FAQ on Condominiums - Part 2 of 2

[ Basic Knowledge for Brokers ] This article contains answers to frequently asked questions about condominiums.

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How was the condominium concept started in the Philippines?

§ In the Philippines, the system of co-ownership as provided in the civil code (approved in June 18, 1949) was the closest concept to condominium before the latter became a definite development pattern.

§ Condominium here had its formal birth with the passage in June 18, 1966 by Congress of Republic Act No. 4627 entitled “An Act to Define Condominium.” This established the requirements for its creation and governs its incidence.

§ Initially, the construction of condominium was primarily to provide space for dwelling and/or office in urban centers where land cost was very high to enable those who could not afford to be located near their source of livelihood and children’s schooling.

§ Then, it found acceptance in Baguio City other summer retreats as an answer to the inconvenience of owning a house and lot which the owner uses only for about one week twice a year while being burdened with the year-round cost of maintenance and salary of caretaker.

§ Later, with the construction of luxurious high-rise condominium like the Avalon, Urdaneta, and Twin Towers, status symbol was attached to ownership of high-budget condominium units.


What is a Condominium?

§ Condominium is an interest in real property consisting of an absolute ownership in a unit or a residential, office or commercial building, and an individual interest in the land and other common areas of the project.
What is a Condominium Unit?

§ Condominium unit is a part of the condominium project intended for a specific type of independent use of ownership, which is the space bounded by the interior surface of the perimeter walls, floor, ceiling and exterior windows and doors.


What is a Condominium Project?

§ This refers to the site, the saleable units and the common areas.
What is condominium ownership compare to the traditional concept of real estate ownership?

§ In terms of evidence of ownership. The traditional concept is evidenced by a Transfer Certificate of Title (TCT), while condominium ownership is evidenced by a Condominium Certificate of Title (CCT).

§ In terms of property rights. The interest of an owner in the traditional concept generally consists of absolute ownership covering the land and the outer and inner structures of the building or the entire building.

§ In terms of capacity to buy. In the traditional concept, ownership is limited to Filipino individuals and corporations with at least sixty percent (60%) of the capital of which is owned by Filipinos. However, ownership by aliens not to exceed forty percent (40%) of the total units in a condominium project is legally allowed through the formation of a condominium corporation.


In condominium, what are the two types of property rights?

§ Absolute ownership of the air space in a particular unit bounded by the interior surfaces of the door, floor, walls, ceiling and windows

§ Co-ownership of the land and common areas such as the weight bearing columns, beams, floors and utilities and facilities
What is the significance of a Condominium Title?

§ The transfer certificate of title covering the land is in the name of the condominium corporation of which a unit owner is a member.

§ The condominium title identifies the unit as part of the project annotated on the transfer certificate of title covering the land.


What are the types of condominium projects?

§ As to cost: low-budget or high-budget

§ As to construction: townhouses and high-rise condominium buildings

§ As to usage: residential, office or commercial


What are the advantages of a condominium unit owner?

§ Enhances affordability by fractionalizing cost of land and building

§ Facilities and services cost less to build and maintain

§ Makes possible home ownership near commercial and industrial areas

§ Economy in land space: families holding title to a contiguous land of say 40.50 or 60sqm may obtain adequate housing by constructing a condominium project thereon.

§ Retention of the psychological and economic concept of a family house by exclusive ownership of a unit while holding co-ownership rights on the undivided common areas and facilities

§ Promotes closer neighbor ties because of homogeneity of economic level of owners

§ Round-the-clock maximum security service
What is the common buyer objection in a condominium?

§ Buyers prefer the additional features of the traditional single detached housing such as privacy in a detached home or availability of a large yard.


How to overcome the buyer objection?

§ Condominium units and townhouses are not mere apartment-type or row houses in ribbon-type clusters along the street. The application of varying building types for each cluster and the use different facades have eliminated monotonous architectural repetition and enhanced visual appeal and aesthetic influence.

§ With gasoline cost and traffic snarls involving more expensive and man-hour wastage, the convenient proximity of condominium sites to one’s place of business or office is a distinct advantage.


What are the profiles of condominium buyers?

For low-budget

§ Apartment dwellers whose monthly rental is more than P5,000.00

§ Businessmen from the province with children schooling in Metro Manila

§ Businessmen, professionals and senior executives who wish to provide housing benefits to a “special friend.”

For high-budget

§ Professionals and entrepreneurs who have acquired social and financial status

§ Businessmen from the provinces who, in their periodic stay in Metro Manila, are staying in plush hotels

§ Multi-national companies who desire housing for their top executives

§ Foreign embassies

In General

§ Busy professional and executives, as well as the elderly who are constrained by the “hustle and bustle” of city living prefer homeownership which is free from the burdensome exterior maintenance chores associated with detached houses

§ People who buy for investment or for rental income

§ Foreigners desiring residential ownership but who are disqualified under the traditional concept of ownership

§ Parents whose house has become too big for them because of the marriage of their children who have established own separate residences


What are the rights of condominium unit buyers?

§ Exclusive ownership of the dwelling/ office/ commercial section bounded by the interior surfaces of the perimeter walls, floors, ceilings and exterior windows and doors

§ Co-ownership of the land and common areas of the project

§ Non-exclusive easement, enjoyment of ingress to and egress from the roads, streets, alleys, utilities, facilities and amenities

§ Right to sell, transfer, lease or otherwise dispose of the unit subject to the right of first refusal by the condominium corporation

§ Right to mortgage, pledge or encumber the unit and to have the same appraised independently of the other units

§ Voting right in the election of directors and participation in other affairs of the corporation


What are the obligations of unit buyers?

§ To pay assessment and other fees as may be prescribed by the condominium corporation

§ To comply with use restriction

§ To pay the real estate tax on the unit

§ To pay the insurance for the unit


What are the purpose of assessment and fees?

§ To promote the recreation, health, safety and welfare of the residents (janitor, security, garbage collection)

§ To pay for water and electric bill on the common areas

§ To pay for the realty tax and insurance on the common areas

§ For improvement and maintenance of common areas

§ To fund property management services expenses such as salaries, supplies, etc.

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