Condominiums can be a wonderful home ownership option for many people. The reduced maintenance and shared community space are appealing to many types of buyers who also want to own their own dwelling. But condominiums also come with extensive legal frameworks.
Many people may be asking this. After one has purchased a condominium, what will happen to it after 50 years when it has served its purpose and the area where it stands becomes, well, not so much of a real estate hotspot as it is now? After all, buildings and structures are exposed to the elements and they are especially vulnerable—especially when not maintained well—to damage and wear and tear.
The condominium’s location, a primary predictor of its value, is also an important factor to its lifespan. What may be a real estate hotspot now may be an area of urban decay in 50 years’ time. (Though there are exceptions to this, including Melbourne’s Docklands and London’s Canary Wharf.) And this is especially true in the Philippines where an area could rapidly suffer urban decay: downtown Manila’s central business district of Escolta—a bustling area up until the 1960s—is now a long-forgotten street of dilapidated buildings. Even the Makati central business district, just a little over 40 years old, is already showing signs of aging.
It’s not surprising then that many would-be Filipino homebuyers are hesitant to purchase condominiums. Among their usual concerns include the extent of one’s ownership into a specific condominium project, who owns the land where the building sits, and who decides if and when the building has to be demolished.
Here we will address these concerns, which will eventually lead us to the issue of a condominium’s lifespan.
1. Condominiums Are Essentially Corporations
Although the Condominium Act of 1966 does not specifically stipulate this, it has become necessary today as many developers are targeting foreign buyers. Foreigners as we now are not allowed to own land in the Philippines, but they can buy into a corporation that owns one, so long as foreign ownership in a condo project does not exceed 40 percent. Hence, the land on which the condo sits is owned by the condominium corporation whose members are the individual unit owners (or shareholders). And this brings us to next point.
2. What Is the Extent of Ownership in a Condo Project?
Since homeowners possess only the specific dwelling (or dwellings) they purchased in a condominium project, they do not hold the title for the land where the building stands, neither do they hold exclusive ownership to the condominium’s common areas. Instead, individual unit owners are shareholders of the condominium corporation.