In accordance with statistics discovered on-line, the Philippines has 154,700 condominium items as of 2023. This quantity is predicted to succeed in 200,000 items by the top of 2025.
Primarily based on this estimate, we are able to anticipate 45,000 extra condominium items to be constructed within the subsequent two years.
The rise within the variety of condominium items has a direct correlation with rental costs. From 2017 to 2023, costs of residential condominium items have elevated yearly by a mean of about 8.55 % a yr. The exception was in 2021 when costs decreased by 1 %.
The 1000’s of condominium items being constructed and but to be constructed by property builders will principally be funded by loans from the banking sector.
Final yr, the Bangko Sentral ng Pilipinas launched information indicating that within the first three months of 2023, the banking trade prolonged P3 trillion value of investments and loans to the true property sector, which was 5.3 % larger than the P2.85 trillion in the identical interval for 2022.
READ: City to suburban
Whereas some in the true property sector have intimated that builders are scaling again residential developments in favor of economic and workplace tasks, the scale of the residential condominium property sector will stay vital.
Contemplating that the majority property builders will finance their tasks by means of loans and financing, it’s however pure for a purchaser, after having entered right into a contract with the property developer for the acquisition of a condominium unit, to fret that the developer could not adjust to the promised specs, or worse, may not even full the venture.
For individuals who can bear in mind the monetary disaster of 1997 and 2009, there have been many unfinished buildings that had been promised to be lovely high-rise residential condominium buildings.
Accordingly, it will be clever for potential patrons of condominium items, and people already paying for his or her items by means of common installment funds, to be acquainted with Presidential Decree No. 957 (“PD 957”).
Often known as the Subdivision and Condominium Patrons’ Protecting Decree, its declared goal is “to offer a protecting mantle over helpless residents who could fall prey to the razzmatazz of what P.D. 957 termed ‘unscrupulous subdivision and condominium sellers…” (Francel Realty Company v. Sycip, G.R. No. 154684, 8 September 2005).
The follow of mortgaging the condominium venture, outlined by PD 957 as “your complete parcel of actual property divided or to be divided primarily for residential functions into condominium items, together with all buildings thereon”, to a financial institution, monetary establishment, or different collectors (“mortgage creditor”) is frequent follow.
Whereas the supply of credit score has helped the property sector to develop, there have been circumstances the place absolutely paid patrons have had problem in consolidating the title to their condominium items or acquiring clear titles thereto.
READ: Condominium costs mirror hole between wealthy and poor
Some mortgage collectors have refused to launch the mortgage they maintain over the condominium items on the bottom that the mortgage debt has not been paid by the property developer.
In that regard, Part 18 of PD 957 particularly regulates the suitable of a developer to mortgage and encumber the condominium venture. The regulation offers that the Housing and Land Use Regulatory Board (“HLURB”), now the Division of Human Settlements and City Growth and Human Settlements Adjudication Fee pursuant to Republic Act No. 11201, should approve in writing any such mortgage or encumbrance for a similar to be legitimate.
Mortgage of condominium items
As well as, PD 957 offers that: (a) proceeds of the mortgage must be used for the event of the condominium venture, (b) efficient measures have been supplied to make sure such utilization, (c) patrons of condominium items have to be notified earlier than launch of the mortgage, (c) patrons have to be given the chance to pay their buy worth on to the mortgage creditor who, in flip, shall apply such funds to the corresponding mortgage indebtedness and, (d) when absolutely paid, patrons have the suitable to the title and demand on the discharge of the mortgage as to their unit.
Mortgages of condominium tasks that haven’t been authorized by the HLURB are void (House Bankers Financial savings and Belief Co. v. Courtroom of Appeals, et al., G.R. No. 128354, 26 April 2005).
In a single case, the Supreme Courtroom declared void the mortgage of a condominium unit by the developer to a financial institution for non-compliance with PD 957.
The financial institution did not examine whether or not the developer secured the HLURB’s prior written approval, which approval is required by PD 957, earlier than it accepted the properties as collateral and whether or not any of the properties supplied as collateral already had corresponding patrons on the time the Mortgage Settlement was executed.
Even when the mortgage settlement between the financial institution and property developer was executed earlier than the contract to promote and deed of absolute sale with the client, for the reason that purchaser paid its reservation charge 4 months earlier than the execution of the mortgage settlement the court docket discovered that the financial institution ought to have verified with the developer if the unit already had a purchaser. (Prudential Financial institution (now Financial institution of the Philippine Islands) v. Rapanot, et al., GR 191636, January 16, 2017))
Furthermore, patrons should additionally confirm whether or not the developer has mortgaged the condominium venture, not solely the precise unit, as it’s also not a protection that the topic of the mortgage mortgage was for your complete land or constructing and never the person subdivided items of the condominium venture.
In a case, the court docket declared that the unit was additionally mortgaged when your complete parcel of land or constructing, of which it was a component, was mortgaged (Far East Financial institution & Belief Co. v. Marquez, G.R. No. 155344, 20 January 2004).
If the venture or unit was mortgaged by the developer, the client could demand that they be allowed to pay the acquisition worth on to the mortgage creditor, who shall apply the funds to the corresponding mortgage indebtedness, in order that when absolutely paid, they might have the suitable to insist on the discharge of the mortgage of their unit and switch title to their names.
However, within the occasion the property developer has not developed the condominium venture in accordance with the authorized plans, or has not accomplished the development throughout the agreed time restrict, the client could cease paying their installments by giving discover to the proprietor or developer, and demand reimbursement on quantities already paid (Part 23, PD 957).
The fitting to cease cost is straight away efficient upon giving due discover to the proprietor or developer, or upon submitting a criticism earlier than the HLRUB towards the erring developer (Francel Realty Company v. Sycip, G.R. No. 154684, 8 September 2005).
When all is claimed and finished, patrons should guarantee that they know their rights beneath PD 957, and select financially steady, socially-responsible and reliable builders, with whom to speculate their hard-earned money.
Your subscription couldn’t be saved. Please strive once more.
Your subscription has been profitable.
(The creator, Atty. John Philip C. Siao, is a practising lawyer and founding Associate of Tiongco Siao Bello & Associates Legislation Places of work, an Arbitrator of the Building Trade Arbitration Fee of the Philippines, and teaches regulation on the De La Salle College Tañada-Diokno Faculty of Legislation. He could also be contacted at [email protected]. The views expressed on this article belong to the creator alone.)
