Everything You Need to Know About Condo Ownership in the Philippines (2021)

What is your right as a condo owner based on Philippine law? Can you freely rent out your condo unit? What will happen with your condo after 50 years? Can you still profit at the end of your condo’s lifespan? What is a condominium corporation, and why should you care?

These are some of the commonly asked questions about Condo Ownership in the Philippines, and we are going to answer them in this article.

Leasehold vs. Freehold Ownership

There are two kinds of condominium ownership in the Philippines.

First, is the Leasehold ownership, wherein you buy the right to live in the property for a fixed amount of time. Usually, this contract is around 25-50 years. When your contract expires, you can either extend the lease or return the property to the landowner.

The second type of ownership is Freehold ownership, wherein you, as an owner, own the condo in perpetuity. You can live in it for as long as you want, and when you pass away, your kids or legal heirs will inherit it.

In the Philippines, most developers offer condos with freehold ownership. Some of these property developers are SMDC, Ayala Land, DMCI, and Century Properties.

The freehold ownership of a condominium is evidenced by the Condominium Certificate of Title (short for CCT).

It is a document that proves you own the condo unit. It contains information about the unit’s location, its floor number and unit number, how big it is, and who owns it.

The CCT is recorded in the Register of Deeds of the province or city where the property lies.

You will get your CCT once you have fully paid your condo. If you take out a loan to pay for it, the bank will use the title as collateral.

Who can buy condominiums in the Philippines?

Filipino citizens, Corporations, and Foreigners are allowed to purchase and acquire condominium units.

Yes, that’s right! Foreigners are allowed to buy condos in the Philippines, provided that foreign ownership of the given condo project does not exceed 40 percent.

Why? Because the law states that, foreigners are only allowed to own 40% of a condo project’s total and outstanding capital stock.

What is Condominium Corporation?

According to Condominium Act and the Corporation Code provisions, the developer shall form and organize a Condominium Corporation. 

And condo owners will automatically be a member or a shareholder of the corporation.

One of the corporation’s purposes is to hold the title of the common areas and the land of the condo project.

And being a part of it, in essence, you are a co-owner of the condominium’s common areas and the land.

And as a co-owner, you have a say in decisions on what to do with it.

For example, you may vote for the sale of the entire condo project in the future. And if the majority voted yes, then all proceeds would be divided among the members or shareholders.

This is one of the beauties of condo investing. Besides having absolute ownership of your condo unit, you will have an appropriate share of being a member or shareholder.

Your percentage share may be based on:

  1. The no. of units that you have. For example, you have two units. Therefore, you have two shares.
  2. Or it could be based on the total floor area of all your units. 

What are my rights as a Condo Owner?

According to Condominium Act of the Philippines, you have the absolute right to sell or dispose your condominium unit.

But when you do, you are not only transferring the condo ownership, but also your membership in the Corporation.

This means the buyer will now be a member of the Condominium Corporation, and will get the rights to the common areas and shares.

This membership cannot be transferred or disposed separately from the condo unit.

You may sell your unit to Filipinos, Foreigners or Corporations, provided that the transfer shall not reduce the condominium ownership to less than 60% Filipino.

As mentioned earlier, foreign ownership of the given condo project should not exceed 40 percent. Therefore, it is not valid if the resulting transfer will make foreigners own more than 40% of the condominium corporation.

Also, the law says that you have the right to mortgage pledge or encumber your condo unit.

For example, if you want to borrow money from someone, you can use your condo as collateral for the loan. You can also have it appraised independently of the other owner’s condo.

Lastly, you can renovate your unit as long as renovations are done within the boundaries of your unit. Meaning, you can paint, tile, refinish and decorate the inner surfaces of the walls, ceilings, floors, windows, and doors bounding of your condo unit.

This is important, especially if you want to lease out your condo unit, because the rental rate may vary based on how much you furnish your unit.

Can I freely lease out my Condo Unit?

So far, renting out your condo thru home-sharing platforms such as Airbnb is legal in the Philippines, and many are doing it right now.

Currently, condo units that are leased in Metro Manila can go between Php 1,000 – Php 4,000 pesos per day… depending on the location and the unit size area. 

If you do not want to manage the leasing of your condo on a day-to-day basis, you can also offer it on a long-term lease.

So, does this mean that I can freely rent out my condo unit?

The answer to that question depends on the rules and regulations of the condo project. There are condos with different types of uses and rules, and these are in the condo’s Master Deed.

A condominium can be residential, commercial, office, resort condo, condotel, or dormitory. And because it may have a different use and purpose there are rules and regulations that you must follow.

For example, you cannot freely lease out your “condotel” or condo-hotel unit because it will be operated as a hotel room by its hotel management.

Also, restrictions may be imposed such as certain activities might be prohibited inside the building.

For example, raising, breeding or keeping of animals of any kind is not allowed.

Such restrictions are legal as long as it’s not contrary to law.

Having these restrictions is necessary because its primary goal is to protect the owners’ collective interest and the marketability of the units.

Are the Condo rules and restrictions permanent?

According to Republic Act 7899, the Master Deed can be amended or revoked by a simple majority of condo owners.

And the amendment or revocation of the rules must be approved by HLURB/DHSUD, and the city or municipal engineer.

Another power of condo owners is that you can vote for how the condominium is being managed.

Because Condominium Corporation also serves as the condo’s management body. It enforces the provisions of the corporation and maintains the building. Also, it can also do other things like getting insurance, paying taxes, or rebuilding any portion of the project if necessary.

The existence of Condominium Corporation shall be co-terminus with the lifespan of the condo project.

It means if there’s a condominium dissolution, then the corporation will also end.

Is it true that the lifespan of a condo project is only 50 years?

Well, the law does not state that condominiums are strictly just good for 50 years.

According to Republic Act 4726, aside from being more than 50 years old, it must be obsolete and uneconomical, plus more than 50% of the shareholders are opposed to restoring it.

If these three conditions are met, then there will be a dissolution of the condominium project.

It is important to note, however, that dissolution of condominium can also occur if:

  1. there’s substantial damage and it has not been rebuilt for three years.
  2. If 1/2 or more of the condo units are not livable and more than 30% want to stop its restoration.
  3. If the government has condemned the condo and 70% are opposed to its continuation.
  4. And the conditions about dissolution in the declaration of restrictions are met.

If this happens, then the Condominium Corporation will hold a power of attorney to sell or dispose the entire project for the benefit of all owners.

The good news is that condominiums nowadays are built with modern materials to last a long time and resist ordinary wear and tear.

As a condo owner, it is your obligation as an owner to cooperate with the Condominium Corporation in maintaining the structural integrity, concept, and marketability of the project.

Because if it’s managed with reasonable care, a condo is still one of the good investments out there and can give you good return on your investment for many years to come!

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