A number of homebuyers are skeptical at first when deciding whether it would be beneficial to purchase a condominium unit over a house and lot. Condominium spaces are relatively cheaper and more attainable to own compare to dwellings which are built on land. Much of the concern is hinged on the idea that condominium buildings are only good for fifty years which will eventually be demolished. Another question is how the law on ownership works in a condominium set up between homeowners. Thus, many potential purchasers would be doubtful whether or not buying a condo unit would actually be a wise investment.
We gathered the usual concerns on this issue in order to guide you in deciding on your future property investment.
- THE CLAIM: The lifespan of condominium buildings is only good for fifty years.
Fact or Fallacy: FALLACY
This is not true. The law does not provide that condominium units are strictly just good for fifty years. The law states that aside from being more than fifty years old, it must be obsolete and uneconomical plus the fact that majority of the unit owners are against its repair and restoration.
Many would claim that the Republic Act 4726 or the Condominium Act of the Philippines would imply that condominium towers are only good for fifty years since the law provides that several persons who own condominium units may bring an action for partition under Section 8-c when:
“That project has been in existence in excess of 50 years; that it is obsolete and uneconomical, and that condominium owners holding in aggregate more than 50 percent interest in the common areas are opposed to repair or restoration or remodeling or modernizing of the project.”
A careful and intelligent reading of the law would clearly state that the three factors or elements must coincide in order to declare a condominium building uninhabitable. That the building has been (1) in existence in excess of 50 years; (2) obsolete and uneconomical and that (3) owners holding in aggregate more than 50 percent interest in the common areas are opposed to repairing or restoration or remodeling or modernizing the project.
Therefore, although a condominium building has been in existence for over fifty years, it does not necessarily have to be obsolete and uneconomical. Most condominium buildings are now being developed through modern means in order to endure ordinary wear and tear compared to the kind of construction which were available decades ago. The standard of being “obsolete and uneconomical” can change over time because construction efforts and materials have been improved through advanced technology.
Moreover, the third factor must come into play as well. Assuming that a condominium tower has been built over fifty years ago, if the homeowners would actually decide (at least more than fifty percent) to modernize the structure of the building to be fit for living condition and safety, the structure will remain and demolition would not be necessary.
- THE CLAIM: Ownership of the condominium ends after 50 years.
Fact or Fallacy: FALLACY
What the law refers to in the 50-year rule is the lifespan of a corporation which is essentially the same to unit owners who make up the condominium project. However, the condominium corporation can actually be renewed for another fifty years so the ownership does not necessarily end. In addition, this is based on the practice before where real estate developers would only lease the land where they build their condominium structures. This practice is limited to a leasing period of fifty years but nowadays, developers would buy the land and the leasing rule will no longer apply.
Section 11 provides that “the term of a condominium corporation shall be co-terminus with the duration of the condominium project.”
Since we have settled that it is untrue that condominium buildings are only good for fifty years, what is the basis of the 50-year rule? Ownership of the condominium is similar to a corporation where unit owners are considered to be the shareholders. This is the reason why major decisions such as renovation and repair of the building or even the common areas must be voted upon by at least more than fifty percent of the homeowners.
In instances such as demolition of the structure and when there is any income from the scrap materials, unit owners are entitled to get a share depending on the extent of their ownership. The 50-year rule is based on the Corporation Code of the Philippines wherein it is declared that the life of a corporation is only good for fifty years. So does this mean that the dissolution of the condominium “corporation” would lead to the termination of the condominium project? Of course not! The Corporation Code gives right to corporations to renew their existence for another fifty years. Therefore, a condominium corporation may do the same and renew their registration while co-existing with the residential condominium building for as long as it is fit for human habitation.
- THE CLAIM: Buying a condominium unit is NOT a good investment.
Fact or Fallacy: FALLACY
Some may argue that even if the lifespan of a condominium structure could actually last longer than fifty years, having a house and lot is more beneficial for investment. However, a homebuyer must take into consideration various factors in deciding which type of home suits his or her needs. First is the financial capacity of the person. Owning a condominium unit is more attainable if you earn less compared to waiting for decades to save up just to purchase a house and lot. In addition, property taxes that one must pay for owning a condo space is relatively cheaper compared to a home built on land. Second, one would still have to shell out money when owning a house since the structure is still exposed to various elements which would entail a renovation. Third, come to think of the funds and time you could save when it is no longer necessary for you to travel or commute far every day since your residential space is just within the proximity of your workplace. Most condominium developments are strategically positioned around business districts where a great number of job opportunities are available or even near schools and universities where you may enroll your children. Imagine the convenience and the time you could set aside for recreation. So try to weigh the pros and cons whether condo living will actually fit your personality and your family’s lifestyle. You will realize that it is actually possible to save more money if you decide to invest in a condominium unit.
Now that we have debunked the common myths on the downside of purchasing condominium units, try to reflect on whether buying this type of dwelling will give you better gains. Moreover, there are different kinds of condo spaces available in the market so aside from choosing the most realistic in terms of your budget, check on the amenities and facilities if they are suitable to your needs. Most importantly, research and ask your broker about the developer who built the project.