Condominium Act (RA 4726) PDF

# Condominium Act (RA 4726) ## Important Terms - **Condominium:** An interest in real property consisting of a separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common areas directly and indirectly, in the land, or the appertaining interes...

# Condominium Act (RA 4726) ## Important Terms - **Condominium:** An interest in real property consisting of a separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common areas directly and indirectly, in the land, or the appertaining interest of their respective units in the common areas. - **Unit:** A part of the condominium project intended for any type of independent use or ownership including one or more rooms or spaces located in one or more floors in a building or buildings and such accessories as may be appended thereto. - **Project:** The entire parcel of real property divided or to be divided in condominiums including all structures thereon. - **Common Areas:** The entire project except all units separately granted or held or reserved. - **Condominium Corporation:** Constitute the management body of the project. The corporate purposes of such a corporation shall be limited to the holding of the common areas; either the ownership of any other interest in real property recognized by the law; to the management of the project; and to such other purposes as maybe necessary. ## Rules on Transfer or Disposition of Unit 1. Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the transfer or conveyance of the undivided interest in the common areas or, in a proper case, the membership or shareholdings in the condominium corporation. 2. Where the common areas in the condominium project are held by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens or corporation at least 60% of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession. 3. Where the common areas in a condominium project are held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limits imposed by existing laws. 4. Upon registration of an instrument conveying a condominium, the Register of Deeds shall, upon payment of the proper fees, enter and annotate the conveyance on the certificate of title covering the land included within the project and the transferee shall be entitled to the issuance of a "condominium owners" copy of the pertinent portion of such certificate of title. ## Rights of Unit Owner 1. **Absolute Ownership** * The boundary of the unit granted, are the interior surfaces of the perimeter walls, floors, ceiling, windows and doors thereof: Provided, that in the case of an industrial estate condominium projects, wherein whole buildings, plants or factories may be considered as unit, the boundary of a unit shall include the outer surfaces of the perimeter walls of said buildings, plants or factories. * The following are not part of the unit: bearing walls, columns, floors, roofs, foundations, and other common structural elements of the buildings; lobbies, stairways, hall ways and other areas of common use, elevator equipment and shafts, central heating, central refrigeration and central air conditioning equipment, reservoir, tanks, pumps and other central services and facilities, pipes, ducts, flues, chutes, conduits wires and other utility installations, wherever located, except the outlets thereof when located within the unit. 2. An exclusive easement for the use of the air space encompassed by the boundaries of the unit, as it exists at any particular time and as the unit may lawfully be altered or reconstructed from time to time. Such easement shall be automatically terminated in any air space upon destruction of the units as to render it untenantable. 3. **Co-ownership** of the land and common areas, in equal share one for each unit. ## Partition by Sale of the Entire Project Where several persons own condominium in a condominium project, an action may be brought by one or more such person for partition thereof, by sale of the entire project based on the following grounds: - That three years after damage or destruction to the project which renders a material part thereof unfit for its use prior thereto, the project had 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 30 percent interest in the common areas are opposed to the repair or restoration of the projects; or - 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; 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 70 percent interest in the common areas are opposed to the continuation of the condominium regime after expropriation or condemnation of a material proportion thereof; or - That the condition for such partition by sale set forth in the declaration of restrictions duly registered in accordance with the terms of the Condominium Act, have been met. ## The Master Deed of Restriction The owner of a project shall, prior to the conveyance of any condominium therein must cause the registration of the declaration or restrictions, relating to such project, which restrictions shall ensure to a bind all condominium owners in the project. ## Principal Purpose: 1. To hold title to the land. 2. To act as the management body of the condominium project. ## Conflict with the Master Deed In case of conflict between the articles of incorporation of the condominium corporation and the master deed of the condominium project, the master deed shall prevail because the master deed gives birth to the condominium project. The project cannot exist without a master deed, but it can exist without a condominium corporation. ## Membership Membership in a condominium corporation regardless of whether it is stock or non-stock corporation, shall not be transferable separately from the condominium unit of which it is an appurtenance. When a member or a stockholder ceases to own a unit in the project in which the condominium corporation owns or holds the common area, he shall automatically cease to be a member or stockholder of the condominium corporation. ## Registration The registration and regulation of a condominium corporation shall be vested with the Housing And Land Use Regulatory Board (HLURB). ## Term of the Corporation The term of the said corporation shall be coterminous with the duration of the subdivision projects unless it is earlier dissolved ## Grounds for Involuntary Dissolution 1. The three years after damage or destruction to the project in which damage or destruction renders a materials part thereof unfit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction; or 2. The damage or destruction to the project has rendered one half or more of the units therein untenantable and that more than 30 percent of the members of the corporation entitled to vote, if a stock corporation, are opposed to the repair or reconstruction of the project; or 3. That the project has been in existence excess of 50 years, that it is obsolete and uneconomical and that more than 50 percent of the members of the corporation if non-stock or stockholders representing more than 50 percent of the capital stock entitled to vote, if a stock corporation, are opposed to the repair or restoration or remodeling or modernizing of the project; or 4. That project or material part thereof has been condemned or expropriated and that the project is no longer viable or that the members holding in aggregate more than 70 percent interest in the corporation if non-stock, or the stockholders representing more than 70 percent of the capital stock entitled to vote, if a stock corporation, are opposed to the continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or 5. That the conditions for such a dissolution set forth in the declaration of restrictions of the project in which the corporation, are opposed to the continuation of the condominium regime after expropriation or condemnation of a material portion thereof. ## Effects of Involuntary Dissolution 1. The common areas held by the corporation shall be transferred to the members of the corporation pro-indiviso and in proportion to their respective interests. 2. The transfer shall be deemed full liquidation of the interest of the members in the corporation. ## Voluntary Dissolution Condominium corporation may be dissolved by the affirmative vote of all the stockholders or members thereof at a general or special meeting duly called for such purpose: Provided, that all the requirements of Section 62 of the Corporation Law are complied with. ## Effects of Voluntary Dissolution Unless otherwise provided for in the declaration of restrictions: 1. The corporation shall be deemed to hold a power of attorney from all the members or stockholders to sell and dispose of their separate interests in the project and 2. Liquidation of the corporations shall be affected by a sale of the entire project as if the corporation owned the whole thereof, subject to the rights of the corporation and of individual condominium creditors. ## How Sale of Common Areas Effected 1. A condominium corporation shall not, during its existence, sell, exchange, lease or otherwise dispose of the common areas owned or held by it in the condominium project unless authorized by the affirmative vote of a simple majority of the registered owners: provided, that prior notification to all registered owners are done and provided further, that the condominium corporation may expand or integrate the project with another upon the affirmative vote of a simple majority of the registered owners, subject only to the final approval of the HLURB. 2. The stockholder or member shall not be entitled to demand payment of his shares or interest in those cases where such right is granted under the Corporation Law unless the consents to sell his separate interest in the project to the corporation or to any purchaser of the corporation's choice who shall also buy from the corporation the dissenting member or stockholder's interest. In case of disagreement as to price, the procedure set forth in the appropriate provisions of the Corporation Law for valuation of shares shall be allowed. The corporation shall have two years within which to pay for the shares or furnish a purchaser of its choice from the time of award. All expenses incurred in the liquidation of interest of the dissenting member or stockholder shall be borne by him. 3. Where the enabling or master deed provides that the land included within a condominium project are to be owned in common by the condominium owners therein the Register of Deeds may at the request of all the condominium owner and upon surrender of all their condominium owner's copies, cancel the certificate of title of the property and issue a new one in the name of said condominium owners as pro-indiviso co-owners thereof. ## Dues and Assessment 1. The Deed of Restriction usually provides for two kinds of assessment: * Regular Assessment - a monthly obligation to fund ordinary project expenses such as security, garbage collection, repair and maintenance of common areas, electricity and water bills on the common areas and realty tax and insurance of the common areas. * Special Assessment - this is imposed as the needs arises, such as need for the replacement of generator. ## Consequences of non-payment of assessment 1. The management body may constitute a lien on the delinquent unit by registering with Register of Deeds a notice of assessment and delinquency. Such lien shall be superior to all other liens registered subsequent to the registration of said notice of assessment except real property tax liens and except that the declaration of restrictions may provide for the subordination thereof to any other liens and encumbrances. 2. Such liens may be enforced in the same manner provided for by law for the judicial or extra-judicial foreclosure of mortgage or real property. 3. Unless otherwise provided in the declaration of restrictions, the condominium corporation may bid at the foreclosure sale. 4. The owner affected shall have the same right of redemption as min judicial or extrajudicial foreclosure of mortgage. ## Obligatons of Condominium Unit Owners 1. Pay the realty tax on his unit. 2. Share the realty tax on the land and common areas. 3. Pay the insurance on his unit. 4. Share the insurance on the common areas. 5. Comply with the restrictions. 6. Pay dues and assessments 7. Give other unit owners the priority right to buy his unit (right of first refusal) if so required by the master deed. ## Distinction between condominium and traditional concept of ownership, 1. **Evidence of Ownership** - ownership in the traditional concept is evidenced by an original or transfer certificate of title, while condominium ownership is evidenced by condominium certificate of title. 2. **Capacity to Buy** - In the traditional concept of ownership, alien acquisition is not allowed except in cases of hereditary succession or transfer in favor of former natural born Filipino citizens. In the condominium concept, alien ownership not to exceed 40% in the project is legally allowed. ## Extent of Ownership The interest in the traditional concept consist of absolute ownership of the inner and other structures of the building (the entire building). In the condominium concept, the unit owner is the absolute owner of the space within the interior surface of his unit, but is only a co-owner of the exterior or façade of the unit. ## Advantages of Condominium Concept 1. Enhances affordability by fractionalizing of land and building. 2. Facilities, utilities, amenities and services will cost less to build and maintain. 3. Economy in land space. Families holding title contiguous lands of say 40 or 50 sq. meters by adequate housing consolidating their lots and constructing a condominium project. 4. Enhances marketability because foreigners can buy. 5. Eliminates the routinary chores of daily maintenance, security and garbage collection associated with single detached dwellings. ## Operative Act to Condomize An owner or developer may convert a property into a condominium project by executing a legal document called Master Deed and registering the same with the Register of Deeds. ## General Steps in Condomizing 1. Preparation of building plans. 2. Execution and registration of master deed. 3. Organization of a non-stock, non-profit condominium corporation. 4. Execution of a deed of conveyance transferring land title to condominium corporation. 5. Submission of building plans to assessor's office to obtain individual tax declarations for the condominium units and common areas. 6. Application for registration and license to sell with HLURB.