All aspiring homeowners are forewarned that when they buy a home, they are not just paying for the house itself, but also for the various taxes and fees that come with the purchase. Then there are the monthly payments that you need to make, such as the amortization, utilities, and groceries. But the expenses do not end there; when you move into a new neighborhood, you are also expected to pay what is called “homeowners’ association dues.” But before you ask “what is it for” or “how much,” it would help to know the basic inner workings of a homeowners’ association.
What is a homeowners’ association?
According to Republic Act 9904 or the Magna Carta for Homeowners and Homeowners’ associations by the Housing and Land Use Regulatory Board (HLURB), a homeowners’ association is defined as a “nonstock, nonprofit corporation registered with the HLURB, or with the Home Insurance Guarantee Corporation (now the Home Guaranty Corporation), or the Securities and Exchange Commission (SEC).” This group is organized by:
a. Owners or buyers of a lot in a subdivision/village or other residential real property within the association’s jurisdiction;
b. Legal occupants or lessees of a housing unit and/or lot in a government socialized housing or relocation project;
c. Underprivileged and homeless citizens as defined by law in the process of being accredited as usufructuaries or awardees of ownership rights under the Community Mortgage Program (CMP), Land Tenure Assistance Program (LTAP), and other similar programs related to housing projects implemented by the national government or local government unit.
Membership in the association
Although all homeowners are qualified to be a member of the association, Section 9 of the Implementing Rules and Regulations (IRR) of RA 9904 states that membership is optional unless otherwise provided in the Contract to Sell, Deed of Sale, or other instruments of conveyance or annotated in the title of the property. Even lessees of a member can qualify for membership as long as they have a lease term of at least one year and they have procured written consent/authorization from the owner of the lot/housing unit they are leasing.
Members are required to pay membership fees, dues, and special assessments (including construction bond and stickers); attend the association’s meetings; and support and participate in the association’s projects and activities. If these are responsibilities you are willing to shoulder as a member, you can enjoy the following benefits:
a. Avail of and enjoy all basic community services and use common areas and facilities
b. Inspect association books and records during office hours and provided upon request annual reports including financial statements
c. Participate, vote, and be eligible for any of the association’s elective or appointive office subject to qualifications
d. Demand and receive deposits required by the association
e. Participate in association meetings, elections, and referenda
f. Enjoy all other rights as may be provided for in the association bylaws
Under Section 13, a member is declared delinquent if they fail to pay three consecutive monthly dues or membership fees or other charges/assessment despite demands by the association; or has repeatedly violated the association’s bylaws and/or declared policies. Once the Board of Directors has found a member to be delinquent, all of the rights and privileges of the member will be suspended. However, a delinquent member can be reinstated by the board once they have settled unpaid dues, fees, or charges or they have satisfied the imposed sanctions.
One of the benefits of being a member of the association is voting for its leaders. Photo via Depositphotos
The duties of a homeowners’ association
As commonly known among residents of a subdivision, a homeowners’ association is responsible for imposing and collecting reasonable fees for the use of open spaces, facilities, and services of the association to defray necessary operational expenses subject to the limitations and conditions imposed under the law, the regulations of the board, and the association’s bylaws. But according to Section 49 of RA 9904’s IRR, an association has a number of other rights and powers, including but not limited to:
a. The adoption and amendment of articles of association and bylaws, rules, and regulations, pursuant to existing laws and regulations
b. The institution, defense, or intervention in litigation and/or administrative proceedings affecting the welfare of the association and the subdivision or village as a whole
c. The regulation of the use, maintenance, repair, replacement, and modification of the common areas
d. The regulation of access to and passage through the roads of the subdivision
e. The permission of the establishment of certain institutions within the subdivision, such as schools, hospitals, markets, and grocery stores
f. The suspension of privileges and imposition of sanctions should members violate the association’s bylaws, rules, and regulation
An association makes multiple decisions that affect the welfare of the subdivision. Photo via Depositphotos
Management of the association
An association’s Board of Directors/Trustees is a group composed of five to 15 elected members of the association. Unless otherwise provided in the bylaws, the association’s business will be managed by a president, vice-president, secretary, treasurer, auditor, and other management positions created by the board members as necessary. In order to qualify for director or officer, a member must:
a. Be of legal age
b. Be in good standing
c. Be an actual resident of the subdivision, housing, or relocation project for at least 6 months
d. Have not been convicted of an offense involving moral turpitude
Members of the Board of Directors are expected to carry out their duties and responsibilities with the degree of care and loyalty required by their position. In Section 54 of RA 9904’s IRR, these tasks are as follows:
a. Regularly maintain of an accounting systems using generally accepted accounting principles, and to keep books of accounts
b. Collect reasonable fees, dues, and assessments as provided for in the bylaws
c. Collect reasonable charges for assessments and charge reasonable fines
d. Propose measures to raise funds and how to use them
e. Undergo a free orientation by the HLURB or any HLURB-deputized agency on how to conduct meetings, prepare minutes, handle accounts, laws and pertinent rules and regulations within 30 days after election or appointment
f. Discharge the duties and responsibilities provided for in the association’s bylaws
g. Exercise other powers that are necessary and proper for the accomplishment of the purpose of the association
While the board will act on behalf of the association, there are instances wherein the vote and approval of the members themselves are required, such as:
a. Amending the articles of association
b. Dissolving the association
c. Electing members of the board
d. Determining the qualifications, powers and duties, and terms of office of the board
The association’s bylaws
The bylaws of each subdivision are not necessarily identical as these are rules of action adopted by the association for its internal government. Among others details, the bylaws should contain the following:
a. The rights, duties, and obligations of members
b. The circumstances of acquisition, maintenance, and loss of membership
c. Details on how and where meetings are conducted
d. Details on how board members are elected to and removed from office
e. The dues, fees, and special assessments to be imposed regularly, and the manner by which they are imposed and/or increased
f. The procedures involved in adopting, amending, repealing, and abrogating the bylaws
g. The penalties for violating particular provisions of the bylaws
There are specific sanctions depending on the violation commited by a member of the association. Photo via Depositphotos
Fees, dues, and contributions
One of the main concerns that homeowners have when moving to a new neighborhood is the payment of various dues and fees. Due to a lack of understanding of these fees, members may feel that they are being charged excessively or asked to pay arbitrary fees. There are also some cases wherein associations intentionally mislead homeowners to be able to make unnecessary collections. To avoid this, the HLURB adopted Executive Committee Resolution 001 Series of 2017, which dictates the kinds of dues, fees, and contributions that associations are allowed to charge, as well as how these are formulated:
a. Membership fees – This is the amount paid to be considered for membership in the association.
b. Association dues – This is the amount charged on a regular basis to defray the association’s administrative expenses.
c. Beneficial user dues – This is the amount paid by homeowners who may not be compelled to be members or those whose membership have been revoked; or owners and/or developers of subdivisions or condominium projects who own lots or housing units as part of their inventory for the purpose of selling to the public.
To calculate the amount charged per member or beneficial user, these details must be taken into account: (1) Gross expense, which is the average monthly expense or, if not feasible, the highest monthly expense, and an additional 10 percent as contingency funds for unforeseen additional expenses; (2) Gross area, which is the total lot and floor area of saleable lots or units in the subdivision or condominium, respectively; and (3) Rate base, which is obtained by dividing the gross expense by the gross area, resulting in the cost per square meter.
The charge per member or beneficial user is computed by multiplying the total lot and floor area by the rate base, and an additional 10 percent for members or 20 percent for beneficial users to cover any shortfall in collections if other members or beneficial users fail to pay their dues, fees, or contributions. Non-payment of dues, fees, and contributions may result in interests and penalties, which should not exceed 12 percent per annum.
HLURB has a formula for computing a member's association dues. Photo via Depositphotos
d. Special assessments – These are the costs charged from members or beneficial users to defray costs that have not been incorporated in the schedule of Association or Beneficial User Dues, including security and maintenance, vehicle stickers, delivery fees, construction charges, charges for use of amenities and facilities, legal defense fund, and ID fees.
Keep in mind that as a member, you are free to inspect the books and records of the association should you have any concerns regarding any fees, dues, and assessments being collected. If you feel like you are being overcharged or forced to pay unauthorized fees, you can file a complaint with your association’s Grievance Committee. If such a committee does not exist or your complaint results in inaction by the committee, you can file a complaint directly with the HLURB. In case the act constitutes a crime, then you can file a criminal complaint with the appropriate government agency.
Violations of the provisions of the rules, failure to perform duties, or violation the rights of the members will result to sanctions depending on the severity of the violation. Sanctions include penalties ranging from Php5,000 to Php50,000; permanent disqualification from being elected or appointed as member of the board, officer, or employee of the association; or prosecution before a regular court for violations of the provisions of the Revised Penal Code, Civil Code, and other pertinent laws.
Main photo via Depositphotos