FAQ on Condominiums - Part 1 of 2

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

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What is the law that governs Condominium Development?

§ Republic Act 4626 and House Bill 970 Amendment.


What are the stages in putting up condominium?

§ Planning stage

§ Development stage

§ Condominium management stage


What are the things to do during planning stage?

§ Choosing a suitable location, normally in high-population density areas

§ Determining the following: USAGE TYPE- residential, commercial, office, hotel; Budget- high or low; DESIGN - high rise, townhouse, twin tower; FUNDING - bank financing or direct investment or joint; CONSTRUCTION FEATURES- number of floors, units/floors, basement levels, facilities and services, land area; ARCHITECTURAL DESIGN - choice of architect

§ Selection of constructor or builder

§ Consolidation of the master plan

§ Cost estimates- labor, material, miscellaneous

§ Bid solicitations and adjudication


What are the things to do during development stage?

§ Application/ registration for building permit

§ Application with DENR for Environmental Compliance Certificate

§ Application for development permit with HLURB


Where to get the application building permit?

§ Application must be done with city or municipality where the project will be constructed as in ordinary building construction. Application is coursed through the city/municipal engineer, the fire department, the planning and zoning authority, and finally, to the city/municipality mayor.


What is an Environmental Compliance Certificate?

§ This is the Environmental Compliance Certificate attesting that the land on which the project is to be constructed is not within the prohibited zones where the environment is projected; or so that the project will observe rules set to promote environmental protection.


What are the requirements in getting development permit from HLURB?

§ Description of land (with survey plan)

§ Description of building, number of stories, units and their accessories (with diagram of floor plans)

§ Description of the common areas and facilities

§ Description of the interest to be acquired by unit-buyers and those of the common areas

§ Declaration of restrictions or purposes for which the condominium project is intended or restricted as to usage

§ Certification of the registration if such is undertaken for him by representative


What are the things to do during the condominium management stage?

§ Declaration of Restrictions shall provide for the management body i.e. condominium corporation if units may be offered for sale to foreigners or association of condo owners, or board of governors elected or managements agent likewise elected or by the board of directors or if corporation, whether stock/ non-stock

§ It shall also provide for voting majorities, quorums, meeting dates, and other rules to govern such body

§ Power to enforce declaration of restrictions

§ Insurance and bonding of members

§ Provide for maintenance, utility, gardening, etc.

§ Purchase of equipments, supplies, etc for common areas

§ Payment of taxes, assessments and discharge encumbrances

§ Reconstruction and repairs of common areas

§ Delegation of its powers

§ For allowed entry into any unit for maintenance, etc

§ For power of attorney in its favor from members

§ To amend restrictions by a majority vote of members

§ For reasonable assessments to meet expenditures

§ For partition, dissolution and/or sale of condominium as authorized by law of the courts

§ Others as authorized by secondary purposes of articles and by-law.


What are the other authorized by secondary purposes of articles and by-law that needs to be done during condominium management stage?

§ Buy and sell independent units in exercise of rights of first refusal

§ Otherwise lease such units for the corporation’s benefit

§ Assume mortgage on independent units

§ Establish service cooperatives among the unit-owners

§ Other undertaking for benefit of the corporation and its members (shareholders or stockholders)


What are the incidents of a condominium grant?

§ The boundary of the unit granted are the interior surfaces of the perimeter walls, floors, ceilings, windows and doors thereof

§ An exclusive casement (right to enjoy) for the use of the air space encompassed by the boundaries of the unit

§ The common areas are held in common by the holders of the units, in equal share one for each unit

§ A non-exclusive casement for ingress, egress, and support through the common areas in apartment to each unit and the common areas are subject to such casement

§ Exclusive right to renovate, remodel, redecorate or refinish the inner surfaces of the unit (walls, ceiling, floors, window and doors bounding the units), provided value is not impaired

§ Exclusive right to mortgage, pledge or encumber his unit and to have the same appraised independently of the other units of the condominium (subject to restriction in the Declaration of Restriction)

§ Absolute right to sell dispose of the condominium unit (subject to the right of first refusal) (Sec. 6, RA 4726)
What is the right of first refusal?

§ A requirement in the master deed or declaration of restriction that the property be first offered to the condominium corporation or its management body within a reasonable period of time before the same is offered to outside parties


What is the main difference between master deed and declaration of restrictions?

§ In a general sense, the Master Deed or Enabling Act states what acts the unit holders/owners can legally do. The Declaration of Restrictions specify the acts that cannot be legally done.
In what situations involuntary dissolution is applicable?

§ Three (3) years after damage or destruction, no rebuilding or repair has been made to a material part rendered unfit for use

§ More than ½ of project rendered untenantable- owners of more than 30% interest in the common areas are opposed to repair

§ Project in excess of 50 years, obsolete an uneconomical to repair- owners holding over 50% interest in common areas opposed to repair

§ Project is condemned or expropriated, no longer viable- owners of 70% interest in common areas are opposed to the continuation after condemnation or expropriation of a material part of project

§ That conditions for such partition are set forth in the Declaration of Restrictions duly registered (Sec. 8, RA 4726)
What is the effect of involuntary dissolution?

§ Common areas owner or held by the condominium corporation are transferred pre-indivise by way of liquidation an in proportion to their interests to the members or stockholders subject to the superior rights of creditors. Such transfer is deemed all liquidation and the condominium corporation is deemed to sell the entire project for the benefit of all the owners.


In what situations voluntary dissolution is applicable?

§ When the Master Deed is revoked upon registration of an instrument executed by the condominium corporation and consented to by all the registered holders of any lien or encumbrance on the land or building

§ When the condominium corporation is dissolved through an action for dissolution filed by the affirmative vote of all stockholders or members at the general meeting called for the purpose provided all the requirements of section 62 of the Corporation Law are compiled with. (Sec. 13 and 14, RA 4726)


What is the effect of voluntary dissolution?

§ Condominium Corporation is deemed to hold a power of attorney to sell all separate interests of stockholders/member; and

§ Full liquidation of the Corporation by sale of entire project, again subject to the right of the Corporation itself and individual creditors


When and where was the condominium housing started?

§ Condominium housing had its beginning in the 1920s in South America and in some parts of Europe, particularly in Spain, Italy, France and Great Britain because of critical space shortage and high construction cost.

§ In the US, condominium became a trend only in the early 1960s as a forerunner of the cooperatives. Cooperative housing evolved through the information of corporation with the shareholders entitled to occupied a unit. The cooperative however suffered from a crucial disadvantage in that the financial liability of a member who failed to pay his obligation became also the liability of the other members. Hence, the condominium supplanted the cooperative as a housing concept.

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