By: Atty. Nelson G.

Leyco September 1, 2013

 Can

a foreigner legally buy a condominium unit? NO, why? YES, how?

If If

 THE

CONDOMINIUM ACT (Republic Act No. 4726) SUBDIVISION AND CONDOMINIUM BUYERS' PROTECTIVE DECREE (Presidential Decree No. 957) INSTALLMENT BUYER ACT also known as THE MACEDA LAW (Republic Act No. 6552)

THE

REALTY

THE CONDOMINIUM ACT

A condominium is an interest in real property consisting of separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building. A condominium may include, in addition, a separate interest in other portions of such real property. 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 the holders of separate interest shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas. (Sec. 2, RA 4726)

It

is a separate interest in a unit or other portions of a building together with a common interest on its land and other common areas.

 "Unit"

means 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 (or part or parts of floors) in a building or buildings and such accessories as may be appended thereto.

1997 SC Decision previously held that parking slots do not form part of the unit, but instead, these form part of the common areas. (See G.O.A.L. Inc. vs CA, G.R. No. 118822. July 28,
1997)

However,

subsequent decisions of the SC involved facts where parking spaces were treated like units (e.g., covered by CCTs, excluded from the common areas and sold to customers). It would seem that the SC has impliedly recognized this practice as being valid.

Each condominium owner shall have the exclusive right to paint, repaint, tile, wax, paper or otherwise refinish and decorate the inner surfaces of the walls, ceilings, floors, windows and doors bounding his own unit.

Each condominium owner shall have the exclusive right to mortgage, pledge or encumber his condominium and to have the same appraised independently of the other condominiums but any obligation incurred by such condominium owner is personal to him. Each condominium owner has also the absolute right to sell or dispose his condominium unit unless the master deed contains a requirement that the property be first offered to the condominium owners within a reasonable period of time before the same is offered to outside parties (also called the Right of First Refusal).

Each unit shall be separately assessed, for purposes of condominium dues and other tax purposes and the dues and/or tax on each such unit shall constitute a lien solely thereon. An assessment upon any unit in accordance with the declaration of restrictions shall become a lien when the management body causes a notice of assessment to be registered with the Register of Deeds.

In a case decided by the CA and affirmed by the SC in Salvacion vs. Chateau de Baie Condominium Corporation, G.R. No. 178549, it was held that: R.A. No. 4726 does not require a special authority from the condominium owner before a condominium corporation can initiate a foreclosure proceeding.

 "Common

areas" means the entire project excepting all units separately granted or held or reserved. Examples:
lobbies, stairways, hallways, and other areas of common use, elevator equipment and shafts, central air-conditioning equipment, reservoirs, tanks, pumps and other central utility installations, wherever located, except the outlets thereof when located within the unit.

NOTE: A non-exclusive easement for ingress, egress and support through the common areas is appurtenant to each unit and the common areas are subject to such easements.

SECTION 5 of The Condominium Act provides:

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 interests in the common areas or, in a proper case, the membership or shareholdings in the condominium corporation: Provided, however, That where the common areas in the condominium project are owned 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 corporations at least sixty percent of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession. 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.

WHEN THERE IS NO CONDO.CORP.

Any

conveyance of a unit shall include the conveyance of the undivided interests in the common areas. the common areas in the condominium project are owned by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed to persons other than Filipino citizens, or Filipino corporations

Where

WHEN THERE IS A CONDO.CORP.

Where the common areas in a condominium project are held by a corporation, no conveyance of a unit shall be valid if the concomitant transfer membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limits imposed by existing laws.

Membership in a condominium corporation is not transferable separately from the condominium unit of which it is an appurtenance. When a member ceases to own a unit, he shall automatically cease to be a member of the condominium corporation.

transferee shall be entitled to the issuance of an owner's copy of the Condominium Certificate of Title (the CCT). conveyance, subsequent to the original conveyance from the owner of the project, shall be registered unless accompanied by a certificate of the management body of the project that such conveyance is in accordance with the provisions of the declaration of restrictions of such project.

No

There shall be recorded in the Register of Deeds of the province or city in which the property lies and duly annotated in the corresponding certificate of title of the land an enabling or master deed which shall contain, among others, the following:
(a) Description of the land (b) Description of the building stating the number of stories and basements, the number of units and their accessories (c) Description of the common areas and facilities (d) A statement of the exact nature of the interest acquired or to be acquired by the purchaser in the separate units and in the common areas of the condominium project. Where title to the common areas is to be held by a condominium corporation, a statement to this effect shall be included (e) Statement of the intended purpose of, and reasonable use or disposition restrictions for, the building and each of the units The master deed may be amended or revoked upon registration of an instrument executed by a simple majority of unit owners based per unit (if exclusive use) or per floor area (if mixed-use). Such instrument shall be approved by HLURB and City/Municipal Engineer.

 The

owner of a project shall, prior to conveyance of any unit, register a declaration of restrictions which shall bind all units and annotated on the certificate of title covering the land.
Vote of not less than a majority is required for amending the declaration of restrictions. Master Deed and the Declaration of Restrictions is usually contained in a single instrument.

The

If there is no Condominium Corporation, an association of unit owners or some other body designated in the master deed or declaration of restrictions will be the management body, and will administer the common areas.
If there is a Condominium Corporation, it shall constitute the management body of the project. The corporate purposes of such corporation shall be limited to the holding of the common areas, either in ownership or any other interest in real property recognized by law, to the management of the project, and to incidental purposes. However, a management body or company may also be appointed. This is especially true in cases where the unit owners comprising the members of the Association or the Condo. Corp. are busy with their own affairs. VERY IMPORTANT NOTE: A condominium corporation shall not, during its existence, sell, exchange, lease, or otherwise dispose of the common areas unless authorized by a simple majority of the owners.

The term of a condominium corporation shall be co-terminous with the duration of the condominium project, the provisions of the Corporation Law to the contrary notwithstanding.
In case of involuntary dissolution of a condominium corporation, coownership of the common areas shall fully apply. Until the master deed is revoked, the corporation shall not be voluntarily dissolved through a voluntary action for dissolution except upon a showing: (a) (b) (c) (d) 3 years after material damage, the project has not been repaired at least 1/2 the units are untenantable and 30% of owners are opposed to repair the project is 50 years old and obsolete and 50% of owners are opposed to repair there is material condemnation or expropriation and 50% of owners are opposed to continuation

 The

condominium corporation may also be dissolved by vote of all members.

voluntary dissolution of a condominium corporation the corporation shall be deemed to hold a power of attorney from all the members to sell and dispose of their separate interests and liquidation shall be effected by a sale of the entire project as if the corporation owned the whole thereof.

Upon

Generally, the common areas shall remain undivided, and there shall be no judicial partition thereof.
SECTION 8. Partition of condominium project shall be made only upon a showing that: (a) (b) (c) (d) 3 years after material damage, the project has not been repaired at least 1/2 the units are untenantable and 30% of owners are opposed to repair the project is 50 years old and obsolete and 50% of owners are opposed to repair there is material condemnation or expropriation and 50% of owners are opposed to continuation

THE SUBDIVISION AND CONDOMINIUM BUYERS' PROTECTIVE DECREE

 Reports

of alarming magnitude show cases of swindling and fraudulent manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators, such as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent purchasers for value, and failure to develop these subdivisions and condominiums according to plans.

Section 4. Registration of Projects. The registered owner of a parcel of land who wishes to convert the same into a subdivision project shall submit his subdivision plan to the Authority which shall act upon and approve the same, upon a finding that the plan complies with the Subdivision Standards' and Regulations enforceable at the time the plan is submitted. The same procedure shall be followed in the case of a plan for a condominium project except that, in addition, said Authority shall act upon and approve the plan with respect to the building or buildings included in the condominium project in accordance with the National Building Code (R.A. No. 6541).

Section 5. License to sell. Such owner or dealer to whom has been issued a registration certificate shall not, however, be authorized to sell any subdivision lot or condominium unit in the registered project unless he shall have first obtained a license to sell the project within two weeks from the registration of such project. Q: Is failure to register and to secure a license to sell sufficient ground to rescind a purchase of a Condo Unit?

Section 17. Registration. All contracts to sell, deeds of sale and other similar instruments relative to the sale or conveyance of the subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered by the seller in the Office of the Register of Deeds of the province or city where the property is situated. NOTE: This is frequently violated in actual practice.

Section 18. Mortgages. No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the Authority. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. The buyer may, at his option, pay his installment for the lot or unit directly to the mortgagee who shall apply the payments to the corresponding mortgage indebtedness secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereto

Section 19. Advertisements. Advertisements that may be made by the owner or developer through newspaper, radio, television, leaflets, circulars or any other form about the subdivision or the condominium or its operations or activities must reflect the real facts and must be presented in such manner that will not tend to mislead or deceive the public. The owner or developer shall be answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures, advertisements and other sales propaganda disseminated by the owner or developer or his agents and the same shall form part of the sales warranties enforceable against said owner or developer, jointly and severally. Failure to comply with these warranties shall also be punishable in accordance with the penalties provided for in PD 957.

Section 20. Time of Completion. Every owner or developer shall construct and provide the facilities, improvements, infrastructures and other forms of development, including water supply and lighting facilities, which are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters, letters or in any form of advertisement, within one year from the date of the issuance of the license for the subdivision or condominium project or such other period of time as may be fixed by the Authority. NOTE: Extensions are, however, usually granted by the HLURB.

Section 23. Non-Forfeiture of Payments. No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.

Section 24. Failure to pay installments. The rights of the buyer in the event of this failure to pay the installments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552 (the Maceda Law).

Section 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title.
In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith.

Section 26. Realty Tax. Real estate tax and assessment on a lot or unit shall be paid by the owner or developer without recourse to the buyer for as long as the title has not passed to the buyer; Provided, however, that if the buyer has actually taken possession of and occupied the lot or unit, he shall be liable to the owner or developer for such tax and assessment effective the year following such taking of possession and occupancy.

Section 33. Nullity of waivers. Any condition, stipulation, or provision in a contract of sale whereby any person waives compliance with any provision of this Decree or of any rule or regulation issued thereunder shall be void. .

THE MACEDA LAW

SECTION 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments: (a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him, which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any. (b) I f the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer. Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

SECTION 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.

SECTION 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act. SECTION 6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property. SECTION 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void.

2 TYPES OF SALES TO BE CONSIDERED

One is called a "Unit Price" sale, governed by Art. 1539 of the Civil Code, where there is a price per unit of measurement (i.e., Php22k per square meter), and the other called a "Lump Sum" sale, governed by Art. 1542 of the Civil Code, where there is a lump sum for an "identified" property. Art. 1539 provides the remedy of rescission if the deficiency in the area exceeds 10%. Art. 1542 does not provide such remedy and even declares that there shall be no increase or decrease of the price, although there be a greater or lesser area or number than that stated in the contract.

CONTINUATION RE: 2 TYPES OF SALES TO BE CONSIDERED

"In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price although there be a greater or lesser area or number than that stated in the contract. HOWEVER, THE DISCREPANCY MUST NOT BE SUBSTANTIAL. A VENDEE OF LAND, WHEN SOLD IN GROSS OR WITH THE DESCRIPTION "MORE OR LESS" WITH REFERENCE TO ITS AREA, DOES NOT THEREBY IPSO FACTO TAKE ALL RISK OF QUANTITY IN THE LAND. THE USE OF "MORE OR LESS" OR SIMILAR WORDS IN DESIGNATING QUANTITY COVERS ONLY A REASONABLE EXCESS OR DEFICIENCY." (Lietz vs. CA, G.R. No. 122463, December 19, 2005)