15 Things You Need to Know about the Condominium Act

BY Lamudi 25 March 2016 Tips and Advice

Things to Know about the Philippine Condominium Act

Planning to purchase a condo soon? Then it might be time to brush up on your knowledge on the
Philippines’ Condominium Act

Times have changed. In the past, people thought that owning a house was like living the dream, or that
the bigger the house, the better it was. Nowadays, people tend to think and want smaller; phones and
computers got smaller, and these days, many people want their spaces to be more compact as well,
which means getting a condo unit.

Young professionals starting up their career, couples looking to start a family, or even small families are
often those who look for such spaces. Aside from it being an ideal living space for the single or the
settled-down, it is an excellent investment for those looking for an extra passive income. After all,
besides the business opportunities, there is a certain air of luxury and practicality associated with
owning a condo unit.

In line with that, let us look at some of the things you will need to know and consider when deciding to
purchase a condo unit. Most of the things we will be dealing with are taken off of or based on Republic
Act No. 4726, or more commonly known as the Condominium Act. We will be tackling the issues from
both the unit owner and the condominium owner’s points of view, to see how the law works for both
sides.

1. What is a condominium?

A condominium, according to the law, is 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 in which it is located and in other common areas of the building.”

In other words, a condominium is a building where sections of which can be owned individually by a
person or, in some cases, a corporation. This can be for either a residential, industrial, or commercial
purpose.

2. Who can own condominiums?

Filipino citizens and corporations can own condominiums. Foreigners, however, are restricted to owning
no more than 40 percent of the total and outstanding capital stock of a corporation, which must be
Filipino-owned and controlled. In addition to that restriction, foreigners and foreign corporations are, by
law, prohibited to own land.

3. Who can own condominium units?

Again, Filipino citizens and corporations can own condominium units. This time, however, foreigners, by
virtue of the Condominium Act, are allowed to purchase and acquire condominium units.

4. What is my stake in a condominium?

As a unit owner, you are, in essence, a co-owner of the condominium, entitled to such privileges and
limited by such restrictions that may follow the title.

5. What forms part of a condominium unit?

Everything within the boundaries of your unit forms part of the same. According to the law, the interior
surfaces of the perimeter walls, floors, ceilings, windows, and doors form the boundary of your unit.
That is, of course, unless the master deed or the declaration of restrictions prescribed by the
condominium corporation or the administration stipulate otherwise.

6. Am I allowed to alter anything beyond the boundaries of my unit?

Generally, no. However, if the administration allows such alteration or does not prohibit the same, then
you may be allowed to. A thorough read of the house rules or the contract would be a good idea.

7. What do not form part of the condominium unit?

In most cases, areas that are not found inside the unit are deemed to be excluded from the unit but the
condominium law itself lists aspects of properties that generally do not form part of the unit. To wit:
“bearing walls, columns, floors, roofs, foundations, and other common structural elements (e.g., lobbies,
stairways, hallways, and other common areas), elevator equipment and shafts, central heating, central
refrigeration, and central air-conditioning equipment, reservoirs, tanks, pumps, and other central
services and facilities, pipes, ducts, flutes, chutes, conduits, wires, and other utility installations,
wherever located.” An exception to the list are those outlets that are located within the unit.

Things to Know about the Philippine Condominium Act

Hallways, like other common areas, are not parts of condo units and, hence, are not owned exclusively
by a single owner. However, these areas are owned collectively by the condo corporation. Photo via
Shutterstock

8. Can I freely sell my unit?

Yes. That is not prohibited in the condominium law. When you sell your unit, however, you are not just
selling the unit itself, you are also selling your interest in the common areas, as well as your membership
and shareholdings in the condominium corporation.

9. Can I freely sell my condominium?

Not exactly. Selling a unit may be simple, but selling a condominium is restricted by certain rules under
the Condominium Act. One of such restrictions is the ownership requirement. For condominiums where
the common areas are co-owned by the owners of the units, the law requires that the purchaser be
either a Filipino citizen or corporation—a corporation that is at least 60 percent owned and controlled
by Filipinos. For condominiums owned by corporations, the sale will be deemed invalid if such a sale
would result in the foreign interest in the corporation exceeding the limits prescribed by law, which in
this case, is 40 percent. In other words, in both cases, the foreign ownership in the purchasing
corporation cannot exceed 40 percent, otherwise the sale would be invalid.

10. Can I mortgage my unit for a loan?

Yes. The condominium law states that “each condominium owner shall have the exclusive right to
mortgage, pledge, or encumber his condominium and to have the same appraised independently of the
other condominium owner is personal to him.”

Things to Know about the Philippine Condominium Act

Like any property, a condo unit can be mortgaged by its owner for a loan. Photo via Shutterstock

11. Can the condominium corporation sell the condominium without my consent?

As a general rule, it can. However, if the master deed contains a requirement that the property should
first be offered to the other condominium owners within a reasonable time before offering it to third
parties, then it may not.

Another restriction, however, is one that has been amended to the Corporation Code by Republic Act
No. 7899, which states that, as an owner, you shall not, sell, exchange, lease, or otherwise dispose of the
common areas of a condominium without the approval of the simple majority of the registered owners,
subject as well, to the approval of the Housing and Land Use Regulatory Board (HLURB).

12. The Condominium Act stipulates that the owners can sell the condominium after 50 years. Does that
mean that I will not have any say in the sale?

No, that is not the case. Upon turnover of the unit to you, you become a member of the corporation
that owns the condominium. Hence, your concurrence or dissent on the matter will count. If, however,
it has been decided that the building shall be sold, then you will be compensated your appropriate share
from the proceeds of the sale.

13. Who owns the common areas in a condominium?

Generally, titles to the common areas are held by a corporation formed for the purpose. However, the
condominium law also states that the common areas are held in common by the unit holders, in equal
share for each unit.

14. What are my rights as a condominium unit owner?

Aside from those already mentioned, the only other right you have as a unit owner is the right to
renovate your unit, for as long as all renovations are done within the boundaries of your unit. All
restrictions on your rights and activities are those that are stipulated in the declaration of restrictions or
on the contract you signed upon the turnover of the unit to you.

15. I own a condominium building, and I want to amend or revoke the master deed. May I do so without
reservation?

No. The Condominium Act states that you can only do this upon the registration of an instrument (a
formal legal document) executed by a simple majority of the registered owners of the property. In this
case, a simple majority could mean either of the two: a majority based on per-unit ownership or a
majority based on the floor area of ownership.

For condominiums used for either residential or commercial purposes, the former would apply, while if
it is for a mix of both purposes, it is the latter. This requirement also stipulates that the registered
owners must be notified in advance. Evidence of a vote of a simple majority must also be submitted to
the HLURB.