium or house; there will be always
pros and cons in buying, and living in one. Generally, you get
what yoy pay for, that is, the more expensive the unit, the
better the location, the features, amenities, unit size, parking
slots, etc. But the majority of condo buyers will not be able to
afford the high-end or luxury units, so a number of them will
encounter some problems. The disadvantages and usual problems
are the following:
Size.
With the exception of large luxury residential condominiums, the
size of the unit itself is a problem for most buyers, since it
is usually quite small. The bare unit as envisioned or model
unit as seen by many buyers looks large enough to live int, that
is before they start to place more furniture and things in the
room and the dining area. The bathroom is also sometimes
incredibly small where in some units, the shower head is just
above the toilet. There are townhouse condo units that are worth
many millions of pesos, but to save space built the stairs for
the units so steep that's prone to accident. Those who are used
to living in a large house and lot will have to adjust their
expectations and excitement in living in a condo. For one, many
of their accummulated things over the years will not fit into
their condo units. They have to throw, give away, sell or just
leave many of their things in their parents' house. Usually the
room is good only for a bed and a small closet; there is no
closet for ones books, books, sporting equipment, etc. The small
kitchen area lacks space for the numerous kitchenware and
appliances and dining wares. The drying area for the clothes, if
there is any is not sufficient for bed sheets, bed covers, or
the numerous clothes of the occupants. Sometimes developers
would include some areas in the quotation such as the hallway in
front of the unit, drying area at the roof and the parking area
as part of the floor area being marketed. So, prospective condo
buyers should ask if the floor area is really the unit itself of
if other areas are included. Given the financial realities, most
buyers would adjust their expectations and lifestyles based on
the size of their unit. Most of them will settle for a smaller
and more practical furniture, limit the number of guests to
their place, etc. On the other hand, other unit owners maxmize
the space of their units by having many things, people and pets
their unit can handle. It is common to have a middle class buyer
with his wife and two kids plus the maid and pets trying to live
in a two-bedroom 55 square meter housing or condo unit. With
that number of occupants in the unit, the place will almost
always get cramped especially if the children get bigger. This
is especially common for low cost or affordable condos where
some families cramped in an 18 to 25 square meter unit. if one
of the family members get sick with a contagious disease, the
rest will easily get it. Most of the time, there is also lack of
privacy, especially if the couple engage in some heated
arguments. If one is looking for some space and privacy, one has
to buy at least a 130 square meter unit. Some of the amenities
for projects for small compounds also have small amenities. The
size of the swimming pool is not that big, the size of the
function room is small, the gym is tiny, etc. Even if the
condominium has many amenities, it is not possible for the
occupant or his family to make use of every single amenity in
the building regularly. The occupant usually can only use one or
two of the amenities regularly.
Restrictions.
In terms of exterior design, the buyer cannot just renovate or
repaint as he pleases, since there has to be some uniformity for
all the units which is specified in the house rules of deed of
restrictions. For example, one cannot just repaint the front
door brown if the colors of the front doors in the condominium
are white. Some condominiums would only allow certain color
shades for the curtains and venetian blinds of the unit
occupants. This is to ensure that the unit looks clean from the
outside. The administrator and security guards will most often
give up on reiterating the house rules to some hardheaded
residents, so they begin to tolerate minor infractions of the
residents. But if the developer and association have a
reputation and imeage to protect, even minor infractions are not
tolerated. Most, if not all of the condominium associations
would strictly not allow anything that will affect the
structural design and integrity of the building. These include
the breaking down of conrete walls to create more space, moving
the bath tub to another location, changing the size of the
windows, moving or removing of sprinklers and smore detectors,
etc. Some condos will not allow buyers in the upper floors to
change the wooden floor parquet to floor tiles to granite or any
other heavy flooring due to the weight it will add to the
computed bearing load of the floor. Even if there are open
spaces and many amenities in large condominium projects, gone
are the days when children can pick up fruits from trees of
their own or their neighbor's backyards. There will be no more
climbing and playing around trees anymore in condominium
projects. Adults who love outdoor gardening can no longer engage
in their past time since majority of condos do not have enough
space for real private gardening. Pets will have to be limited
to ones that fit in small cages, aquariums or containers.
Parking.
Without doubt, this is the main problem for most condo buyers.
Different cities have different parking requirements for condo
development. In Mandaluyong city, it is one parking slot for
every 75 square meters of floor space. In Quezon City, it is one
parking slot for every unit in the building. Many, if not most
condominium projects do not have enough parking spaces for all
the unit buyers. This is due to the high cost of building
parking spaces in a very limited are. The cost of building a
multi level parking, whether it is in the basement or not is
costly for the developers. so, a number of developers just apply
the minimum standard of one parking per 100 square meters. That
translates to roughly about one parking for every four 25-square
meter studio units. For small areas where a residential
condominium tower is going to be built, most developers would
just allocate parking spaces on the assumption that most studio
and even one-bedroom unit buyers will not need a parking space
since the projects are accessible to most public transport. As a
result, there are times when parking slots are fully sold and
additional parking slots cannot be made anymore. Even some
high-end projects sell their parking slots on a first-come
first-serve basis. But there are times when the project is
located in a big compound; the developers would just wait and
see if there is a demand for parking slots; if there is no
demand, they will not build anymore that what is needed.
Sometimes some developers build a parking building in one
building site if the need arises. The lack of parking slots
gives the buyer no sense of long-term security since he will not
know where to park his future car/s. For many studio unit
buyers, a parking slot is not allocated. If it is not possible
to purchase one slot, the buyer will just have to rent one. For
the majority of the projects, the price of the parking slot is
separate from the total contract price. The average price of
parking slot in Cebu for example is about P450,000 per slot. The
parking slots are sold either with their own separate
Condominium Certificate of Title (CCT) or a Certificate of
Management. The latter if used by the developer so that real
estate tax payments can be reduced, especially before the lots
are sold. But since the Certificate of Management is not honored
by banks to be mortgaged, most parking slots in various projects
are assigned with a CCT. Just like condo units, the prices or
parking spaces also vary in terms of location. A parking space
at basement level four would generally be cheaper than a parking
space located at the ground floor. Likewise, an open parking
space is cheaper than a covered one. Buyers of condo units in
the pre selling stages should be way of the size of their
parking spaces. Although model units are nice to look at, the
parking slot may just be too narrow or too short for their cars.
Even a 12.5 square meter minimum size requirement could be too
short or a bit narrow for large vehicles to maneuver in and out.
With the problems in parking, many buyers rush to get the best
parking slots when a new condominium is at the pre-selling
stages leaving others with no so good parking slot or type of
parking slot, unless the parking slots have already been
determined by the developer for each particular unit. The lack
of parking slots is also a problem for the guests. In many
condominium projects, the parking slots allocated are not enough
given the many occupants in the project. If the slots are
already filled, guests will have to park elsewhere usually along
the private road outside the building if they are lucky enough
to find a space. Sometimes the parking of the guests outside the
condo building causes some heavy traffic jams.
Association
Dues. On top of the utility
expenses, the occupant must also pay for the monthly dues. The
dues are for security, upkeep repairs and maintenance of the
building, the amenities, landscaping, etc. The total monthly
payment of condominium dues of a single unit at mid cost
condominium for one year is usually more than a yearly
association dues of a house and lot in most decent subdivisions.
The dues are computed by the multiplyng the number of square
meters of the unit by the rate of dues per square meter. In Cebu
City for example the rate of condo dues vary from P40.00 to
P50.00 per square meter. The rate is determined by the developer
first, then by the condominium association after the turn over.
The dues are on the maintenance, security , taxes and other
necessary expenses.
Advantages of
condominium
- Enhance affordability by fractionalizing
cost of land & building
- Facilities utilities, amenities and
services will cost less to build and maintain
- Economy in land space. Families holding
title contiguous lands of say 40 or 50 square meters by
obtaining adequate housing by consolidating their lots and
constructing a condominium project
- Enhances marketability because
foreigners can buy
- Multiples saleable or rentable floor
areas by as many storeys put up
- Eliminates the routinary chores of daily
maintenance, security, and garbage collection associated
with single-detached dwellings
Operative act to
condomize
An owner or developer may convert a
property into a condominium project by executing a legal
document called Master Deed and registering the same with the
Register of Deeds
Documents in condominium
development and marketing
- Mater Deed with Deed of Restrictions
- Articles of Incorporation and By-Laws
of condominium corporation
- Reservation Agreement, Contract to
Sell, Deed of Absolute Sale, Buyer’s Acceptance of Unit
Distinctions between Condominium and
House & lot in the concept of ownership
- Evidence of ownership
– In house and lot, evidenced by original or transfer
certificate of title while in condominium, ownership is
evidenced by condominium certificate of title
- Capacity to buy
– In house and lot, or lot only or townhouse, alien
acquisition is not allowed. In the condominium concept,
alien ownership not to exceed 40% interest in the
project is legally allowed
- Extent of ownership
– the interest of the owner in house and lot consists of
absolute ownership of the inner and outer structures of
the building (the entire building). In the condominium
concept, the unit owner is the absolute owner of the
space within the interior surface of his unit, but is
only a co-owner of the exterior or façade of the unit
Contents of Master Deed
- Technical description of the land.
- Description of the building (number
of storeys) and condominium units.
- Description of the common areas and
facilities.
- Interests acquired by unit buyers.
- Purposes for which the building and
units are to be used.
- Certification by the landowner, if he
is other than the party executing the master deed, that
he is agreeable to the registration of the master deed
on his title.
- Certification by the landowner, if he
is other than the party executing the master deed, that
he is agreeable to the registration of the master deed
on his title.
- Annexes: land survey plan and
building diagrammatic floor plan
Contents of deed of restriction
General steps in
condomizing
- Preparation of building plans
- Execution and registration of master
deed
- Organization of a non-stock,
non-profit condominium corporation
- Execution of a deed of conveyance
transferring land title to condominium corporation.
- Submission of building plans to
assessor’s office to obtain individual tax declarations
for the condominium units and common areas.
- Application for registration and
license to sell with the HLURB
Amendment of revocation of master
deed
- The master deed may be amended or revoked
upon registration with the register of deeds of an
instrument executed by a simple majority of the registered
owners
- For condominium projects exclusively for
either residential or commercial use, simple majority shall
be based on a per unit of ownership.
- In case of mixed use condominium
projects, simple majority shall be on the floor area of
ownership basis
- Any amendment or revocation already
decided by a majority shall be on a floor area of ownership
basis
Disposition of common areas
- The condominium corporation shall
not, during its existence, sell, exchange, lesse or
otherwise dispose of the common areas owned or held by
it in the condominium project unless authorized by the
affirmative vote of a simple majority of the registered
owners. Prior notification to all registered owners is
required.
- The condominium corporation may
expand or integrate the project with another upon the
affirmative vote of a simple majority of the registered
owners, subject only to final approval of the HLURB.
Rights of unit owner:
- Absolute ownership of his unit
- Co-ownership of land and common areas
- Exclusive easement of the space of
his unit
- Non-exclusive easement to common
areas for ingress or egress
- Right to sell, lease, or mortgage his
unit
- Right to repair, paint, decorate the
interior surface of his unit
- Right to participate and vote in
condominium corporation meetings
Obligations of condominium unit owner
- Pay the realty tax on his unit.
- Share the realty tax on the land and
common areas.
- Pay the insurance on his unit.
- Share the insurance on the common
areas.
- Comply with use restrictions.
- Pay dues and assessments.
- Give other unit owners the priority
right to buy his unit (right of first refusal). If so
required by the master deed.
Dues and Assessments
The Deed of Restriction usually provides for
two kinds of assessments:
- Regular assessment – a monthly obligation
to fund ordinary project expenses, such as security, garbage
collection, repair and maintenance of the common areas,
electricity and water bills on the common areas and realty
tax and insurance on the common areas.
- Special assessment – this is imposed as
the need arises, such as the need for replacement of the
generator.
Consequences of non-payment of
assessment
- The management body may constitute a lien
on the delinquent condominium unit by registering with the
Register of Deeds a notice of assessment and delinquency.
- Such lien may be enforced in the same
manner provided by law for the judicial or extra-judicial
foreclosure of mortgage.
- Unless otherwise provided in the
declaration of restrictions, the condominium corporation may
bid at the foreclosure sale.
- The unit owner affected shall have the
same right of redemption as in cases of judicial or
extra-judicial foreclosure of mortgage.
Extent of interest in common areas
In the absence of any provision in the master
deed, all unit owners shall have equal share in the common
areas. If the intent is to pro-rate the unit owners’ interest on
the common areas, such fact must be expressly provided in the
master deed. The interest based on floor area of ownership is
arrived at by dividing the unit area by the total floor area of
all condominium units.
Condominium Corporation
Optional and Mandatory Requirement. The
condominium corporation is optional if no unit will be sold in
foreigners. However, the corporation is mandatory if some units,
not exceeding forty percent interest in the project, will
be sold to foreigners, in which case title to the land will be
transferred in the name of the condominium corporation and thus
comply with the constitutional mandate that corporations may
acquire real estate provided that at least sixty percent
of its capital or membership is Filipino
Principal Purposes:
a) To hold title to the land and b) To set as the management
body of the condominium project.
Conflict with Master Deed.
In case of conflict between the articles of incorporation of
the condominium corporation and the master deed of the
condominium project, the latter should always prevail
because:
- It is the matter deed which gives birth
in the condominium project. The project cannot exist without
a master deed, but it can exist without a condominium
corporation.
- The condominium law specifically provides
that the articles of incorporation and by-laws of the
condominium corporation shall not conflict with the master
deed.
Effects of Voluntary Dissolution
Unless otherwise provided in the Deed of
Restriction, the corporation shall be deemed to hold a power
of attorney from all the members to sell their separate
interest in the project. Liquidation of the corporation
shall be effected by the sale of the entire project, subject
to the rights of individual creditors
Effects of involuntary Dissolution
The common areas held by the corporation shall be
transferred to the members of the corporation pro-indiviso and
in proportion to their respective interest.
The transfer shall be deemed full liquidation of the interest of
the members in the corporation. |
