ALTHOUGH the lifespan of a condominium unit is limited by law to only 50 years, there are a number of options that allow owners to profit from their investment at the end of a unit’s life, according to online listing service MyProperty.ph.
The main law governing the purchase, ownership, maintenance, transfer, and conveyance of condominium units in the Philippines is Republic Act 4726, also known as “The Condominium Act.” Under Section 2 of the Act, a condominium development (which may consist of one or more buildings) is defined as a “corporation.”
Corporations in the Philippines are governed by the Corporation Code of the Philippines, and in Section 11 of that law, it is stipulated that a corporation cannot exist for more than 50 years.
MyProperty.ph pointed out, however, that the 50-year lifespan of a condominium is as much a matter of practicality as it is legal restrictions. “Section 8c of RA 4726 actually notes that a condominium unit becomes ‘obsolete and uneconomical’ after an existence in excess of 50 years,” it said. “Experience would tell us that these are accurate descriptions of a condominium’s eventual outcome.” Wear and tear on the building and the units in it, as well as social, political, and economic changes that inevitably shift “prime areas” over time – reducing the condominium’s number one value driver, its location, MyProperty.ph said – all render a condominium unit obsolete after a long period of time.
“The limitation imposed by law is also the limitation imposed by reality,” MyProperty.ph said.
Options for owners
The property listing site said there are three main options for condominium owners once their project reaches the end of its corporate life.
The first option is for all the owners to share in the proceeds of the sale of the entire project, which must be done according to the provisions of Section 8 of RA 4726. Essentially, the share of the total sale price of each owner is proportional to his or her interest in the common areas of the project.
A second option, particularly if the building is in poor repair, is to demolish the building and sell the land where it stood. The proceeds of the sale would then be divided among the owners according to the value and number of units that they owned in the building.
Another option is to move for the construction of a new condominium building on the original property, either using the original developer or a new one. This would involve forming a new condominium corporation, which would then have a fresh 50-year legal life.
Despite the legal and practical oddities involved, MyProperty.ph stressed that purchasing a condominium is still a very good investment. “For a start, it tends to be less expensive than buying a house,” it pointed out. “And because condominiums are usually strategically located, they offer many conveniences like being near schools and malls, hospitals, and workplaces.” In addition, owners or the heirs can profit from the dissolution of the corporation and sale of the condominium property after 50 years, it added.