condominium ownership & concepts (9.1.13)

7/27/2019 Condominium Ownership & Concepts (9.1.13)

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By: Atty. Nelson G. Leyco

September 1, 2013


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Can a foreigner legally buy a

condominium unit?

If NO, why?

If YES, how?


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THE CONDOMINIUM ACT

(Republic Act No. 4726)

THE SUBDIVISION AND CONDOMINIUMBUYERS' PROTECTIVE DECREE

(Presidential Decree No. 957)

REALTY INSTALLMENT BUYER ACT alsoknown as THE MACEDA LAW

(Republic Act No. 6552)


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THE CONDOMINIUM ACT


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A condominium is an interest in real propertyconsisting of separate interest in a unit in aresidential, industrial or commercial building and anundivided interest in common, directly or indirectly,in the land on which it is located and in other

common areas of the building. A condominium mayinclude, in addition, a separate interest in otherportions of such real property. Title to the commonareas, including the land, or the appurtenantinterests in such areas, may be held by a corporationspecially formed for the purpose (hereinafter known

as the "condominium corporation") in which theholders of separate interest shall automatically bemembers or shareholders, to the exclusion of others,in proportion to the appurtenant interest of theirrespective units in the common areas. (Sec. 2, RA4726)


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It is a separate interest in a

unit or other portions of a

building together with a

common interest on its land

and other common areas.


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"Unit" means 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 morefloors (or part or parts of floors) in a building

or buildings and such accessories as may be

appended thereto.


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A 1997 SC Decision previously held thatparking slots do not form part of the unit,but instead, these form part of the commonareas. (See G.O.A.L. Inc. vs CA, G.R. No. 118822. July 28,1997)

However, subsequent decisions of the SCinvolved facts where parking spaces were

treated like units (e.g., covered by CCTs,excluded from the common areas and sold tocustomers). It would seem that the SC hasimpliedly recognized this practice as beingvalid.


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Each condominium owner shall have the exclusive right to paint,repaint, tile, wax, paper or otherwise refinish and decorate theinner surfaces of the walls, ceilings, floors, windows and doorsbounding his own unit.

Each condominium owner shall have the exclusive right tomortgage, pledge or encumber his condominium and to have thesame appraised independently of the other condominiums butany obligation incurred by such condominium owner is personalto him.

Each condominium owner has also the absolute right to sell ordispose his condominium unit unless the master deed contains arequirement that the property be first offered to thecondominium owners within a reasonable period of time beforethe same is offered to outside parties (also called the Right ofFirst Refusal).


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Each unit shall be separately assessed, for purposes ofcondominium dues and other tax purposes and the duesand/or tax on each such unit shall constitute a lien solelythereon.

An assessment upon any unit in accordance with thedeclaration of restrictions shall become a lien when themanagement body causes a notice of assessment to beregistered with the Register of Deeds.

In a case decided by the CA and affirmed by the SC inSalvacion vs. Chateau de Baie CondominiumCorporation, G.R. No. 178549, it was held that: R.A. No.4726 does not require a special authority from thecondominium owner before a condominium corporationcan initiate a foreclosure proceeding.


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SECTION 5 of The Condominium Act provides:

Any transfer or conveyance of a unit or an apartment, office orstore or other space therein, shall include the transfer orconveyance of the undivided interests in the common areasor, in a proper case, the membership or shareholdings in the

condominium corporation: Provided, however, That where thecommon areas in the condominium project are owned by theowners of separate units as co-owners thereof, nocondominium unit therein shall be conveyed or transferred topersons other than Filipino citizens, or corporations at leastsixty percent of the capital stock of which belong to Filipinocitizens, except in cases of hereditary succession. Where the

common areas in a condominium project are held by acorporation,no transfer or conveyance ofa unit shall be validif the concomitant transfer of the appurtenant membership orstockholding in the corporation will cause the alien interest insuch corporation to exceed the limits imposed by existing laws.


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WHEN THERE IS NO CONDO.CORP.

Any conveyance of a unit shall include theconveyance of the undivided interests in thecommon areas.

Where the common areas in thecondominium project are owned by theowners of separate units as co-ownersthereof, no condominium unit therein shallbe conveyed to persons other than Filipinocitizens, or Filipino corporations


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WHEN THERE IS A CONDO.CORP.

Where the common areas in a condominium projectare held by a corporation, no conveyance of a unit

shall be valid if the concomitant transfer membershipor stockholding in the corporation will cause the alieninterest in such corporation to exceed the limitsimposed by existing laws.

Membership in a condominium corporation is nottransferable separately from the condominium unit ofwhich it is an appurtenance. When a member ceasesto own a unit, he shall automatically cease to be amember of the condominium corporation.


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A transferee shall be entitled to the issuanceof an owner's copy of the CondominiumCertificate of Title (the CCT).

No conveyance, subsequent to the originalconveyance from the owner of the project,shall be registered unless accompanied by a

certificate of the management body of theproject that such conveyance is inaccordance with the provisions of thedeclaration of restrictions of such project.


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There shall be recorded in the Register of Deeds of the province or city inwhich the property lies and duly annotated in the correspondingcertificate of title of the land an enabling or master deed which shallcontain, among others, the following:

(a) Description of the land

(b) Description of the building stating the number of stories and basements,the number of units and their accessories

(c) Description of the common areas and facilities

(d) A statement of the exact nature of the interest acquired or to beacquired by the purchaser in the separate units and in the common areasof the condominium project. Where title to the common areas is to beheld by a condominium corporation, a statement to this effect shall beincluded

(e) Statement of the intended purpose of, and reasonable use or dispositionrestrictions for, the building and each of the units

The master deed may be amended or revoked upon registration of aninstrument executed by a simple majority of unit owners based per unit(if exclusive use) or per floor area (if mixed-use). Such instrument shallbe approved by HLURB and City/Municipal Engineer.


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The owner of a project shall, prior toconveyance of any unit, register adeclaration of restrictions which shall bindall units and annotated on the certificate of

title covering the land.

Vote of not less than a majority is requiredfor amending the declaration of restrictions.

The Master Deed and the Declaration ofRestrictions is usually contained in a singleinstrument.


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If there is no Condominium Corporation, an association of unit owners orsome other body designated in the master deed or declaration ofrestrictions will be the management body, and will administer thecommon areas.

If there is a Condominium Corporation, it shall constitute themanagement body of the project. The corporate purposes of such

corporation shall be limited to the holding of the common areas, eitherin ownership or any other interest in real property recognized by law, tothe management of the project, and to incidental purposes.

However, a management body or company may also be appointed. This isespecially true in cases where the unit owners comprising the membersof the Association or the Condo. Corp. are busy with their own affairs.

VERY IMPORTANT NOTE: A condominium corporation shall not, during itsexistence, sell, exchange, lease, or otherwise dispose of the commonareas unless authorized by a simple majority of the owners.


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The term of a condominium corporation shall be co-terminous with theduration of the condominium project, the provisions of the CorporationLaw to the contrary notwithstanding.

In case of involuntary dissolution of a condominium corporation, co-ownership of the common areas shall fully apply.

Until the master deed is revoked, the corporation shall not be voluntarilydissolved through a voluntary action for dissolution except upon ashowing:

(a) 3 years after material damage, the project has not been repaired

(b) at least 1/2 the units are untenantable and 30% of owners are

opposed to repair(c) the project is 50 years old and obsolete and 50% of owners are

opposed to repair

(d) there is material condemnation or expropriation and 50% ofowners are opposed to continuation


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The condominium corporation may also be

dissolved by vote of all members.

Upon voluntary dissolution of a condominiumcorporation the corporation shall be deemed

to hold a power of attorney from all the

members to sell and dispose of their

separate interests and liquidation shall beeffected by a sale of the entire project as if

the corporation owned the whole thereof.


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Generally, the common areas shall remain undivided,and there shall be no judicial partition thereof.

SECTION 8. Partition of condominium project shall bemade only upon a showing that:

(a) 3 years after material damage, the project hasnot been repaired

(b) at least 1/2 the units are untenantable and 30%of owners are opposed to repair

(c) the project is 50 years old and obsolete and 50%of owners are opposed to repair

(d) there is material condemnation or expropriationand 50% of owners are opposed to continuation


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THE SUBDIVISION ANDCONDOMINIUM BUYERS'

PROTECTIVE DECREE


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Reports of alarming magnitude show casesof swindling and fraudulent manipulationsperpetrated by unscrupulous subdivisionand condominium sellers and operators,such as failure to deliver titles to thebuyers or titles free from liens andencumbrances, and to pay real estatetaxes, and fraudulent sales of the samesubdivision lots to different innocentpurchasers for value, and failure todevelop these subdivisions andcondominiums according to plans.


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Section 4. Registration of Projects. The registeredowner of a parcel of land who wishes to convert thesame into a subdivision project shall submit hissubdivision plan to the Authority which shall act upon

and approve the same, upon a finding that the plancomplies with the Subdivision Standards' andRegulations enforceable at the time the plan issubmitted. The same procedure shall be followedin the case of a plan for a condominium projectexcept that, in addition, said Authority shall act

upon and approve the plan with respect to thebuilding or buildings included in the condominiumproject in accordance with the National BuildingCode (R.A. No. 6541).


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Section 5. License to sell. Such owner or dealer to

whom has been issued a registration certificate shallnot, however, be authorized to sell any subdivision lot

or condominium unit in the registered project unless heshall have first obtained a license to sell the projectwithin two weeks from the registration of such project.

Q: Is failure to register and to secure a license to sellsufficient ground to rescind a purchase of a Condo Unit?


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Section 17.Registration. All contracts to sell, deeds of

sale and other similar instruments relative to the sale or

conveyance of the subdivision lots and condominium units,

whether or not the purchase price is paid in full, shall beregistered by the seller in the Office of the Register of

Deeds of the province or city where the property is

situated.

NOTE: This is frequently violated in actual practice.


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Section 18. Mortgages. No mortgage on any unit or lotshall be made by the owner or developer without priorwritten approval of the Authority. Such approval shall notbe granted unless it is shown that the proceeds of the

mortgage loan shall be used for the development of thecondominium or subdivision project and effectivemeasures have been provided to ensure such utilization.

The buyer may, at his option, pay his installment for the

lot or unit directly to the mortgagee who shall apply thepayments to the corresponding mortgage indebtednesssecured by the particular lot or unit being paid for, with aview to enabling said buyer to obtain title over the lot orunit promptly after full payment thereto


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Section 19. Advertisements. Advertisements that may be made bythe owner or developer through newspaper, radio, television,leaflets, circulars or any other form about the subdivision or thecondominium or its operations or activities must reflect the real

facts and must be presented in such manner that will not tend tomislead or deceive the public.

The owner or developer shall be answerable and liable for thefacilities, improvements, infrastructures or other forms ofdevelopment represented or promised in brochures,

advertisements and other sales propaganda disseminated by theowner or developer or his agents and the same shall form part ofthe sales warranties enforceable against said owner ordeveloper, jointly and severally. Failure to comply with thesewarranties shall also be punishable in accordance with the

penalties provided for in PD 957.


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Section 20. Time of Completion. Every owner or developer

shall construct and provide the facilities, improvements,infrastructures and other forms of development, including

water supply and lighting facilities, which are offered andindicated in the approved subdivision or condominium plans,brochures, prospectus, printed matters, letters or in any formof advertisement, within one year from the date of theissuance of the license for the subdivision or condominiumproject or such other period of time as may be fixed by the

Authority.

NOTE: Extensions are, however, usually granted by theHLURB.


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Section 23. Non-Forfeiture of Payments. No installment

payment made by a buyer in a subdivision orcondominium project for the lot or unit he contracted

to buy shall be forfeited in favor of the owner ordeveloper when the buyer, after due notice to theowner or developer, desists from further payment dueto the failure of the owner or developer to develop thesubdivision or condominium project according to the

approved plans and within the time limit for complyingwith the same. Such buyer may, at his option, bereimbursed the total amount paid includingamortization interests but excluding delinquencyinterests, with interest thereon at the legal rate.


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Section 24. Failure to pay installments. Therights of the buyer in the event of this failureto pay the installments due for reasons otherthan the failure of the owner or developer todevelop the project shall be governed byRepublic Act No. 6552 (the Maceda Law).


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Section 25. Issuance of Title. The owner ordeveloper shall deliver the title of the lot or unitto the buyer upon full payment of the lot or unit.No fee, except those required for the registrationof the deed of sale in the Registry of Deeds, shall

be collected for the issuance of such title.

In the event a mortgage over the lot or unit isoutstanding at the time of the issuance of the titleto the buyer, the owner or developer shall redeemthe mortgage or the corresponding portion thereofwithin six months from such issuance in order thatthe title over any fully paid lot or unit may besecured and delivered to the buyer in accordanceherewith.


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Section 26. Realty Tax. Real estate tax andassessment on a lot or unit shall be paid bythe owner or developer without recourse tothe buyer for as long as the title has not

passed to the buyer; Provided, however, thatif the buyer has actually taken possession ofand occupied the lot or unit, he shall be liableto the owner or developer for such tax and

assessment effective the year following suchtaking of possession and occupancy.


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Section 33. Nullity of waivers. Any condition,stipulation, or provision in a contract of salewhereby any person waives compliance withany provision of this Decree or of any rule orregulation issued thereunder shall be void.

.


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THE MACEDA LAW


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SECTION 3. In all transactions or contracts involving the sale or financing of realestate on installment payments, including residential condominium apartments butexcluding industrial lots, commercial buildings, where the buyer has paid at leasttwo years of installments, the buyer is entitled to the following rights in case hedefaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the totalgrace period earned by him, which is hereby fixed at the rate ofone month grace

period for every one year of installment payments made: Provided, That this rightshall be exercised by the buyer only once in every five years of the life of thecontract and its extensions, if any.

(b) I f the contract is cancelled, the seller shall refund to the buyer the cashsurrender value of the payments on the property equivalent to fifty per cent ofthe total payments made and, after five years of installments, an additional fiveper cent every year but not to exceed ninety per cent of the total paymentsmade: Provided, That the actual cancellation of the contract shall take placeafter thirty days from receipt by the buyer of the notice of cancellation or thedemand for rescission of the contract by a notarial act and upon full payment ofthe cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in thecomputation of the total number of installment payments made.


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SECTION 4. In case where less than two years of

installments were paid, the seller shall give the

buyer a grace period of not less than sixty days

from the date the installment became due. If

the buyer fails to pay the installments due at the

expiration of the grace period, the seller may

cancel the contract after thirty days from

receipt by the buyer of the notice ofcancellation or the demand for rescission of

the contract by a notarial act.


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SECTION 5. Under Section 3 and 4, the buyer shall have theright to sell his rights or assign the same to another personor to reinstate the contract by updating the account duringthe grace period and before actual cancellation of thecontract. The deed of sale or assignment shall be done by

notarial act.

SECTION 6. The buyer shall have the right to pay inadvance any installment or the full unpaid balance of thepurchase price any time without interest and to have suchfull payment of the purchase price annotated in the

certificate of title covering the property.

SECTION 7. Any stipulation in any contract hereafterentered into contrary to the provisions of Sections 3, 4, 5and 6, shall be null and void.


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2 TYPES OF SALES TO BE CONSIDERED

One is called a "Unit Price" sale, governed by Art.1539 of the Civil Code, where there is a price per unitof measurement (i.e., Php22k per square meter), andthe other called a "Lump Sum" sale, governed by Art.1542 of the Civil Code, where there is a lump sum foran "identified" property.

Art. 1539 provides the remedy of rescission if the

deficiency in the area exceeds 10%. Art. 1542 doesnot provide such remedy and even declares that thereshall be no increase or decrease of the price,although there be a greater or lesser area or numberthan that stated in the contract.


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CONTINUATION RE: 2 TYPES OF SALES TO BE CONSIDERED

"In the case where the area of the immovable is stated in thecontract based on an estimate, the actual area delivered maynot measure up exactly with the area stated in the contract.According to Article 1542 of the Civil Code, in the sale of real

estate, made for a lump sum and not at the rate of a certainsum for a unit of measure or number, there shall be noincrease or decrease of the price although there be a greateror lesser area or number than that stated in the contract.HOWEVER, THE DISCREPANCY MUST NOT BE SUBSTANTIAL. AVENDEE OF LAND, WHEN SOLD IN GROSS OR WITH THEDESCRIPTION "MORE OR LESS" WITH REFERENCE TO ITS AREA,DOES NOT THEREBY IPSO FACTO TAKE ALL RISK OF QUANTITY INTHE LAND. THE USE OF "MORE OR LESS" OR SIMILAR WORDS INDESIGNATING QUANTITY COVERS ONLY A REASONABLE EXCESSOR DEFICIENCY." (Lietz vs. CA, G.R. No. 122463, December19, 2005)

condominium ownership & concepts (9.1.13)

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