CLARESSA MARQUEZ-LEDESMA (or part or parts of floors) in a building or buildings and

2009301343 such accessories as maybe appended thereto

REM 124 Assignment 1
Condominium Concepts - HO “PROJECT”
It is the TOTALITY of the site (land), condominium
Summarize and compose a Handout of the units and common areas
CONDOMINIUM CONCEPTS
Not less than 2500words, must not exceed A vertical subdivision on a parcel of land and a multi-
3000words storey structure erected thereon

CONDOMINIUM CONCEPTS
“COMMON AREAS”
Condominium Housing was basically born out of the Means the entire project excepting all units separately
condition of limited land space. granted, held or reserved.

In the Philippines, the concept of condominiums was Refers the weight bearing walls, columns and beams,
formally recognized with the passage by congress on stairways, halls, elevators, etc.. Including the
June 18, 1966 of the Republic Act No. 4726 entitled electrical, water and plumbing systems and amenities
“An Act to Define Condominium, Establish in a condominium project
Requirements for Its Creation, and Govern Its
Incidence” TYPES OF COMMON AREAS
• GENERAL OR UNDIVIDED – not subject to the
“CONDOMINIUM” exclusive use of any one or group of owners
Is defined as an interest in a real property consisting (swimming pool, hallways, stairways,
of a separate interest in a unit in a residential, elevators, etc…)
industrial or commercial building, and an undivided • LIMITED OR DIVIDED – areas allocated the
interest in common, directly or indirectly in the land EXCLUSIVE common areas use of one or group
on which it is erected and in other areas of the of unit owners
building.
EXTENT OF INTEREST IN COMMON AREAS:
Title to the common areas, including the land, or the 1) In the absence of any provision in the Master Deed,
appurtenant interests in such areas, maybe held by a all unit owners shall have EQUAL SHARE in the
“corporation” specially formed for such purpose, in common areas,
which holders of separate interest shall automatically 2) The Master Deed may provide any of the following
be member or shareholders, to the exclusion of the alternatives:
others, in proportion to the appurtenant interest of 2.1 Equal Sharing
their respective units in the common areas. 2.2 Sharing Based on VALUE
2.3 Sharing Based on UNIT AREA in relation to
“UNIT” Total Area
This is the SPACE encompassed by the interior surface
of the floor, ceilings, walls, and exterior doors and COMMON AREA VS. CONDOMINIUM UNIT:
windows, which is susceptible of INDEPENDENT USE In Limson vs. Wack Wack condominium Corporation
and OWNERSHIP. (G.R. No. 188802, 14 February 2011), the Supreme
Court held that an electrical panel, which functions as
A part of the condominium project intended for any “utility installation” should not be considered as part
type of independent use or ownership, including one of the unit. Instead, it should be deemed part of the
or more rooms or spaces located in one or more floors common area since it functions to serve interests
common to the dwellers. The electrical panel’s
location inside the unit notwithstanding, it is not 7. RULES AND REGULATIONS – determines what
automatically considered as part of it. unit owners and tenants can and cannot
do
“TO DIVIDE” REAL PROPERTY
Means to divide the ownership thereof or other
interest therein by conveying on or more CONDOMINIUM MASTER DEED AND DECLARATION
condominiums therein but less than the whole OF RESTRICTIONS
thereof The Enabling or Master Deed maybe amended or
revoked upon registration of an instrument executed
MAJOR DOCUMENTS IN A CONDOMINIUM PROJECT by SIMPLE MAJORITY of the registered owners of the
property
1. CONDOMINIUM CERTIFICATE OF TITLE (CCT) –
is the evidence of ownership of the Simple Majority shall be on a per unit basis if the
condominium unit (compared to the Transfer project is exclusively for residential or commercial;
Certificate of Title for Land Ownership)
In case of mix-use, simple majority shall on a floor area
of ownership basis.
2. TAX DECLARATION – reference for tax
assessment and tax due on the Any amendment or revocation shall be submitted to
the HLURB and the City/Municipal Engineer for
condominium unit and share in the common
approval before it can be registered (As amended by
areas R.A. No. 7899, approved Feb. 23, 1995)

3. CERTIFICATE OF MANAGEMENT– a document

issued by the condominium corporation that CONDOMINIUM MASTER DEED AND DECLARATION
the conveyance is in accordance with the OF RESTRICTIONS
Master Deed / Restriction 1) Description of the land or lot
2) Description of the building (no. of storey,
units…)
4. MASTER DEED – refers to the Enabling Act of 3) Description of Common Areas and Facilities
any condominium project. This “enables” 4) Description of Interest acquired by the unit
the condominium to exist and governs its owners in the common areas and land
existence 5) Purposes for which the building and units are
5. DEED OF RESTRICTIONS – lays down the to be used
6) Certification by Registered Owner of the
provisions for management body, insurance
Property if he is other than those executing the
coverage, maintenance cost and assessment Master Deed, that he consents to the
basis and audit registration of the Deed
7) Deed of Restrictions
8) Annexes, land survey plan and building
6. ARTICLES OF INCORPORATION – establishes diagrammatic or schematic floor plans
the birth and guidelines of and BY-LAWS of
the condominium corporation THE DEED OF RESTRICTIONS indicate the following:
1) Management Body
2) Provision for Insurance Coverage
3) Provision for the maintenance of Common
Areas and Facilities
4) Sharing of Realty Tax on Common Areas
 5) Manner of Amending Restrictions
6) Independent Audit 6) EFFECT OF INVOLUNTARY DISSOLUTION
7) Assessment and dues o The common areas held by the corporation
8) Project Partitioning and Dissolution of the shall be transferred pro-indiviso and in
Condominium corporation proportion to their interest in the
corporation to the members or stockholders
THE NEED FOR A CONDOMINIUM CORPORATION thereof, subject to the superior rights of the
1) NECESSITY FOR CREATION corporation creditors
- The organization of a Condominium o The transfer shall be deemed full liquidation
Corporation is OPTIONAL if no unit will be of the interest of the members or
sold to Foreigners. stockholders in the corporation
- The Corporation is MANDATORY if some
units, not to exceed 40%, will be sold to DISSOLUTION OF CONDOMINIUM CORPORATION
foreigners. In such case, title to the land shall The condominium corporation may also be dissolved
be transferred to the Corporation to comply by the AFFIRMATIVE VOTE of all the stock holders or
with the constitutional mandate that members thereof at a general or special meeting duly
corporations may acquire real estate called for the purpose DISPOSAL, SELL, EXCHANGE OF
provided that least 60% of the capital or COMMON AREAS
membership is Filipino
The condominium corporation shall not during its
2) PURPOSES OF CORPORATION existence, sell, exchange, lease or otherwise dispose
- to Hold Title to the Land, and Act as the of the common area owned or held by it, unless
Management Body authorized by the AFFIRMATIVE VOTE of SIMPLE
MAJORITY of the registered owners.
3) CONFLICTS WITH MASTER DEED
in case of conflict between the provisions of the NON PAYMENT OF A UNIT OWNER OF HIS DUES
Articles of Incorporation of the condominium Shall constitute a lien on the title of the condominium
corporation and the Master Deed, the latter shall unit to be registered with the Registry of Deed
prevail based on the following reasons: concerned

• It is the Master Deeds that gives birth to the The management body shall have the power to bid at
condominium project the foreclosure sale
• the condominium corporation shall not
conflict with the Master Deed Condominium Corporation

4) TERM OF CORPORATION Membership in the Condominium corporation,

the life of the condo corporation is whether stock or non-stock, shall not be transferable
COTERMINOUS with the duration of the condominium separately from the condominium unit of which it is
project an appurtenance

5) EFFECT OF VOLUNTARY DISSOLUTION SUBDIVISION VS. CONDOMINIUM

• The Corporation shall be deemed to hold a SUBDIVISION CONDOMINIUM
power of attorney from all its
stockholders or members to sell their separate
interest in the project. Absolute Limited to the interior
• Liquidation of the Corporation shall be ownership over surface of the unit plus
affected by the Sale of the entire project land and the unit share in the “common
subject to the rights of the corporation and areas”
individual condominium creditors
 Transfer Certificate Condominium Certificate of
of Title (TCT Title (CCT
Foreigners not Foreign ownership allowed
allowed to own up to 40%
Open space Common Area provision
requirement under
PD1216

FACTORS AFFECTING VALUES OF CONDOMINIUM

PROJECT OR UNITS
Location: relative location to center of activity,
relative location of the unit within the project
Classification: residential, commercial, industrial
Type of Unit: regular, corner, single level, with loft
Size : floor area is ideal to its utility or HABU
Layout: floor plan lay-out
Design: architectural, floor lay-out, building features
Depreciation: condition, physical wear and tear

VALUATION METHODS:
Whether the appraiser’s assignment of values
involves the valuation of a condominium unit or
several units, or the entire condominium project, the
three approaches to value can be applied

- Market Data Approach / Sales Comparison

Approach
- Cost Approach
- Income Approach
VALUATION OF A CONDOMINIUM PROJECT:
Clark Corporation is building a Condominium project on a 1,000 [Link]. vacant lot. Market Value of Land
at P50,000 per square meter, total floor area of the condo building is estimated at 8,000 square meters,
cost of building construction is P35,000 per square meter, estimated building ME at P8,000 per square
meter, swimming pool at P7,000,000; SPA & gym at P5,000,000; Admin Cost at 4% of Development
Cost; Marketing/Selling Expenses at 5% of Development Cost; Project Development in 2-years; Interest
Rate at 12%, Bank’s Loan Value at 60% of the Appraised Value or Project Cost, and Developers Profit at
30%

Market survey of valuations of a residential condo units ranges from P80,000 to P100,000 per square
meter.

Solution:
Land = 1,000 [Link]. @P50,000 P 50,000,000
Bldg = 8,000 [Link]. @P45,000 P 280,000,000
Bldg ME: 8,000 @P8,000 P 64,000,000
Swimming Pool P 7,000,000
SPA & Gym P 5,000,000
Therefore, DEVELOPMENT COST = P 406,000,000

PLUS
Admin Cost: 4% of Dev’t Cost P 14,640,000
Marketing/Selling Exp.: 5% Dev’t Costs P 18,300,000
Cost of Borrowed Money:
Dev’t Cost x LV x interest x period of dev.
366MM x 60% x 12% x 2 P 52,704,000
Developer’s Profit: 30% P 109,800,000
Therefore, TOTAL COST = P 601,444,000

Therefore, if
Net Floor Area is 80% of Total Bldg. Area = 6,400 square meters
Then, the Average Selling Price is
601,444,000 / 6,400 [Link]. = P 93,075.625
SAY @ P93,000 per square meter
Conclusion: The project is FEASIBLE

FOR SALES COMPARISON:

If the COMPARABLE IS SUPERIOR, you deduct (-)
If the COMPARABLE IS INFERIOR, you add (+)
VALUATION BY MARKET DATA OR SALES COMPARISON APPROACH:
SUBJECT DATA 1 DATA 2 DATA 3

PRICE ? P8,950,000 P7,580,000 P8,200,000

Size ([Link].) 120 140 128 134

 Floor/Level 14 20 12 16
Finishes GOOD BETTER GOOD GOOD
Floor Lay-out GOOD BETTER GOOD BETTER
Ameneties GOOD GOOD FAIR FAIR
ADJUSTMENTS:
Size -5% -2% -3%
Floor/Level -5% 2% -1%
Finishes -5% 0% 0%
Floor Lay-out -5% 0% -2%

Ameneties 0% 5% 1%
TOTAL ADJUSTMENTS -20% 5% 5%
ADJUSTED PRICE P_______ P10,740,000 P7,959,000 P8,610,000
___

VALUATION BY INCOME APPROACH:

What is the value of a condominium unit having a floor area of 130 [Link]., rented at P400/sq.m. on a
yearly basis? Interest rate at 10%per annum.

Solution:
Floor Area = 130 [Link].; Rented at P 400/sq.m
Interest Rate @ 10% PA
Therefore: ANNUAL INCOME = P130 x 400 x 12
= P 624,000
Less Tax: 5% (P31,250) = P 592,800
Using Direct Capitalization Method = P 592,800.00 x 10%
Therefore, VALUE OF UNIT = P 5,928,000.00
NOTES:

- The law governing the protection of buyers who are buying subdivision lots/house & lots, and condominium units is
referred to as PRESIDENTIAL DECREE NO. 957 or SUBDIVISION AND CONDOMINIUM BUYER’S PROTECTIVE DECREE (1976)

- Any person directly engaged as principal in the business of selling, or exchanging real estate whether on full time or part
time basis is known as REAL ESTATE DEALER

- A written authorization to develop in a certain area based on an approved land use plan or ordinance is referred to as
LOCATIONAL CLEARANCE

- A buyer who failed to pay the installments due for reasons other than the failure of the owner or developer to develop the
project shall be governed by REALTY INSTALLMENT BUYER’S PROTECTION ACT

- The buyer may desist from making his monthly payment or amortization to the developer for non-completion of the project
on its completion date provided the buyer GIVES NOTICE TO THE DEVELOPER

- The entire parcel of a real property divided or to be divided in condominium including structures thereon is known as
CONDOMINIUM PROJECT

- As owner of a condominium unit, the owner would be liable to pay real estate taxes ON THE TAXES OF HIS UNIT

- The space encompassed by the interior surface of the floor ceiling, walls, and exterior doors and windows, which is
susceptible of independent use and ownership is known as CONDOMINIUM UNIT

- A unit owner does not have the right as a condominium unit owner TO PAY FOR SHARE IN INSURANCE OF THE CONDO
PROJECT

- In a mix-use condo project, amendment of the Master Deed shall be decided by MAJORITY VOTE BASED ON PER UNIT
FLOOR AREA

- A Notice of Assessment shall considered as a lien on the condominium unit if it is REGISTERED WITH THE REGISTER OF
DEEDS

- To register a sale of a condo unit, a CERTIFICATE OF MANAGEMENT must be secured from the condo corporation

- GENERAL COMMON AREA is a part of the condominium which are not subject to the exclusive use of any of the owners

- The law covering the ownership and rights of a unit owner is known as THE CONDOMINIUM ACT

- The areas allocated to the exclusive use of a condominium unit owner like parking space is known as LIMITED COMMON
AREA

- A partition by sale may be made provided that damaged or destruction to the project has rendered one-half or more of
the units therein un-tenantable and that condominium owners with common interest are opposed to repair is more than
30%
- The condominium corporation maybe dissolved if the project has been in existence in excess of 50 years, that it is obsolete
and that members of the corporation are opposed to the repair or restoration or remodeling or modernizing of the project
to the extent of more than 50% OF THE MEMBERS

- A residential condominium corporation shall not during its existence, sell 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 REGISTERED
OWNERS
References:

[Link]
[Link]