Concept of Ownership of Philippine Condominium

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 facade of the unit

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
 
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
Management body
Provisions for insurance coverage
Maintenance of the common areas
Realty tax on the common areas
Use restrictions
Manner of amending
Independent audit
Dues and assessments

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