Understanding co-ownership | Company Applicant

(First of two parts)

Condominium units continue to sell like hot cakes.

In its report on the real estate sector, the Board of Investments projected an annual growth of at least 3% in the assumption of units, consistent with the formation of households in the country. Colliers International Philippines meanwhile noted that despite higher inflation and rising benchmark yields from Bangko Sentral ng Pilipinas, 54,000 condo units located in Metro Manila’s prime business districts have been sold. in 2018, surpassing the previous record of 53,000 units in 2017. Last year also saw strong demand for affordable to mid-range units, with prices ranging from 1.7 million pesos to 5.9 million pesos.

“Yields are more likely to remain attractive in larger [central business districts (CBD)], unless some extraordinary event occurs,” Colliers said in a report for the Inquirer. “We suggest that potential buyers seriously consider projects in major CBDs and those in easily accessible outlying areas, as they would offer the best returns on investment.”

Potential buyers should understand that investing in a condominium is more than owning a unit. Under the Condominium Act, co-ownership refers to an interest in real property, consisting of a separate interest in said unit in a commercial, industrial or residential building; and an undivided interest in the land on which the building is located and in other common areas thereof. In some cases, a joint ownership may also include a separate interest in other portions of that real estate.

Ownership of the land, common areas or interests therein may be held by a condominium corporation, of which the holders of separate interests are automatically members or shareholders, to the exclusion of others. Their interest in the corporation is proportional to the related interest of their respective units in the common areas.

Article 5 of the said law states: “Any assignment or disposal of a unit or apartment, office or store or any other space therein, includes the assignment or disposal undivided interests in the common areas or, if applicable, the membership or participation in the condominium corporation: provided, however, that where the common portions of the condominium project are owned by the owners of separate units as co-owners of those herein, no unit of condominium shall be assigned or transferred to persons other than Philippine citizens, or corporations in which at least sixty percent of the registered capital is owned by Philippine citizens, except in cases of hereditary succession.

He further noted that “…where the common portions of a condominium project are owned by a corporation, no transfer or transfer of a unit shall be valid if the concurrent transfer of membership or shareholding related in the company will cause the foreign interest in such company to exceed the limits imposed by the laws in force.

Unless expressly provided otherwise in the Enabling or Master Deed or Statement of Restrictions, a unit owner is granted: the boundary of the unit, consisting of the interior surfaces of boundary walls, floors, ceilings, windows and doors thereof; an exclusive easement for the use of the airspace encompassed by the boundaries of the unit as it exists at any given time and as the unit may lawfully be modified or reconstructed from time to time; co-ownership of common areas in equal shares, one for each dwelling, unless otherwise provided; and a non-exclusive easement for entry, egress, and support as props to each unit and common areas.

A unit owner may also be granted the exclusive right to paint, repaint, tile, wax, paper or otherwise touch up and decorate the interior surfaces of walls, ceilings, floors, windows and doors bounding his own unit; exclusive right to mortgage, pledge or encumber his co-ownership and have it assessed independently of other co-ownerships, but any obligation incurred by this owner is personal to him; and the absolute right to sell or dispose of his co-ownership, unless the main deed obliges him to first offer the unit to the other co-owners within a reasonable time before it is offered to third parties .

(To be continued)

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