What Happens To a Condominium After 50 Years

What Will Happen To a Condominium Investment After 50 Years?

Posted by: Joanne Almaden in Condominiums, Real Estate Investing, Real Estate Laws On:September 9, 2013 Last updated: April 1, 2018

This is one of the most common concerns raised by condominium buyers. And it is a very relevant question to ask especially since we are talking about millions of money here.

In the Philippines, there is a law that protects the interest of the unit owners in a condominium project. This is the Republic Act 4726 or The Condominium Act of the Philippines which was mandated on June 18, 1966.

To answer the concern of the condominium owners and the would-be owners, here is an excerpt of the act.

SECTION 8. Where several persons own condominiums in a condominium project, an action may be brought by one or more such persons for partition thereof by sale of the entire project, as if the owners of all of the condominiums in such project were co-owners of the entire project in the same proportion as their interests in the common areas: Provided, however, That a partition shall be made only upon a showing:

That three years after damage or destruction to the project which renders material part thereof unit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction, or

That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that condominium owners holding in aggregate more than thirty percent interest in the common areas are opposed to repair or restoration of the project; or

That the project has been in existence in excess of fifty years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than fifty percent interest in the common areas are opposed to repair or restoration or remodeling or modernizing of the project; or

That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the condominium owners holding in aggregate more than seventy percent interest in the common areas are opposed to continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or

That the conditions for such partition by sale set forth in the declaration of restrictions, duly registered in accordance with the terms of this Act, have been met.

It’s not like you will buy a condominium property and then after 50 years, your investment will be gone, just like that. When a condominium project is fully turned over to the unit owners, it becomes just like a corporation, and you are one of the owners of that corporation if you have a unit there.

So it follows that you will have a “say” in the decision making as to what to do with the whole building, and if it has been decided that the property is going to be sold or demolished so that a new property will be developed on the area, you will get your appropriate share of the proceeds of the sale.

Just like any investment, your condominium property can last, can be profitable and can be passed on to your heir(s).

You can read the full version of this Republic Act below:

Download

Other important things you may want to read about investing in real estate in the Philippines are the following:

Real Estate Investing: Read These Tips Before Buying Condos in the Philippines

Are you are looking to buy a property in the Philippines?

Whether it be it a condominium, house, lot or commercial property, choosing your broker or agent also makes a huge difference! You don’t only need a broker who is licensed and knowledgeable.

You also need your broker to be always there for you when you have concerns about your real estate transaction. And you need him/her to be there even long after your purchase.

That’s one of the things we guarantee our clients here at PPE and the reason why our clients voted us the Most Trusted Brokerage Firm in the Philippines.

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Disclaimer: The information in this post is not meant as legal advice and should not be taken as such. See our full legal disclaimer.

Feature image credit: Steve Snodgrass

ABOUT THE AUTHOR

Joanne Almaden

Joanne is a licensed real estate broker and appraiser. She founded Phil. Property Expert, Inc. – a top-notch real estate services company whose vision is being the most trusted company when it comes to competence and quality of service.

Danvic Ruiz

Thanks the information. Do you have an example of this scenario? I’d like to read about the experience of some owners and the turn out.
- Nimrod Flores
  
  Hi Danvic,
  
  That’s a very interesting question! Unfortunately, there is no example yet here in the Philippines.
  
  That is because the Condominium Act was first approved in 1966 (amended a couple of times after that). And they probably didn’t finish building condos that same year. Still, even if we say so, then the oldest condominium around should still be 49 years old.
  
  So we can’t give you an actual example until next year, if the first condos were built in 1966 that is. We’ll still dig into this, so stay tuned.
  
  Nevertheless, a law is a law. If you buy a condo unit of your own and you read the full text of the Condominium Act above, then you’ll know the full extent of your rights as one of the owners of the building. If people are well-informed of their lawful rights, no one can violate them without consequences.
  - Johnny
    
    “If people are well-informed of their lawful rights, no one can violate them without consequences.”
    – We are talking about the Philippines here right?
    - Nimrod Flores
      
      Yes we are. And I think I know what you mean. I guess we are just being optimistic here. 🙂
      
      To illustrate my point further, I wanna cite an example – my own personal experience. I bought a condo unit before we got into this business. And it wasn’t delivered on time. Construction got so delayed that I wanted out already.
      
      The developer told me I could only get 50% refund on my money. I thought it wasn’t fair, because they were the ones who were at fault. I couldn’t afford a lawyer that time, so I researched and found out that I could sue them to get all my money back. And that’s what I did. I sued them on my own based on the provisions of PD 957… And I got them to pay me back everything.
      
      It may not be like this 100% of the time and I’m realistic enough to know that it’s a long long shot to make things always work as they should.
      
      But what I’m trying to say is that if only more people are informed enough of their rights and the procedures, more people would properly file cases at the right venues. And that, in my opinion, should start a change for the better as more companies and individuals will rethink their evil plans and behaviors.
      - Johnny
        
        Agreed with you on the point: knowledge of the law or rights can strengthen your claim. However, the developer can know full well the lengthy court system is a deterrent for the claimant. Not to mention the cost.
        One of the #1 reasons the Philippines is in the shape its in is because of a corrupt, slow, weak, or incompetent judicial system. Property and the court system is a never-ending headache and seems to tie up 90% of all the civil courts time. Lawyers love that the system is so bad and property laws are easily violated as each case is an easy income stream for them for years.
        My wife had a pre-construction condo with SM. She had a few issues they were not going to address or take care of. Even though the issues were clearly stated in the contract, they had no trouble giving us various excuses why they were not liable. The only thing that saved her was her father is an attorney and threatened legal action. It did work, but they were both worried the developer would let them file a case, cause that would take at least 5 years and hundred of hours in labor against someone with a legal team, connections, and the ability to easily bribe a judge.
      - Nimrod Flores
        
        That’s true. Those things are really deterrents for people to actually file suits. When I sued that developer, I also had the same worries your wife and her father had. Your wife was even in a better situation because she had a lawyer she knows she can trust.
        
        But I’ve proven those worries to be just unfounded fear. If I had let myself get carried away by that fear, I wouldn’t have done anything. And I think that’s what happens with a lot of people. They are paralyzed by the fear of something that’s very likely not going to happen.
        
        Just consider the other side of the situation you described: If only all the aggrieved would file cases against misbehaving companies, those companies will eventually be overwhelmed. Corporate funds, legal team capacity and favors from connections, all have limitations. At some point, they will dry up if they continue doing bad business.
        
        The majority will still be more powerful than the few. We just need to empower that majority because right now, they are too afraid of the big guys. They just don’t realize how powerful they are if they all do their part.
      - Johnny
        
        I agree with you’re saying. Also, I encourage your enthusiasm and ideals.
        The court system has been a thorn in the side of many other property issues my family has faced. For instance, squatters and property forgers like to stall in court as long as possible and use the very awful court system as a tool to keep stolen property.
        The developer (or his rep) in our case threatened back, but backed down. I’m happy my wife is so persistent and got her issues resolved. What I learned about the condo, pre-construction guys is they will promise everything to entice you. The minute they get you to put a deposit down, everything changes.
        Another final note on condo’s. SM seems to build very cheap condo’s. I know people with leaks, plumbing issues, electrical, etc shortly after turnover. Ayala seems to be the better quality.
        Thanks for the feedback and great discussion.
- Dee
  
  There is a low rise condominium in Greenhills at Annapolis that they demolished after the owners agreed to its demolition, then they had it rebuilt and probable sold some of the condos when they made it high rise.
- James Morrison
  
  The Picasso Boutique Hotel in Makati used to be a residential condominium building. It was converted into a hotel 50+ years after it was built.
bernard

Hi, what is the difference of a perpetual condo vs. a non-perpetual ownership. I ask this cuz, some condos, it states under the contract that it is a perpetual ownership, while for some it doesn’t state that.
- Joanne Almaden
  
  Hi @disqus_mkVyNqLBz8:disqus,
  
  Perpetual Ownership means you have every right a condominium unit owner is entitled to as provided in the Condominium Act in the above post; you have full ownership rights to your own unit(s) and a proportionate share of ownership to all the common areas of the building and the land itself where your condo is built on. This ownership will never expire and it can be handed down to your heirs and assignees.
  
  Non-perpetual ownership on the other hand, means your ownership rights to your own unit and your proportionate share of ownership to the common areas and the land, has a set expiration date or conditions which will make your ownership eventually cease. You should read your contract carefully to know these conditions or the length of time your ownership is valid.
  - James B. Chua
    
    so non perpetual ownership is something more of a kind of leasing?
  - Boo Lahga
    
    Thank you!
Rally De Leon

Is it possible that a Residential Condo which sits on top of a commercial building complex only lease the property for xx number of years from the owner of the lot? What happens if the owner decides not to renew the lease? Or is it a legal requirement that the developer of Residential Condo owns the lot?
Jasonn Darroca

Hi,I’d like to ask if miscellaneos is not included in the 50prcnt refund and they are charging me 3prcnt for processing.?I started to withdraw last april but until now still processing they said..please anyone could help me
Antonio Chua-so Jr.

Is it legal that developers charge monthly dues appropriate to the unit size(bigger units, higher dues), but they don’t clean Inside your unit and everybody just share the same hallways, lifts, pools etc. Don’t you think its unfair?
- Nimrod Flores
  
  No, it’s not unfair at all. It’s also perfectly legal.
  
  As a unit owner in a condominium community, you are one of the shareholders of the condominium corporation which owns the whole project.
  
  The bigger your unit is, the bigger also is your corresponding share in the corporation. When the corporation will be dissolved, you will have a bigger share in its proceeds.
  
  From this, it will also follow that you have a bigger interest in the maintenance of the building if you have a bigger unit. That translates to a proportionately bigger fee for the maintenance of the *common spaces/amenities. (The cleaning of your own unit is not anymore part of what you’re paying for.)
  
  Also, I’d like to clarify that it’s not the developer who actually charge those monthly dues. You pay them to the condo management.
  
  When the project is not yet fully turned over to the unit owners’ association, it’s the developer who handles the management of the project, but even so, they usually have a separate “management body” for the project. And when it’s been fully turned over, your unit-/home-owners’ association will be fully in charge with the maintenance of the project/building, and again, they are the ones who charge you those dues, not the developer.
amdg

I have question on condo ownership in Makati specifically in Salcedo Village Makati. Sometime in the late ’70’s, I was the working for an investment house and our company was one of the the underwriters for Ayala Bonds. As such we sold Ayala Bands to our clients. One feature of said bonds (w/c were in PHP 1 million denomination) was its eligibility to be used as payment for lot purchases in Salcedo Village. From my recollection, the sale of the lots in Salcedo Village had the provision that all lots in Salcedo Village will revert back to Ayala after 100 years. Since Salcedo is made up of condominiums, does it mean condo owners of properties located in Salcedo will lose ownership in another 65-70 years? I have been away from Philippine financial markets/real estate since the early 80’s and am curious if this is still applicable and or if some changes have been made to reflect a new perspective. Thank you.
- Nimrod Flores
  
  This is interesting.
  
  I, for myself, personally haven’t heard of this before but my colleagues might have. However, this is a question that involves legal matters and because of that, it cannot be answered without reviewing those actual provisions you mentioned.
  
  But based solely on those info you described, it does lead to the logical conclusion that in 6 to 7 decades, those lots will be rightfully returned to the Ayalas. If that’s the case, then I would assume it wasn’t actually a Deed of Absolute Sale for the property that the buyers signed with Ayala.
  
  At any rate, if the buyers just read what they signed before they did, then this shouldn’t come as a surprise to them anymore.
  - Lito C. Cobarrubia
    
    To relieve you of those worries, why wait for 50 years ? Ok you can invest in a condo be it luxury or economic, and you can use it or have it rented out to recover the investment. But why wait for 30, 40 or 50 years ? After 10 years, you have already enjoyed using or have recovered substantial portion of the total cost thru rental income. So, SELL IT already. You have enjoyed it if you lived there, or recovered a portion of your investment plus the sales value which I am sure have appreciated through time. then look for another investments.
Liezl Asintista

Ms. Joanne Almaden. Ask ko lang po..kumuha po ako ng isang condo unit at nakapagbayad na po ako ng 3 mos monthly amortization..at sa ngayon po balak ko ecancel…ano po ang mangyayari ?maibalik po ba yong binayad ko?thanks po
- Nimrod Flores
  
  @liezlasintista:disqus, to answer your question, you can read this post:
  
  Defaulting Payments – Know Your Rights under Republic Act 6552 (Maceda Law)
  
  But the short answer is, no, you can’t get your money back. What you want to do is to breach the contract that you’ve already entered into.
Ador Martinez

Greetings Sir/Madam,
Ador Martinez

Good morning po Sir/Mam,
Nakita ko po ang Discussion na ito, kc po almost 4-5 yrs narin po kaming mag-asawa na bothered dun sa nakuha namin property i hope po matulungan nyo kami at the same time maishare ko itong naeexperience namin ngaun kung sakaling may kagaya kaming sitwiasyon na ganito.
Ask ko po itong problem namin sa nakuha naming H&L property under Installment po sa isang Subdivision (Ung Phase ng subd. na iyon po pala ay hindi pa naka individual title, nakamother title pa po pala, but after na lang po namin makabayad ng Down Payt. and ilang month amort tsaka namin nalaman na Mother Title pa po iyon, hanggang ngaun year 2016.) Ganito po ang nangyari.

Year 2010 po may agent nag offer sa amin nito and immediately po nagdown kami ng required D.P, then September 2010 po lumipat na kami and nagstart na po kami magbayad ng amortization consistent po with official receipt, after a year (yr. 2011) po parang nagkaproblem sa subd. and sabi po sa Amin ng Developer sa Bank na kami magbayad ng Amort., so sa Bank po na sinabi nila kami nagbabayad ng amort. from that day on po 2011 hangang ngaun po June 2016 (More than 5 yrs na po kami nagbabayad ng Amortization)

Wala po kaming ni Loan dun sa bank na iyon, so siguro po sa tingin namin mag asawa na naiaasign ung Property. So tuloy-tuloy lang po pagbabayad namin ng amort. Yung Amort po namin na binayad mula Sept 2010 up to Feb year 2013 may OR po iyon na nanggagaling sa Developer kinukuha ko po. Then come year 2016, June 2016 po to be exact, nung kumukuha na po ako ng OR and Statement of Acct. (SOA) sa developer sabi nila, hindi na nga daw po sila nag iisue ng OR simula pa nung 2013, kc daw po hindi naman po daw sila ang nakakareceive ng bayad nmin ung bank nga po daw, dahil gawa nga po daw sa Tax, di naman po daw sila ang nakakareceive ng pera. Kaya ganun po daw, then pumunta po ako sa bank tapos naituturo naman po kami sa developer na dapat sila nga daw po ang mag issue ng receipt so very disappointed po kami mag asawa we’re no where to go po.
Kaya po sabi ko sa wife ko na wag na nating bayaran ung Amort ng June 2016 po and we’re planning po to sell or itransfer kung may interesadong bibili, pero i doubt po na may bibili pa nito kc nga po may problem.

Ngayun po parang ang recourse na lang po namin ay icancell po itong contract, kc nga po ung status din nung property hindi po malinaw sa amin and nung nabasa ko po ung mga discussion dito nagkaroon po kami ng pag-asa na somehow may marerecover kami sa lahat ng payments namin po kahit papaano. Nagkaroon po kami ng pag-asa nung makita ung mga discussion dito, kasi hindi naman din po biro ung mga pinaghirapan naming ibayad dito.

Sir/Mam sana po matulungan nyo kami kung ano po ang pinakamagandang gawin po, gusto na din po naman naming iwan ung property. at maghanap po ng iba.
At gusto din po namin macarecover dun po sa mga binayad namin kung anu pong pwedeng gawin?

Maraming salamat po sa pagbigay ng time basahin..Maraming salamat po.
Richard

Hi Nimrod , let us say in case of fortuitous event, an example of which is an earthquake damage the whole building. And the building is still within 50 years. What will happen? Or the eights of the owners?
- Nimrod Flores
  
  This is a very interesting question. In fortuitous events, no one is responsible. So this is when the insurance becomes useful. It will then be up to the board of the condo corp to decide on what to do with the proceeds from the insurance claim, with the approval of the shareholders (i.e. unit owners).
  - Richard
    
    So basically the condominium owners will end up with nothing but the insurance claim?
    - Nimrod Flores
      
      The insurance claim, my friend, is not nothing. Insurances are usually worth more or at least about the same value as of that which is insured.
      
      And as shareholders of the condo corp, each unit owner will be entitled to their proportionate share of the insurance proceeds.
      
      Also, they still retain their interest in the ownership of the land where the destroyed building used to stand on.
      - ed
        
        Where does the condo corp get the amount for the building insurance premium payment? Would it be collected by the condo corp from individual unit owners? How?
Jerry Telan

In a post-fire or post-earthquake scenario in which the condominium is untenable for quite a long period, are the unit owners required to pay the monthly mortgage even though they can not use their property? The mortgage is thru in-house financing.
Alex Xpds

good day,ask ko lang po kasi my pinurchase po akong townhouse pero ung contract po condominium contract po. ang concern ko po kasi pag ganun po ba after 50 years mawawala na ung binili naming townhouse?
pau

Hi guys! Need ko lang po ng advise

Bumili po ako ng house and lot in cavite. Nakapagbayad na po ako ng almost 13 months downpayment but for some personal reason we need to cancel the agreement.I emailed already the developer if possible to refund our downpayment but unfortunately the developer replied that the account is not entitled for refund base on company policy under maceda law. They said to be qualified for 50% of total payments made, the account should meet at least 24months of installment payment at the time of cancellation. Appreciate your kind advise. Thank you
- P E
  
  Which developer and where in Cavite?