You are on page 1of 7

CONDOMINIUM CONCEPTS

Condominium Housing was basically born


out of the condition of limited land space.
In the Philippines, the concept of
condominiums was formally recognized
with the passage by congress on June 18,
1966 of the Republic Act No. 4726
entitled An Act to Define Condominium,
Establish Requirements for Its Creation,
and Govern Its Incidence
CONDOMINIUM
Is defined as an interest in a real property
consisting of a separate interest in a unit in
a residential, industrial or commercial
building, and an undivided interest in
common, directly or indirectly in the land
on which it is erected and in other areas of
the building.
Title to the common areas, including the
land, or the appurtenant interests in such
areas, maybe held by a corporation
specially formed for such purpose, in which
holders
of
separate
interest
shall
automatically be member or shareholders,
to the exclusion of the others,
in
proportion to the appurtenant interest of
their respective units in the common
areas.
UNIT
This is the SPACE encompassed by the
interior surface of the floor, ceilings, walls,
and exterior doors and windows, which is
susceptible of INDEPENDENT USE and
OWNERSHIP
A part of the condominium project
intended for any type of independent use
or ownership, including one or more rooms
or spaces located in one or more floors (or
part or parts of floors) in a building or
buildings and such accessories as maybe
appended thereto
PROJECT
It is the TOTALITY of the site (land),
condominium units and common areas

A vertical subdivision on a parcel of land


and a multi-storey structure erected
thereon

COMMON AREAS
Means the entire project excepting all units
separately granted, held or reserved.
Refers the weight bearing walls, columns
and beams, stairways, halls, elevators,
etc.. Including the electrical, water and
plumbing systems and amenities in a
condominium project
TYPES OF COMMON AREAS
GENERAL OR UNDIVIDED not
subject to the exclusive use of any
one or group of owners (swimming
pool, hallways, stairways, elevators,
etc)
LIMITED OR DIVIDED areas
allocated the EXCLUSIVE common
areas use of one or group of unit
owners
EXTENT OF INTEREST IN COMMON AREAS:
1) In the absence of any provision in the
Master Deed, all unit
owners shall have
EQUAL SHARE in the common areas,
2) The Master Deed may provide any of
the following alternatives:
2.1 Equal Sharing
2.2 Sharing Based on VALUE
2.3 Sharing Based on UNIT AREA in
relation to Total Area
COMMON AREA VS. CONDOMINIUM UNIT:
In Limson vs. Wack Wack condominium
Corporation (G.R. No. 188802, 14 February
2011), the Supreme Court held that an
electrical panel, which functions as utility
installation should not be considered as
part of the unit. Instead, it should be
deemed part of the common area since it
functions to serve interests common to the
dwellers. The electrical panels location
inside the unit notwithstanding, it is not
automatically considered as part of it.

TO DIVIDE REAL PROPERTY


Means to divide the ownership thereof or
other interest therein by conveying on or
more condominiums therein but less than
the whole thereof
MAJOR DOCUMENTS IN A CONDOMINIUM
PROJECT
1. CONDOMINIUM
CERTIFICATE
OF
TITLE (CCT) is the evidence of
ownership of the condominium unit
(compared to the Transfer Certificate
of Title for Land Ownership)
2. TAX DECLARATION reference for
tax assessment and tax due on
the condominium unit and
share in the common areas
3. CERTIFICATE OF MANAGEMENT a
document
issued
by
the
condominium corporation that
the conveyance is in accordance
with the Master Deed / Restrictions
4. MASTER DEED refers to the
Enabling
Act
of
any
condominium
project. This
enables the condominium to exist
and governs its existence
5. DEED OF RESTRICTIONS lays down
the provisions for
management
body,
insurance
coverage,
maintenance cost
and
assessment basis and audit
6. ARTICLES OF INCORPORATION
establishes
the
birth
and
guidelines of and BY-LAWS of
the condominium corporation
7. RULES
AND
REGULATIONS

determines what unit owners and


tenants can and cannot do
CONDOMINIUM
MASTER
DEED
AND
DECLARATION OF RESTRICTIONS
The Enabling or Master Deed maybe
amended or revoked upon registration of
an instrument executed by SIMPLE
MAJORITY of the registered owners of the
property

Simple Majority shall be on a per unit basis


if the project is exclusively for residential
or commercial;
In case of mix-use, simple majority shall on
a floor area of ownership basis.
Any amendment or revocation shall be
submitted to the HLURB and the
City/Municipal Engineer for approval before
it can be registered (As amended by R.A.
No. 7899, approved Feb. 23, 1995)

CONDOMINIUM
MASTER
DEED
AND
DECLARATION OF RESTRICTIONS
1) Description of the land or lot
2) Description of the building (no. of
storey, units)
3) Description of Common Areas and
Facilities
4) Description of Interest acquired by
the unit owners in the common areas
and land
5) Purposes for which the building and
units are to be used
6) Certification by Registered Owner of
the Property if he is other than those
executing the Master Deed, that he
consents to the registration of the
Deed
7) Deed of Restrictions
8) Annexes, land survey plan and
building diagrammatic or schematic
floor plans
THE DEED OF RESTRICTIONS indicate the
following:
1) Management Body
2) Provision for Insurance Coverage
3) Provision for the maintenance of
Common Areas and Facilities
4) Sharing of Realty Tax on Common
Areas
5) Manner of Amending Restrictions
6) Independent Audit
7) Assessment and dues
8) Project Partitioning and Dissolution of
the Condominium corporation

THE
NEED
FOR
A
CONDOMINIUM
CORPORATION
1) NECESSITY FOR CREATION
- The organization of a Condominium
Corporation is OPTIONAL if no unit
will be sold to Foreigners.
- The Corporation is MANDATORY if
some units, not to exceed 40%, will
be sold to foreigners. In such case,
title to the land shall be transferred
to the Corporation to comply with
the constitutional mandate that
corporations may acquire real
estate provided that least 60% of
the capital or membership is Filipino
2) PURPOSES OF CORPORATION
- to Hold Title to the Land, and Act as
the Management Body
3) CONFLICTS WITH MASTER DEED
- in case of conflict between the
provisions of the Articles of
Incorporation of the condominium
corporation and the Master Deed,
the latter shall prevail based on the
following reasons:
It is the Master Deeds that
gives
birth
to
the
condominium project
the condominium corporation
shall not conflict with the
Master Deed
4)
TERM OF CORPORATION
the life of the condo corporation is
COTERMINOUS with the duration of the
condominium project
5)
EFFECT OF VOLUNTARY DISSOLUTION
The Corporation shall be deemed to
hold a power of attorney from all
its stockholders or members to sell
their separate interest in the
project
Liquidation of the Corporation shall
be affected by the
Sale
of
the entire project subject to
the rights of the corporation and
individual condominium creditors
6)
EFFECT
OF
INVOLUNTARY
DISSOLUTION

o The common areas held by the


corporation shall be
transferred
pro-indiviso and in proportion to
their interest in the corporation to
the members or stockholders
thereof, subject to the superior
rights of the corporation creditors
o The transfer shall be deemed full
liquidation of the
interest
of
the members or stockholders in the
corporation
DISSOLUTION
OF
CONDOMINIUM
CORPORATION
The condominium corporation may also be
dissolved by the AFFIRMATIVE VOTE of all
the stock holders or members thereof at a
general or special meeting duly called for
the purpose DISPOSAL, SELL, EXCHANGE
OF COMMON AREAS
The condominium corporation shall not
during its existence, sell, exchange, lease
or otherwise dispose of the common area
owned or held by it, unless authorized by
the
AFFIRMATIVE
VOTE
of
SIMPLE
MAJORITY of the registered owners

NON PAYMENT OF A UNIT OWNER OF HIS


DUES
Shall constitute a lien on the title of the
condominium unit to be registered with the
Registry of Deed concerned
The management body shall have the
power to bid at the foreclosure sale
Condominium Corporation
Membership
in
the
Condominium
corporation, whether stock or non-stock,
shall not be transferable separately from
the condominium unit of which it is an
appurtenance
SUBDIVISION VS. CONDOMINIUM
SUBDIVISION

CONDOMINIUM

Absolute
ownership over
land and the
unit

Limited to the interior


surface of the unit
plus share in the
common areas

Transfer
Certificate
Title (TCT

Condominium
Certificate
of
(CCT

of

Title

Foreigners not
allowed to own

Foreign
ownership
allowed up to 40%

Open
space
requirement
under PD1216

Common
provision

Area

FACTORS
AFFECTING
VALUES
OF
CONDOMINIUM PROJECT OR UNITS
Location: relative location to center of
activity, relative location of the unit within
the project
Classification:
residential, commercial,
industrial

Type of Unit:
regular, corner, single
level, with loft
Size : floor area is ideal to its utility or
HABU
Layout: floor plan lay-out
Design: architectural, floor lay-out, building
features
Depreciation: condition, physical wear and
tear
VALUATION METHODS:
Whether the appraisers assignment of
values involves the valuation of a
condominium unit or several units, or the
entire condominium project, the three
approaches to value can be applied
- Market Data Approach / Sales
Comparison Approach
- Cost Approach
- Income Approach

VALUATION OF A CONDOMINIUM PROJECT:


Clark Corporation is building a Condominium project on a 1,000 sq.ms. vacant lot. Market
Value of Land at P50,000 per square meter, total floor area of the condo building is
estimated at 8,000 square meters, cost of building construction is P35,000 per square
meter, estimated building ME at P8,000 per square meter, swimming pool at P7,000,000;
SPA & gym at P5,000,000; Admin Cost at 4% of Development Cost; Marketing/Selling
Expenses at 5% of Development Cost; Project Development in 2-years; Interest Rate at
12%, Banks Loan Value at 60% of the Appraised Value or Project Cost, and Developers
Profit at 30%
Market survey of valuations of a residential condo units ranges from P80,000 to P100,000
per square meter.
Solution:
Land = 1,000 sq.ms. @P50,000
P 50,000,000
Bldg = 8,000 sq.ms. @P45,000
P 280,000,000
Bldg ME: 8,000 @P8,000
P 64,000,000
Swimming Pool
P
7,000,000
SPA & Gym
P
5,000,000
Therefore, DEVELOPMENT COST =
P 406,000,000
PLUS
Admin Cost: 4% of Devt Cost
P 14,640,000
Marketing/Selling Exp.: 5% Devt Costs
P 18,300,000
Cost of Borrowed Money:
Devt Cost x LV x interest x period of dev.
366MM x 60% x 12% x 2
P 52,704,000
Developers Profit: 30%
P 109,800,000

Therefore,

TOTAL COST = P 601,444,000

Therefore, if
Net Floor Area is 80% of Total Bldg. Area = 6,400 square meters
Then, the Average Selling Price is
601,444,000 / 6,400 sq.ms. = P 93,075.625
SAY @ P93,000 per square meter
Conclusion: The project is FEASIBLE
FOR SALES COMPARISON:
If the COMPARABLE IS SUPERIOR, you deduct (-)
If the COMPARABLE IS INFERIOR, you add (+)
VALUATION BY MARKET DATA OR SALES COMPARISON APPROACH:
SUBJEC
T

DATA 1

DATA 2

DATA 3

PRICE

P8,950,00
0

P7,580,0
00

P8,200,0
00

Size (sq.ms.)

120

140

128

134

Floor/Level

14

20

12

16

Finishes

GOOD

BETTER

GOOD

GOOD

Floor Lay-out

GOOD

BETTER

GOOD

BETTER

Ameneties

GOOD

GOOD

FAIR

FAIR

Size

-5%

-2%

-3%

Floor/Level

-5%

2%

-1%

Finishes

-5%

0%

0%

Floor Lay-out

-5%

0%

-2%

Ameneties

0%

5%

1%

TOTAL
ADJUSTMENTS

-20%

5%

5%

P10,740,0
00

P7,959,0
00

P8,610,0
00

ADJUSTMENTS:

ADJUSTED PRICE

P_______
___

VALUATION BY INCOME APPROACH:


What is the value of a condominium unit having a floor area of 130 sq.ms., rented at
P400/sq.m. on a yearly basis? Interest rate at 10%per annum.
Solution:
Floor Area = 130 sq.ms.; Rented at P 400/sq.m
Interest Rate @ 10% PA
Therefore: ANNUAL INCOME = P130 x 400 x 12

= P 624,000
Less Tax: 5% (P31,250)
= P 592,800
Using Direct Capitalization Method = P 592,800.00 x 10%
Therefore, VALUE OF UNIT = P 5,928,000.00
NOTES:
The law governing the protection of buyers who are buying subdivision lots/house
& lots, and condominium units is referred to as SUBDIVISION AND CONDOMINIUM
BUYERS PROTECTIVE DECREE (1976)
Any person directly engaged as principal in the business of selling, or exchanging
real estate whether on full time or part time basis is known as REAL ESTATE
DEALER
A written authorization to develop in a certain area based on an approved land
use plan or ordinance is referred to as LOCATIONAL CLEARANCE
A buyer who failed to pay the installments due for reasons other than the failure
of the owner or developer to develop the project shall be governed by REALTY
INSTALLMENT BUYERS PROTECTION ACT
The buyer may desist from making his monthly payment or amortization to the
developer for non-completion of the project on its completion date provided the
buyer GIVES NOTICE TO THE DEVELOPER
The entire parcel of a real property divided or to be divided in condominium
including structures thereon is known as CONDOMINIUM PROJECT
As owner of a condominium unit, the owner would be liable to pay real estate
taxes ON THE TAXES OF HIS UNIT
The space encompassed by the interior surface of the floor ceiling, walls, and
exterior doors and windows, which is susceptible of independent use and
ownership is known as CONDOMINIUM UNIT
A unit owner does not have the right as a condominium unit owner TO PAY FOR
SHARE IN INSURANCE OF THE CONDO PROJECT
In a mix-use condo project, amendment of the Master Deed shall be decided by
MAJORITY VOTE BASED ON PER UNIT FLOOR AREA
A Notice of Assessment shall considered as a lien on the condominium unit if it is
REGISTERED WITH THE REGISTER OF DEEDS
To register a sale of a condo unit, a CERTIFICATE OF MANAGEMENT must be
secured from the condo corporation
GENERAL COMMON AREA is a part of the condominium which are not subject to
the exclusive use of any of the owners
The law covering the ownership and rights of a unit owner is known as THE
CONDOMINIUM ACT
The areas allocated to the exclusive use of a condominium unit owner like parking
space is known as LIMITED COMMON AREA
A partition by sale may be made provided that damaged or destruction to the
project has rendered one-half or more of the units therein un-tenantable and that
condominium owners with common interest are opposed to repair is more than
30%
The condominium corporation maybe dissolved if the project has been in
existence in excess of 50 years, that it is obsolete and that members of the
corporation are opposed to the repair or restoration or remodeling or modernizing
of the project to the extent of more than 50% OF THE MEMBERS

A residential condominium corporation shall not during its existence, sell 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
REGISTERED OWNERS