Solutions for common condominium conundrums

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The various condominium developments serve as a testament to the increasing popularity of condominium living, especially in Metro Manila. And this preference is not without good reasons.

First, condominium developments are ideal for a densely populated city such as Metro Manila as they can accommodate as many as thousands of residents without occupying much land area. Condominium living also offers convenience to residents which traditional homes cannot. It has easily accessible facilities that promote and encourage healthy living — gym, swimming pool and running tracks — and provide entertainment and leisure to residents which allow them to take a break from the stresses of living a fast-paced urban life. Most condominium projects are built around commercial and business hubs too. This makes it enticing for working professionals to purchase condominium units that are in proximity with their places of work, especially to avoid the notorious Manila traffic. Condominium units are relatively cheaper too than the traditional house-and-lot properties. While buying a condominium unit sounds very enticing, like any other transaction, it can come with problems too.

One of the most common concerns faced by buyers is the failure of the developer to turn over the unit within the period indicated in its license to sell or in the contract or its failure to develop the property in accordance with the plan and specifications approved by the Housing and Land Use Regulatory Board (HLURB). If you encounter this problem, Section 23 of Presidential Decree 957 or the Condominium Act gives you two options: First, you can desist from further payment after due notice to the owner or developer of the project and clearance from the Board (HLURB) or, second, you can demand to be reimbursed the total amount paid, including amortization interests but excluding delinquency interests with interest thereon at the legal rate.

Another problem that usually besets condominium buyers who opt to purchase the property on installment basis is the inability to financially sustain the monthly amortization before the purchase price could be fully settled. It is not far-fetched that the buyer may suddenly be faced with an emergency situation — an unexpected loss of a job or a health issue that needs an expensive medical treatment — and thus must back track from the contract. If you find yourself in this situation, the first thing you must consider is your agreement or contract with the developer. Your contract will most likely contain provisions on the consequences of your failure to pay the monthly installment/s. But if your contract is silent on this matter, the provisions of Republic Act (RA) 6552 or the Realty Installment Buyer Protection Act shall apply. Under this law, your remedies will depend on how many years worth of installments you have paid.

Section 3 of RA 6552 says that if you have paid at least two years of installments, you are entitled to the following rights in case you default on the payment of subsequent installments: First, you have the right to pay, without additional interest, the unpaid installments due within the total grace period for every one year of installment payments made. The grace period is one month for every year-worth of installment. Thus, if you have paid three years of installments, you have three months as grace period within which to settle the unpaid installment. However, you can exercise this right only once in every five years of the duration of the contract and its extensions, if any. Second, if the contract is canceled, the developer should refund to you the cash surrender value of the payments on the property equivalent to 50 percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed 90 percent of the total payments made. You must take note that the actual cancelation or the demand for rescission of the contract must be by a notarial act and upon full payment of the cash surrender value to the buyer. Downpayments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

If, however, you paid less than two years of installments, the developer must give you a grace period of not less than 60 days from the date the installment becomes due. If you fail to pay the installment due at the expiration of the grace period, the seller may cancel the contract after 30 days from your receipt of the notice of cancelation or the demand for rescission of the contract by a notarial act.

So before you take the plunge and sign that contract to purchase a condominium unit of your own that ubiquitous agents have been offering you in the malls and streets of Metro Manila, make sure you know your rights as a buyer to protect your interests and to make sure your hard-earned money which you are about to hand over to the developer is not put to waste.

Email: nilo.divina@divinalaw.com

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