The next question following this article's title is: Is it good to invest in a condominium? Well, the answer to your question greatly depends on the purpose you have for buying one. Is it for real estate business or just for you as the end user?
We had to ask that question because, if your purpose for buying condominium unit/s in a condominium project is mainly for real estate business, then 50 years under the Condominium Act of the Philippines (REPUBLIC ACT 4726) would be a huge amount of time to allow return on investment and profit at the same time. However, if this is for purposes of residency or personal property, then the span of the condominium ownership plays a vital role, as it is a fact that properties like this is usually handed down or passed on to the next of kin.
Is it really just 50 years that is allowed by law for condominium buildings to exist? And is it true that demolition is the fate of these condominium projects after 50 years?
For a complete reference of the Condominium Act of the Philippines, RA 4726, click HERE. This Act was put into effect on the 18th of June in the year 1966 to protect the interest of the unit owners.
In a summary, we first need to have a clear understanding of what a condominium is and why it was classified under the 50-year rule, and whether there are exemptions to connote. Condominium projects are essentially considered corporations, thus, called condominium corporations otherwise. A corporation in the Philippines has a lifespan of 50 years under the Corporation Code (Act 1459).
Now, in the Condominium Act, even if it was not indicated specifically that the lifespan is 50 years, it is somewhat true to that fact as we can take a note of the particular stipulation under section 8c:
"That the project has been in existence in excess of fifty years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than fifty per cent interest in the common areas are opposed to repair or restoration or remodelling or modernizing of the project;"
After 50 years it stated, but with certain conditions, namely that the condominium is deemed "obsolete" and "uneconomic", and that more than 50 per cent of the shareholders oppose the modernization of the project.
Two options can be derived from these conditions, so that even after 50 years, condominiums are not rendered useless. First of all, if a specific amount of the whole party concerned agrees to the demolition and sale of the land, the proceeds will be divided according to shares. Second, they can come into an agreement on developing a new condominium in the same property, either with the same developer or another, and renew the lifespan to another 50 years. Whichever option is profitable.
Another thing to note about investing in condominiums, check the deed where it indicates the type of ownership you will have on the condominium property. The two types of condominium ownerships are Leasehold Ownership and Perpetual Ownership.
Leasehold Ownership is more like you are renting a condominium unit with a payment of the full rent 50 years in advance, after which you can either, renew the deal for another 25 years or hand over back the unit to the owner.
Perpetual Ownership, on the other hand, means that you fully own the condominium property and you have a stake and say in the condominium project.
Now we go back to the two main questions and we were able to answer that, yes it is 50 years with certain work around that can be dealt with, and yes, condominiums are a good investment, provided you know how to work around it.
Sources:
https://www.linkedin.com/pulse/perpetual-ownership-condominiums-what-does-mean-why-matter-chavez