CONDOMINIUM CONCEPTS “COMMON AREAS”
Means the entire project excepting all units
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
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 panel’s 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
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
of 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 NON PAYMENT OF A UNIT OWNER OF HIS DUES
following reasons: Shall constitute a lien on the title of the
 It is the Master Deeds that gives condominium unit to be registered with the
birth to the condominium project Registry of Deed concerned
 the condominium corporation shall
not conflict with the Master The management body shall have the power to bid
Deed at the foreclosure sale
4) TERM OF CORPORATION Condominium Corporation
the life of the condo corporation is
COTERMINOUS with the duration of the Membership in the Condominium corporation,
condominium project whether stock or non-stock, shall not be
5) EFFECT OF VOLUNTARY DISSOLUTION transferable separately from the condominium
 The Corporation shall be deemed to hold a unit of which it is an appurtenance
power of attorney from all its
stockholders or members to sell their SUBDIVISION VS. CONDOMINIUM
separate interest in the project SUBDIVISION CONDOMINIUM
 Liquidation of the Corporation shall be
affected by the Sale of the Absolute Limited to the interior
entire project subject to the rights of the ownership over surface of the unit plus
corporation and individual condominium land and the unit share in the “common
creditors areas”
6) EFFECT OF INVOLUNTARY DISSOLUTION
o The common areas held by the Transfer Certificate Condominium Certificate of
corporation shall be transferred of Title (TCT Title (CCT
pro-indiviso and in proportion to their
Foreigners not Foreign ownership allowed
interest in the corporation to the members
allowed to own up to 40%
or stockholders thereof, subject to the
superior rights of the corporation Open space Common Area provision
creditors requirement under
o The transfer shall be deemed full PD1216
liquidation of the interest of the
members or stockholders in the FACTORS AFFECTING VALUES OF CONDOMINIUM
corporation PROJECT OR UNITS
Location: relative location to center of activity,
DISSOLUTION OF CONDOMINIUM CORPORATION relative location of the unit within the project
The condominium corporation may also be Classification: residential, commercial, industrial
dissolved by the AFFIRMATIVE VOTE of all the Type of Unit: regular, corner, single level, with
stock holders or members thereof at a general or loft
special meeting duly called for the purpose Size : floor area is ideal to its utility or HABU
DISPOSAL, SELL, EXCHANGE OF COMMON AREAS Layout: floor plan lay-out
Design: architectural, floor lay-out, building
The condominium corporation shall not during its features
existence, sell, exchange, lease or otherwise Depreciation: condition, physical wear and tear
dispose of the common area owned or held by it,
unless authorized by the AFFIRMATIVE VOTE of VALUATION METHODS:
SIMPLE MAJORITY of the registered owners Whether the appraiser’s 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 - Income Approach
Approach
- Cost 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%, Bank’s 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 Dev’t Cost P 14,640,000
Marketing/Selling Exp.: 5% Dev’t Costs P 18,300,000
Cost of Borrowed Money:
Dev’t Cost x LV x interest x period of dev.
366MM x 60% x 12% x 2 P 52,704,000
Developer’s 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:
SUBJECT DATA 1 DATA 2 DATA 3

PRICE ? P8,950,000 P7,580,000 P8,200,000

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
ADJUSTMENTS:
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%
ADJUSTED PRICE P_________ P10,740,00 P7,959,000 P8,610,000
_ 0

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 BUYER’S 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 BUYER’S
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