6 things to consider before buying a residential condominium unit

A condominium project consists of land on which the project stands, the individual dwelling units and the common areas.

In the Philippines, a condominium building is any vertical development, ranging from, say, 5 to 50-stories tall comprising of, say, a hundred to 500 individually-owned units per building wherein the units share walls.

In the United States, condominiums also usually share walls, although, that is not always the case. There, many condominiums resemble what may appear to us here in the Philippines like townhouses, row houses or apartment complexes that may be only 1 to 2 stories tall. The similarity is in the extent of ownership.

Extent of ownership in a  condominium project

What makes a condominium project unique is not the number of stories they have or whether the units share walls or not. What makes it unique is that each home buyer owns his unit space but shares ownership and use of the common areas and there is no individual ownership of a plot of land. The entire land on which the condominium project stands is owned in common by all the homeowners.

Condominiums are set up like a corporation

Though, it’s not required by law for a condominium project to be set up as a corporation, the fact that all local condominium developers also target foreign buyers makes this necessary. Foreigners cannot own or co-own land in the Philippines; they can only buy into a corporation that owns land.

This, to me, is the most important thing to consider when buying a condominium unit. As a unit owner, you become a shareholder of the condominium corporation. One unit is equal to one share (that is proportionate to the size and price of your unit) in the corporation which is then equal to a proportionate vote.

If there are 500 individually-owned units in the condominium you are buying into, it means there are 499 other incorporators, with varying motivations and idiosyncrasies, who have more or less the same stake and voting power as you do. Everyone, through the condominium corporation, owns all the common areas in the condominium and the land on which the building stands.

Like in any corporation, certain issues and problems will arise that can only be decided through votes by the shareholders or unit owners. As such, some unit owners will lose and some will win. Later, I shall discuss the most important issue that condominium owners will inevitably decide on.

Condominium unit owners can only obtain a CCT and not a TCT

Ownership of a condominium unit is evidenced by a CCT or Condominium Certificate of Title. Unlike a TCT or Transfer Certificate of Title which is evidence of ownership of a traditional house and gives the homeowner absolute ownership of the “inside” and “outside” of his house up to the boundaries of his lot, a CCT only endows the condo buyer ownership of the “inside” of his unit. By the way, a townhouse owner is also issued a TCT that entitles him ownership of his unit and the land on which his unit stands.

Condominiums have a life span of 50 years

Although, the law does not explicitly say that condominiums have a life span of 50 years, it definitely implies so. Section 8c of The Condominium Act says:

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…

In such case, the owners can vote to have the building demolished which presents them two options:

  • Sell the land and the scrap from the demolished building, deduct the cost of demolition and divide the net proceeds among the owners, or
  • Strike a deal with the original developer or another developer to build a new condominium on their land. But until such time that the new project is completed, the owners will have to live in a temporary home which may take 2 to 4 years.

You might be laughing at this point telling yourself: “I’ll be dead by the time my condo reaches 50 years old.”

This leads us to another point:

A condominium is not an ideal inheritance for your children or grandchildren

By the time you pass on your condo to your heir, it may no longer be ideal for dwelling. If you ask me, 50 years is too long given the propensity of many developers to build very tall condominiums. The taller a building is, the more prone it is to the ravages of time and harsh environmental conditions, ergo, the shorter its life span. They are also the most technologically-dependent type of housing.

Short of 10 years, 40 years from now, will future buildings be using the same electrical, water or cooling systems that buildings are employing today? Will replacing these systems, even just their cables, pipes and conduits (which are mostly embedded in the walls) in a, say, 30-story condominium, be feasible? How will you replace a totally broken down elevator in such a building? Will the elevators that we have now still be the same mode for transporting residents up and down a building?

At the very least, modern condominiums today will become eyesores 50 years from now; they will be drowned out by future architectural designs.

Association dues is not the only expense that you will have to pay

Payment of association dues is not unique to condominiums since owners of single-detached houses in subdivisions and owners of townhouses also pay association dues for the maintenance of common areas, solid waste management, security and more. But association dues in condominiums are highest per square meter.

The following are the other expenses that you shall pay when living in a condominium:

  • Realty tax on your unit
  • Share of realty tax on the land on which the condominium stands
  • Share of realty tax on common areas

If you have a car and you opt to buy a car slot in the condominium, expect to pay an extra half a million pesos or more and pay additional monthly dues for it.

Given these 6 things to consider before buying a condominium unit, does it mean you shouldn’t buy a condo?

No, it does not; it depends on the lifestyle problems you want solved.

More on this on my next post.

Thank you so much

P.S. The Condominium Act aka Republic Act No. 4726

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Comments

  1. Hello Ma’am Julie,

    The best that can answer your questions is your developer. Developers have different policies regarding that issue. Some allow it, some do not. And of those who allow it like DMCI, will do so only within a certain period of time after the payment of the reservation fee. Needless to say, management approval is necessary.

    Thanks for dropping by

  2. Hi Jun,

    Just want to ask if it’s possible to transfer the 5% initial downpayment I paid for a studio type condominium to the developers house and lot project? will the whole amount be credited to other project?

    Thanks,

    Julie

  3. Hello bp,

    I’m sorry I cannot help you. Reservation Fee is non-refundable.

    It is non-refundable for a good reason: to prevent prospective home buyers from entering into such a serious transaction without thinking much about the consequences of what they are getting into. Buying a real estate property is one of the most important decisions any person will ever make. It requires a lot of planning and serious thinking and should not be based on impulse which seems to be the case with you. Imagine changing your mind just one week after paying the reservation fee?

    You cannot simply ask for a refund because you are not 100% happy with the decision you made just one week ago.

  4. I saw this blog and thinking that you may help me to decide and advice.

    I am so confused because I recently got a unit from Century Properties and 1week ago and now I am planning to pull it out for personal reasons.
    today, the person who called me from Century Properties for verification of documents told me I can still refund since 1 weel ago lang po sya and I just need to have a letter to send to my agent since OFW ako. I just need to advise my agent for the cancelation, but then my agent refused to.
    He said it is not refundable, and refundable only if I was not approve as an owner., but impossible because of my salary is capable of paying.
    Please help me decide, I want to cancel but then my agent wants to give him a month for him to find someone to contunie the purchaing the unit but maybe that time after one month I might be push to contunue the purchasing the condo unit which on my part is not 100% happy decision.

    Hoping for reply ASAP. God Bless.

    Thanks you po.

  5. Hello Raynand,

    Most of the things you must know about condominiums are contained in the Condominium Act of the Philippines. I suggest you read it well and google information that that you might find lacking in said law.

    Thank you

  6. Raynand ang says:

    Hi jun
    Im a first time buyer and a newbie in this kind of business (condominiums) , i have invested on a studio type in mivesa , developed by landmasters in cebu . Can you please give me an idea about this developer and questions i should ask in their office to gain more knowledge about the real matters i could do or not do with my property when the time comes. Or at least know what i really was paying for.

  7. Hello Shee,

    If HLURB is not familiar with the “scenario,” how can we say that I know better that they do? Just follow the advice of HLURB by filing a complaint with them. Besides, whatever happens, the case will go through HLURB first.

  8. Hi Jun,

    I bought a condo unit and a parking slot — the parking slot I still am paying thru in house financing. I have plans of selling both the unit and the slot but to date the only document I have at hand for the parking slot is the computation. I have been paying this since 2011. According to the developer they still have not secured a title for the parking slots. I went to HLURB but they seem not familiar with my scenario and just wants me to file a complaint. Do you think I can demand for a full reimbursement given that they have been selling a property with no contract to sell? Can you recommend other options I may have? Appreciate your advice and thank you in advance.

  9. Hello Jay Frederic,

    Condominium has never been my forte and I am very far from being an expert. I am relatively a newbie in this industry and I am aware that I have given some lousy opinion on certain matters. In fact, I have gained a lot of knowledge from many visitors like you.

    I only base my opinion on what I read and interpret them to the best of my knowledge and I offer no warranty.

    As far as condominium ownership is concerned, I have always thought that it entitles the condo buyer Ownership of his unit until or unless, after several years, majority of the unit owners decide on whether to demolish the project or not as stated in the Condominium Act.

    However, just today, I learned from the website of Century Properties that there are two kinds of condo ownership in the Philippines: Leasehold and Perpetual Ownership. Honestly, it’s the only website I have come across that gave a definitive answer on the matter.

    However, today, July 28, when I checked again the website of Century Properties, the link to the page no longer exists; the page has been removed. I wonder why?

    Thanks for dropping by.

  10. Jay Frederic Cruz says:

    Hi Sir,

    I came across your website and it has been very informative about Condominiums, its pros and cons, and whether to invest in such a deal. It was previously stated by one of the commenters here regarding Perpetual Ownership. I do have a basic understanding of it but I want an expert opinion on Perpetual Ownership as a concept in Condominiums. The developer is Phinma Properties and the project is Arezzo Place in Pasig.

    Any information you provide will be quite valuable.

    Thanks!
    Jay Frederic Cruz

  11. Hello Mr. Sajor,

    This is the first time I have heard of the phrase Irrevocable Proxy being included as a provision of a Contract to Sell.

    I don’t want to pretend that I know the answer to your question because, honestly, I don’t.

    Can you please email me at junsanchez@yahoo.com and tell me the name of the developer and the project where such CTS was used. I will try to get an answer but I cannot make any promises.

    I hope you understand.

    Thank you.

  12. Ruben Sajor says:

    The contract to sell that the buyer signed provides that you give the developer an irrevocable proxy for 5 years from registration. Is this legal under Philippine law? What if 4 years have passed and there’s still no registration for reasons known only to the developer despite complaint from the unit owner?

  13. Hello Gerlin,

    It’s easy for any company to be registered as a corporation at the SEC.

    I have not heard of the developer, Landgroup, Inc. Their project, Avenue Residences, should have a License-to-Sell issued by the HLURB. If there is none, that’s one very good reason not to buy from the developer; it’s a red flag.

    I hope this helps.

    Thank you for visiting my site.

  14. Gerlin Baranggan says:

    Hello Sir Jun,

    I have been searching for information about condo buying in the Philippines. I’m glad I found your site, it was very informative.
    I was checking out this condominium which is very near my place of work but found not enough info on the web regarding the developer. I have visited the condo and liked it a lot.
    This is The Avenue Residences at Tandang Sora Avenue in Quezon City. The developer is Landgroup, Inc.
    I checked and the developer is indeed registered with SEC but not with HLURB. What other things do I need to check with the developer before I make a purchase? The sales agents are young and not very helpful.

  15. Hello Armin

    This is the first time I have heard of the developer. So, probably just like you, I tried to google the developer and the project but can’t find anything useful, except for a facebook page that hardly has anything on it and one or two Youtube videos.

    Sorry I can’t provide more than you already know.

    Happy New Year

  16. Hi Sir Jun,

    Good day!

    This is very informative and helpful, I am glad I came across your site. This enlightens me a lot of things regarding buying a condominium and also the comments and other inputs. I just want to ask any insights regarding D’ University Land Development Holdings, specifically the D University Place Condominium Project at Taft Ave. Manila. We were quite impress on their units but i personally haven’t heard of the developer. Thank you very much in advance!

  17. Hello Alex

    I will be the first to admit that RA 4726 or the Condominium Act may be subject to different interpretations as it is replete with the word “may” and the phrase “unless otherwise stated” or other similar phrases.

    For example, in Section 2 alone, it says:”…A condominium may include, in addition, a separate interest in other portions of such real property. The title to the common areas, including the land, or the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the condominium corporation) in which holders of separate interest shall automatically be members or share-holders…”

    I think the issue of who owns the land where a condominium project stands boils down to the statement of the nature of the interest and obligations acquired by the condominium buyers as specified in the Master Deed with Declaration of Restrictions.

    Assuming it is legal for a condominium developer to aver in the Master Deed that it will retain ownership of the land where the project stands, said Master Deed can be amended or revoked by virtue of RA 7899 that amended Section 4 of RA 4726.

    RA 7899 states: “The enabling master deed may be amended or revoked upon registration of an instrument executed by a simple majority of the registered owners of the property: Provided: That in a condominium project exclusively for either residential or commercial use, simple majority shall be on a per unit of ownership basis and that in case of mixed use, simple majority shall be on a floor area of ownership basis…”

    But actually, given my very limited knowledge and experience as a broker, I have not encountered any condo developer that retains ownership of the land or the common areas of the project. For why else are condo unit owners assessed property taxes not just on their individual units but also on the common areas (including land) in proportion to their ownership. If the developer retains ownership of the land, it should be the one paying for the taxes on such land and not the unit owners.

    Here, I believe, is the more common example of a Master Deed:

    See Part I, THE MASTER DEED, Section 4 The Condominium Corporation

    “The DECLARANT (property owners) and DEVELOPER will initiate the formation of a non-stock, non-profit organization known as FILIPINIANA TAGAYTAY CONDOMINIUM CORPORATION which shall have titular ownership as transferee of the title to the property as trustee for the members…. To the FILIPINIANA TAGAYTAY condominium corporation shall belong automatic ownership of the property in accordance with the provisions of RA 4726 as amended and such ownership will not be diminished by the fact that the title to the property remains in the name of the DECLARANT. The FILIPINIANA TAGAYTAY CONDOMINIUM CORPORATION shall have corporate personality which is the aggrupation of the unit owners and in turn the unit owners are collectively the condominium corporation.

    If the foregoing Master Deed is the norm, then the unit owners effectively and collectively own the common areas of the project including the land regardless of whether the title remains with the owner/developer or not.

    Note that the above is merely my personal opinion and should not be taken at face value as I have repeatedly said, do not have any legal background. My opinion is as good as anyone else’s.

    I will await for the result of your research on this issue, Alex and I thank you very much for sharing your experience on this important matter.

    Merry Christmas and my best regards

  18. as to 50 years consider impact of the water damage to the underlying metal bars.

    take into account rainy season.

    if metal is corroded the building will be condemned.

    the concrete is not good when it comes to tension, the metal reinforcement is critical as to the structural integrity.

  19. It appears the author made a huge mistake.

    The current practice in the Philippines indeed is to set the buyer association as a corporation.

    But it has nothing to do with the land, maybe it is the purpose of the developer to make it like the unit owner corporation owns the land.

    The corporation only manages common areas.

    The land title as a rule remains with developer company (developer corporation).

    But marketing agents / managers are trained to tell the buyer that every buyer has share of the land.

    To get clarity you can just go to city hall and for less than 1000 pesos you can get the true copy of the land title, it has also the master deed and all other encumbrances attached.

    I was told in Manila City Hall that they didn’t see a case when a unit owner association (arranged as corporation or not) owns the land on which the condominium is standing.

    I’m checking the matter further.

  20. Arvin R. Padual says:

    Living in a condo unit is less costly considering the exorbitant price of materials to maintain a good house.

  21. Hello Maria Shellyn,

    Nothing has changed in the Condominium Act.

    All condo projects in the Philippines offer perpetual ownership unless otherwise stated.

    There is nothing in the Condominium Act that says that a condo building should be torn down after 50 years. It only implies that in 50 years, a condo project may be obsolete, costlier to maintain than to build a new one or untenable.

    It’s really up to the majority of the unit owners if they want to maintain the building for 50 or even 100 years unless the Engineering Office of the city or municipality that has jurisdiction over the building deems the structure as condemned.

    If the developer’s advertising materials promised perpetual ownership of the condo, that’s a promise they cannot break. Copies of such advertising materials are one of the requirements that they submit to the HLURB for the issuance of the Certificate of Registration and License to Sell.

    I hope this helps at next time, sa akin ka na lang bumili, ha :)

  22. Maria Shellyn Chua says:

    Hi Jun,

    I bought a condominium and I’m about to sign the Deed of Absolute Sale. I noticed though that in the contract there is no indication regarding the Length of Ownership of the condo. In the marketing advertisements and the verbal sales, I have been told it’s perpetual ownership and they said the developer won’t ask me to return the unit in 50 years or 99 years. (As opposed to the HK condo law of 99 years lease and Camp John Hay’s units where you need to give the unit back after 25 years).

    In the Deed of Absolute Sale they gave me December 2013, it says: “Seller hereby sells, transfers and conveys unto buyer, absolutely and unconditionally, the subject property…”

    I was wondering how different this is from the other condo (from another developer) I bought which was turned over to me just this March 2013 where the Deed of Absolute Sale (DAS) says: “The vendor do by these presents sell, cede, transfer and convey absolutely and perpetually, unto the latter, its assigns, the above described real estate…”

    Why is it that in the March 2013 DAS it has the word PERPETUAL while in the December 2013 DAS the developer said they cannot use the word perpetual ownership? Is there a change in the Philippine condominium law between March 2013 and December 2013?

    Thanks and regards,
    Maria Shellyn Chua

  23. Hello Chux18

    Condominiums are still a good investment if they are built in a carefully chosen location with a large captive market. And only choose projects of highly experienced and reputable developers.

  24. Hello Maria,

    I’m confused. You talk about units and CCT’s that point to condominium properties but you also talk about “one house built on the area where the two units should have been.”

    Do you mean houses, TCT’s and lots in a subdivision? CCT stands for Condominium Certificate of Title.

  25. A homeowner has two units (he’s holding two CCTs). But he has only one house built on the area where the two units should have been. Should he pay for one CCT only when it comes to the association dues? Thanks.

  26. With the amount of rising new condo towers today. Is investing in these pre selling stuff still profitable if you want to either rent it out or sell it?

  27. Hello May,

    You got yourselves in a bind then. I guess you have no other recourse but to file a case in court or just live with what the new owners want.

    I’m sorry I can’t help you.

  28. ty jun. unfortunately i went to the legal dept of hulrb last month but they said they cannot help us because they have no jurisdiction over the parties involved. they said they could intervene if its between the unit owners and the DEVELOPER, but since the condo was auctioned and a new owner bought it, they cannot help. what other options do we have..we are not a member of hoa as well so hulrb cant intervene again.. filing a case involves a lot of money and the new owners are friends with our local judicial govt : (

  29. Hello May,

    I don’t think that’s legal. Your only obligations as condo unit owners are to pay the monthly dues and the realty taxes for your unit and the common areas (relative to the size of your unit). I have never heard of a condo that requires owners to pay for the hallway fee which is a common area that you already pay for with your monthly dues. What’s more ridiculous is they ask you to pay for the rental of the lot. You already own the lot in common with the other unit owners, SO, WHY DO YOU HAVE TO PAY RENTAL FOR SOMETHING THAT YOU ALREADY OWN?

    I suggest you file a complaint with the HLURB.

  30. p.s. those fees are aside from the monthly dues they are collecting.

  31. i am one of the unit owners of a condo here in metro manila that was auctioned. old owner(developer) mismanaged the condo and did not pay for the real property tax. and then they were gone. the condo( lot/land where the condo exist, common areas, and a penthouse) was bought by a new owner from the municipal and they are now asking the unit owners for hallway fee and lot rental fee (since they bought the lot and common areas). is it legal? the new owners built an incorporation and registered it under SEC. tnx mch for your speedy answer.

  32. Hello Kat,

    You should have thought about what you are thinking or feeling now before you made the decision to buy.

    I’m sorry to inform you that you are not entitled to any refund by law.

    However, you may try to sell your rights on the property. The exact term is Assignment of Rights. You sell the property, ideally to someone for the amount you have paid for it. Then the buyer assumes the balance. This, however, may take time and sounds easier said than done.

  33. Hi Sir,

    Good day to you!

    I’ve been paying for my monthly DP in Rivergreen Residences in Sta. Ana. I started November 15 of last year. Now, I feel like I don’t want to pursue it anymore. Realizing everything about purchasing a condo unit which I will have to pay for 30 years through PAG-IBIG, of which I really can’t say I have a property of my own as I don’t think in 30 years time I can still live in it, now I just want to stop it. I hope you can give me an advise as to what I should do. Do you think I could still get a refund?

    Hoping for your reply!

    Thanks and God bless

  34. thank you very much for your honest reply, really appreciate it. actually, i’m planning to postpone my reservation for another week just to be sure of my decision. also, i’m scanning the internet for comments and reviews about this developer.

    thank you for these numbers. i’ll call them asap.

  35. Hello Roel,

    I’m sorry but I honestly don’t know much about CDC Holdings.

    But in one of my articles, I noticed that one of their projects, River Green Residences, also located in Sta. Ana was issued a cease and desist order on March 19, 2013 by the HLURB for not having a Certificate of Registration and a Licence to Sell.

    These are two very important documents to assure buyers that they will buy into a project that will be built by the developer according to the approved plans and that it will be delivered on time.

    Before setting your mind on getting a unit at River City, call the office of the HLURB if this project has been issued a Certificate of Registration and a License to Sell. Here are their numbers: 920.8749, 927.3061

  36. hi sir jun,

    i’m working here in manila but i’m from the province. i’m planning of getting a condo unit at the rivercity residences in sta. ana by cdc holdings. what can you say about this company? is cdc holdings ok?

    thank you very much and more power…

    roel

  37. thank you very much sir Jun for your inputs, I will consider them and will definitely think twice before investing. Sorry for my late reply, been busy with work.

  38. Hello Harry,

    I am assuming that the real estate company that you want to put up in the Philippines will go into either housing or commercial construction development.

    What’s your point of wanting an honest broker to join you right away when you haven’t even been able to put up the company yet?

    I assume you already know the 60/40 rule of putting up a company in this country. 60% should be owned by Filipinos and a maximum of 40% can be owned by foreigners.

    I will email you regarding Victoria Station 2 and Portovita. By the way, how or where did you learn about Portovita?

    Thanks

  39. Hello Jun,
    I am thinking about starting up a Real Estate company in Philippines. As I am not a Filipino, I will need to find a broker who is willing to join with me. I’ve already done some research and sought legal advice
    Any advice on how to go about finding an honest broker?

    2nd Question. I was looking into acquiring a unit in Victoria Station 2 and/or Portovita Towers. I really don’t like high rises and I have already acquired a unit in a low rise. But these two seem attractive. Any info on the developers and any helpful info about these projects?
    Thanks so much.
    Victoria Station 2 : New San Jose Builders.
    Portovita: Goldland group of companies.

  40. Hello Rem,

    Assuming the unit’s total contract price is P3M (it’s VAT exempt). You intend to pay the 20% down payment in 2 years: P3,000,000 x 20% = P600,000/24 months or P25,000 monthly down payment for 2 years. Your balance to be amortized is P2,400,000

    This means that on the 25th month, you would have start paying your monthly amortization. Assuming you are approved by a bank for a housing loan to pay off the balance of P2.4M for a term of 10 years at a fixed interest rate of 10% (amortization factor for that term and interest is 0.0132150737), P2,400,000 x 0.0132150737=P31,716 (monthly amortization that already includes the monthly principal and interest)

    The problem with what your agent is saying is that the monthly amortization on the unit will be self-liquidating by way of rental income. How can that be when the condo is projected to be completed in 3 to 4 years? In the worst case scenario that the project will be completed in 4 years, you will have to pay the first two years of monthly amortization without any income coming in. That’s P761,184 for two years that will come from your own pocket.

    Also, assuming that the condo will be ready for occupancy after 4 years, can the unit be rented out for P31,716 per month to cover your amortization? Is there any guarantee that it will be rented out year round?

  41. thank you very much sir for the quick reply. I am interested in the 1 bedroom unit. I intend to pay
    the 20% downpayment in two years time. As to the contract price and charges, I do not have the
    exact figures yet, the presentation of the agents are just estimates, they will have to tell me the
    actual price including the charges and miscellaneous once I decided to go for it. But from what
    I understand one unit is roughly P3M.

  42. Hello Rem,

    What unit are you considering? studio, 1-bedroom or a 2-bedroom unit?

    How much is the total contract price = list price + VAT (if applicable) + Miscellaneous Fees or Other Charges?

    Lastly, how many years do you intend to pay the 20% down payment?

    Thanks

  43. Dear Mr Jun,

    I am an OFW in Kuwait and recently I came across agents of Filinvest offering me to invest in
    buying a condominium unit in Katipunan, Studio A if you have heard of it. Right now it is still
    on the pre-selling period and the project they say will be completed in 3 to 4 years. What they
    claim is it is a very wise investment for OFW’s on their hard earned money. They said that I only
    have to pay for the 20% downpayment through monthly amortization and will have to loan the remaining 80% afterwards through In House or Bank Financing. What catches my attention
    the most is they claim that after I have paid the 20% downpayment the unit will be self liquidating
    since I have the option to let Filinvest manage my unit and have it rented to the thousands of
    students studying in that area especially ateneo (their target market). The rent will have to pay
    for the remaining 80% and I will just sit and wait and before I knew it the unit will be fully paid.
    I will be a first time buyer should I decide to go for it and I dont want to rush things because
    of their sweet words, so tempting I guess. What do you think sir Jun, is this just some kind of
    sales talk trying to attract buyers? As an additional info on my part, I live in the province in the
    Philippines and dont intend to live in a condo in the near future and I just want to make a good
    investment while I am here in Kuwait. Thank you very much sir Jun, more bandwidth on your
    site, keep on posting..

  44. Hello Fergie,

    First, on the issue of earthquake or other force majeure that will result to the definite non-completion of the project, the developer or seller usually puts the following provision in the Contract to Sell:

    the seller relieves itself of all obligations under this contract by reimbursing the buyer, without interest, for all amounts (excluding penalties) heretofore received from the buyer and (where applicable) return the unused buyer’s postdated checks

    If you are really that concerned about earthquakes, make sure this provision is included in the Contract to Sell as I’m not sure if other developers have this same provision in theirs.

    On the other hand, there are developers, under the same situation, provide either in their Reservation Agreement or CTS that a buyer may agree to transfer the payments he has made without interest to other projects of the developer.

    On the issue of a developer going bankrupt, I can only make a guess. When a company goes bankrupt, it is the creditors who are given first dibs on whatever asset the company still has and the customers are usually left out to fend off for themselves.

    In 2005, around 14 “pre-need” companies shut down in the Philippines shattering the dreams of tens of thousands of parents who invested big amount of money for their children’s college education. In many cases, these parents filed class action suits against these companies to get their money back. Unfortunately, many of these cases are still pending in court.

    If a developer goes bankrupt, I think buyers of its project/s will have to recourse to the same tactic.

    So your best bet is to buy only from big and highly experienced developers who have long and brilliant track records in the real estate industry; those who have survived the boom-bust cycle of the industry over many years.

    I hope this helps.

    Best

  45. On foreigners investing in condo units here in the Philippines… What protection do we have against delayed turnover say bec of earthquaje and the real estate company going bankrupt? What if I have already paid up 50% and the construction of the building is halted and won’t be continued anymore? What right do I have over the property? Will the real estate developer return my money? Thanks!

  46. Thanks a lot for the encouraging words, Nerissa.

  47. Thank you for your reply.

    Actually, the agent told me about other banks accredited by Avida. I only asked about in-house financing because I wanted to have the option of not having any balloon payment after I paid the down payment.

    Your blog is very informative and of great help to us. Keep on blogging, sir!

  48. Hello Ma’am Nerissa,

    I went over to the website of Avida and found out that they do offer in-house financing for a down payment of 20%, balance can be paid in ten years at 18% fixed interest rate. Aside from BPIFB, they also have other accredited banks: Chinabank, Banco de Oro, Metro Bank, PS Bank and HSBC.

    One possible reason why your agent insisted that you be financed by BPIFB is because she is probably, and I repeat probably, accredited with BPIFB. That is, whenever she gives business to BPIFB, she gets a small commission which is usually 0.5% of the loan amount. Again, this is purely speculation on my part as I don’t want to put your agent in trouble if I am wrong. Another thing that’s troubling is why she did not tell you that there are five other banks aside from BPIFB that can finance your housing loan.

    With the low bank interests nowadays, why do you insist on in-house financing given its very high interest rate? It is usually resorted to by those who cannot be approved by banks.

    I don’t know Avida’s policy regarding penalties if you have been booked for bank financing and you want to go in-house financing. Perhaps it’s something you can clarify with their Accounting Department.

    I’m not really a fan of availing the lowest down payment. In your case, 20%, for the very reason that you are afraid of. If 20% down payment is all person can afford and he can only pay it if the terms is flexible, say payable in one or two years, I don’t think that person is ready to buy a house. And it gives the banks a red flag about the person’s capacity to pay.

    I always tell buyers to pay at least 30% DP, in cash if possible. That way, they not only get discount from the developer but they also give a good impression to the bank.

    Your agent and her manager are not correct when they told you that banks always finance the entire balance of your purchase. It depends on how they assess your financial capacity. Sometimes, it also depends on whether the unit bought is ready for occupancy. There have been countless instances when only 70% or less of the balance is financed by the bank. So, if you paid 20% DP, you will be forced to pay the developer a balloon payment of 10%. That’s a big problem that many home buyers find difficult if not impossible to hurdle.

  49. Nerissa says:

    Hi Jun,
    Can you give any feedback about Avida? When I reserved a unit at Vertis North, I asked the agent if Avida has in-house financing and the agent said that they only have bank financing through BPIFB. When the agent gave me the copy of the reservation agreement, it clearly stated that they have in-house financing but I have to apply within 20 days from signing of reservation and submit the necessary documents (the agent gave the docs 20 days after I paid the reservation). When I called her attention regarding this, she replied that there will be penalties if I change the terms of the reservation since the agreement was based on bank financing. Is this really true? What can I do to still apply for the in house financing even though it is way past their deadline of 20 days (which is really restrictive in my opinion)?

    Another question is this: do banks really approve 100% of the amount being loaned (which is 80% of the TCP) or just 80% of the loan amount? I asked this from the agent and her manager who insisted that 100% of the loan amount will be approved. I don’t trust the agent anymore because of the lie regarding in-house financing, so can you enlighten me? I would rather lose the reservation fee than lose the full down payment if I find that I still have to pay the difference upon turn over.

    Thanks a lot.

  50. Hello Jo,

    I’m sorry to inform you that I don’t know much about Sta. Lucia except that they were one of the most aggressive developers in the 1990’s before the Asian Financial Crisis. They weathered the crisis but they seem to have tempered their activities since.

    It will be unfair to Sta. Lucia and to you if I offer an opinion on something that I am ignorant about. You will have to do your own due diligence on this.

    I hope you understand.

    Thanks

  51. Jo Inovero says:

    Hi,
    What can you say about Sta Lucia Developer, I am planning to buy a condo in Cainta, East Bel-air.

    Regards,
    Jo

  52. Hello Manny,

    Kindly clarify first the kind of alteration the developer made in your unit:
    1. Did they increase or decrease the floor area?
    2. Did they alter the layout of the unit?
    3. Both

    My first suggestion to you (even if you have yet to answer my questions) is to request from the developer that you be transferred to a unit that is similar to what you have agreed upon in the first place.

    I also suggest that your read very carefully the Contract to Sell that you signed. There is usually a provision there that says that they can make modifications on a unit even without prior notice.

  53. Hi Mr. Jun,

    Can we get a full reimbursement of what we paid so far in case the developer amended the floor area in our Contract to Buy & Sell in which we didn’t accept and instead wants to cancel the contract and refund our money.

    Thanks a lot for your help.

  54. Hello Carlo Rey,

    If you are asking if the developer can file a estafa case against you, I don’t think they will. File for the cancellation of your contract as soon as possible, though.

  55. Carlo Rey says:

    hi sir jun.

    are there any grounds kung wala na akong pondo sa checking account. Hindi ko na po kayang ipagpatuloy ang monthly installment sa condo.

    tnx po

  56. Hello Kathy,

    Robinson’s Land and Filinvest are two of the most reliable and trustworthy developers in the Philippines. They always deliver what they promise.

  57. Hello Bernadette,

    Acacia Estate is a project of DMCI, one of the Philippine’s biggest and most reliable developers. I have not heard anything negative about any of their projects. So you will be safe investing in Acacia Estate.

    You said “we are taking a trip there to look at things before you commit… and we will be there for two weeks.” I am assuming that you are asking if that two weeks will be enough time for you to complete the sales process? I am also assuming that you will be buying in cash.

    The sales process starts with the payment of the reservation fee. In your case, since you are buying in cash, you can simultaneously pay the reservation fee and the rest of the contract price. But the thing is a Contract to Sell will have to be processed and signed by you and notarized. Then a Deed of Absolute Sale will also be processed, signed by you and then notarized.

    This process normally takes much more than two weeks to complete. But if the president of the real estate firm who was introduced to you can pull some strings at DMCI, two weeks may be enough.

    But what is impossible to complete in two weeks is the transfer of the Condominium Certificate of Title (CCT) to your name that will make the condominium unit officially yours. This takes a few to several months and will require your signature. You will either have to come back to the Philippines or you can issue a Special-Power-of-Attorney to someone here to do the signing for you. Needless to say, this person should be someone whom you can absolutely trust. You may consider issuing the SPA to the realty president who was introduced to you. As to how the actual CCT will be delivered to you will be up to you and your attorney-in-fact.

    I hope this helps.

    My best regards

  58. Bernadette says:

    We were in the Philippines December/January our only daughter got married there. We stayed at Acacia Estate for almost two months and loved the surroundings when we were there we looked into purchasing a condo in the same estate. We have now decided to buy a condo here which includes the condo, parking space and a drying area. No money has exchanged hands we are taking a trip there to look at things before we commit. We have been introduced to a person who is a president of a big firm dealing in real estate and who has offered to help. Can you or anyone suggest what should we look for or “Be Aware” of before we commit or sign any documents. We are overseas buyers and first time buying in the Philippines. One more thing the condo is on the ground level we are aware that we can buy a condo but not land or property such as a house by itself on land and we are there for two weeks will this be enough time to take ownership.

    Thank you

    Regards
    Bernadette

  59. Hi Jun! This is article is very informative. What can you say about Robinson’s Land and Filinvest?
    Thanks!

  60. Hello Geoff,

    Century Properties is generally a good developer, they deliver what they promise. I haven’t heard anything bad about their projects except for their prices. By using the Trump, Paris Hilton and Versace brands, Century is targeting people who “have already arrived.”

    Their branding can be likened to buying a Hermes bag for 15,000 Euros when you can buy a similar bag of the same quality for less.

    Another very reputable developer you should research on is Ayala Land. Especially check out their projects in Bonifacio Global City – Serendra and Bonifacio High Street South. While you’re at it, research on Bonifacio Global City and see what it’s going to become in the future.

    Before deciding on any condo project, always consider first its location.

    I hope this helps

    Best

    jun

  61. Really helpful to read all the advice and of course learn from the experiences of others. I was told to look at this blog by British expats forum users… as part of my research into one day buying a condo unit to live in Manila with my Philippine partner. But can anyone tell me why not to buy Century Properties? Ok, most of my research is done from London online using real estate websites and developer websites. But on my only visit to Manila in Jan 2012, I view 2 condos by Moldex, 1 on Roxas Blvd facing Manila bay, a luxury high rise, and 1 medium rise in Vanenzuela, Metro Manila (my partners mum is a part time agent dealing with Moldex) … I was quite impressed with the high rise condo, not so much with MR Valenzuela, but having searched into the background of Century Properties and viewed online videos and many units for sale either already built and pre selling, to me there is no contest, Century has the chic and style of many of the top western luxury apartment blocks here in UK etc. I know we need to be careful about buying off plan by a developer hardly heard of or not fully established, but Century has been around since the 1980’s and in process of building the Trump Tower Manila and just completed the Gramercy etc at Century City, Makati, then Acqua Private Residences across river from Rockwell centre. Surely these are or will be some of the most expensive, high end, luxury condos in the whole of the Philippines? On future trips to my partner in Manila we will go and view some of the completed condos by Century to see for ourselves what the places and finishes to the places are like for real. I can’t say I like Donald Trump that much, but even so would like to think one could trust the Philippine developers (Century) who are building the luxury condo tower branded with his name.

    Good and bad happens I think in every city and every country, and within that people sadly have poor and sometimes awful experiences when individuals or companies let them down, with property or other things they buy. Can anyone please tell me what they see as the issues against buying a Century Properties built apartment (condo unit) and if they really are that bad we shouldn’t buy from them under any circumstances then can they suggest a builder / Developer who may be trusted?

  62. Again, thank you for your input, Mr. DeCarlo.

  63. George DeCarlo says:

    Dear Jun,

    If I were to go back in time, my suggestion for then and now is for all buyers to be extremely careful. We believed the words of an old friend of my spouse’s mother he calls an aunt. She was not honest and Ryan now dislikes her for the deception. Trust no one and only trust the facts leading to a truth.

    I would buy a condo but I would make sure I knew the true reputation of the builder and their developer. In the Philippines like Hollywood accounting, new companies are made up all the time for cover, So a proclaimed builder’s name may never be seen in any of the paperwork.

    I would never buy Century Properties ever again. Someone we know who buys and rents units says his experience has shown him that those who buy Century, as an example, never buy again after the experience.

    In fact, given recent experience, I now warn all Americans to be very careful. Filipinos have now been warning me for some time as far as my safety for being a Unit Owner activist. The warnings as to what could happen to me are quite serious.

    Anyone who wants to contact me, please feel to do so. The link in my previous message has a signature at the bottom with contact information.

  64. Hello Gina,

    I’m equally glad that my blog has helped you in some ways.

    Merry Christmas and a Happy New Year.

  65. gina priagola says:

    I’m glad I stumble upon this article. I am planning to buy a condo next year and this info gave me more insights about condos in the Philippines.

  66. Hello Mr.DeCarlo,

    Thank you so much for you keen insight into the condominium market; it’s straight to the point, unbiased and very informative.

    Given your experience as a condo resident, if you will be given the chance to go back in time, will you still choose to live in a condo?

    Again, thank you so much and Merry Christmas.

  67. George DeCarlo says:

    Buying a condominium in the Philippines is quite complex with many details never explained. On the backend of the purchase you will find getting a Title is quite a ceremony. Unlike nations such as the US, getting the title is very important due to use of it for loans by others without your knowledge. This is against the law in the US but legal in the Philippines. At the time of turnover you may also find that what was promised and advertised is not delivered but the pressure to sign is there.

    Place “soho central decarlo” for a link to the skyscrapercity.com website for a forum which has many links to other resources. Please read the many pages and ask questions. There are links to other forums to give you an idea on the serious situations that may develop.

    Please seriously consider a book I should have gotten long ago. The Guide to Homeownership by Armando Ang is a blunt writing into the truth of the real estate market in the Philippines with a wonderful chapter on condos. Remember to demand copies of the Master Deed, Bylaws and Rules & Regulations before signing. These docs are kept hidden by most developers.

    An important question for existing condominiums is whether or not the Board of the building is developer or Unit Owner controlled. Boards are developer controlled in the beginning seated in the capacity under the corporation that all condominiums must be formed. Unit Owner boards increase value as opposed to developer control.

    Some quick hints: examine 5-9 units before making purchase; if there is any flooding around the building no matter how wonderful, say nice but no thanks; and since there is a glut from what we see, do not buy prebuilt at this time only existing units.

  68. Hello Mr. Cliffordx

    At the end of the day, it’s really the unit owners who will determine if the condominium is still not obsolete nor uneconomical and, therefore, worth restoring after 50 years.

    By the way, can you name one condominium that was built 50 or more years ago that is built at the scale that condos are being built today with residents numbering at around 5 thousand or more per building and still standing?

    Thanks for dropping by.

  69. like a corporation, after 50 years just renew the contract. I haven’t seen an unproductive, non economic condo being demolished even its more than 50 years old.

  70. I understand your feeling, Mr. Alexander but please note that I always write my articles with the welfare of home buyers especially first time home buyers in mind. I owe my loyalty to them not to developers. If I write anything that does not bode well on them, rest assured that I do so in good faith.

    It’s true that to say that the lifespan of a condominium building that usually ranges in height from 25 to 40 storeys, is only 50 years may seem short. There are buildings (not condominiums) in other countries that have stood for 100 years without major repairs.

    But their environment is different from the Philippine environment. We are surrounded by water and we experience an average of 20 typhoons each year, many are deadly. Our country lies in the Pacific Rim of Fire that makes earthquakes a constant threat.

    Below is part of Republic Act 4726 also known as the Condominium act of the Philippines.

    Section 8 states among others:

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

    …c) That the project has been in existence for more than 50 years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than 50 percent in the common areas are opposed to repair or restoration or modeling or modernizing of the project.”

    Although the law does not say that the condominium building will be automatically demolished after 50 years (it’s up to the unit owners), how come the promulgators of the law pegged a benchmark of 50 years? Why not 60 or 70 years?
    Please note that in the middle class market, the biggest condominium market in the Philippines, it’s common to see condos that are 35 storeys and above with 50 units (some with as many 60 units) per floor. At a conservative estimate of 3 occupants per unit, a 35 storey unit will have 5,250 residents. Imagine the kind of impact those 5,250 residents will have on the facilities of the building over time.

    With all due respect Mr. Alexander, I don’t think one can replace the electrical wirings and water and sanitary pipes in a 35 storey condominium just like in a normal house.

    The older the condominium becomes, the higher its maintenance cost will be and, therefore, the higher the association dues. As it reaches 50 years, many unit owners will find the condominium obsolete and uneconomical. And many will oppose its repair or restoration because of the high cost involved.

    The law is not explicit on the 50-year lifespan of a condominium, it is implied.

    Thank you

  71. 50 years is not that long for a building made of concrete, after all concrete gets harder and harder for the first 50 years of its life span, so to tear down a building after 50 years is trying to demolish a building at its greatest strength. technologies in high rise buildings hasn’t changed much in the last 80 or so years, elevators get upgraded, yes electrical wiring and water pipes get replaced, as they would in a normal house, i don’t get the negativity about this article.

  72. Please do watch out for my next blog; I’ll be posting it within a few days. I’m just too busy with work.

    It’s a continuation of my last post.

    Thank you so much, Aaron, for the compliment and my warmest regards.

  73. very informative blog, sir. my family is currently considering the pros and cons of buying a condo unit here in las pinas city. some of the stuff you mentioned made me think hard if it would truly be a practical investment. location and accessibility is not a problem because its directly behind the new sm center las pinas and its just across the local city hall w/ schools, malls, and hospitals surrounding it. but the thing is, las pinas is not makati nor even alabang…

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  1. […] to show that you are serious about making the purchase. As proof of ownership, you must display the Condominium Certificate of Title, abbreviated as CCT. However, in order to say that you own the condominium fully, a transfer title […]

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