Does #walangforever apply when buying condos in the Philippines?
Q: Is it true that the lifespan of a condo in the Philippines is only 50 years?
A: The answer to this question would be yes, essentially because of two reasons:
1. A condominium being essentially a corporation; and
2. Obsolescence and being uneconomical after 50 years.
Condominiums are essentially corporations
Republic Act No. 4726, also known as “The Condominium Act,” governs the purchase, ownership, maintenance, transfer, and conveyance of condominium units in the country. Under Section 2 of the said law, it is provided that a condominium is a “corporation”:
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 purposes (hereinafter known as the “condominium corporation”)
Although the law does not explicitly state the specific length of condominium unit’s lifespan, we can infer from its provisions that such length cannot exceed 50 years.
Corporations, as mandated by Section 11 of Batas Pambansa Blg. 68, otherwise known as the “Corporation Code of the Philippines,” cannot exist for more than 50 years; hence, it follows that a condominium can only exist for 50 years.
Condominiums become obsolete and uneconomical in 50 years
Section 8(c) of the RA 4726 notes of a condominium unit becoming “obsolete and uneconomical” after an existence in excess of 50 years.
While laws govern reality, they are also rooted from reality. Section 8(c) mentions “obsolete and uneconomical” in describing a condominium unit. Experience would tell us that these are accurate descriptions of a condominium’s eventual outcome. The exposure of the condominium building to the elements aggravates its natural wear and tear. We also note that urban centers, the so-called “prime areas,” which are considerably the best locations for condominiums, inevitably shift over time, in response to constant social, political, and economic fluctuations. These factors contribute to the decline of the desirability of a condominium’s most valued offering—its location—thus, becoming “obsolete and uneconomical” over time. The limitation imposed by law is also the limitation imposed by reality.
But what happens when the 50-year mark is reached?
The following actions may be taken by the unit owners, acting as corporation shareholder:
1. Opt for partition thereof by sale of the entire project, as if the owners of all of the condominiums in such project were co-owners of the entire project in the same proportion as their interests in the common areas: Provided that a partition shall be made only subject to the provisions of Section 8 of RA 4726
2. Consider demolition of the condominium building, sell the land where it stood and divide the proceeds of the sale among themselves, based on how much shares they have as determined by the value and number of units that they own
3. Move for the construction of a new condominium building on the land with the original developer or a new one
Purchasing a condominium unit is a big financial undertaking and it is understandable that people would want to get their money’s worth. Yet, with all the aforesaid considerations, procuring a condominium unit is both a sensible choice and a good investment for many reasons.
1. For a start, it tends to be less expensive than buying a house (except, of course, for those decidedly upscale ones).
2. Because condominiums are usually strategically located, they offer many conveniences like being near schools and malls, hospitals, and workplaces. To put it simply, a condominium is a convenient home in a good neighborhood for an affordable price.
3. For a good number of years, the owner will enjoy the amenities of modern living and the conveniences offered by a good location, not to mention the intangible benefits, such as the prestige of owning one.
4. On top of that, at the arrival of the 50th year, you will earn profits from the sale of the condominium land.
5. All these benefits and advantages could also be passed on to your heirs.
Fifty years may not be forever, but hey, this #walangforever at least comes with more than a load of memories.
Main photo via Shutterstock