Eight rants about owning a Philippine condo
Philippine Daily Inquirer
By: Tessa R. Salazar—Reporter
24 February 2012
Owning a piece of real estate such as a condominium unit has become a
reachable dream for the multitude belonging to the working class. The
healthy competition among developers has resulted in competitive
pricing and more flexible payment schemes.
At a price range of P45,000 to P80,000 per square meter depending on
the project location, a wider base of buyers are taking up units big
and small near their places of work. The condominium business has
become the darling of the local real estate industry.
But what’s on the flip side of this seemingly pretty picture of happy
condo buyers and (even) happier developers? Inquirer Property has come
across discerning readers and buyers who have had not-so-pleasant
experiences of buying condominium units in the Philippines. Then, we
asked property experts to either confirm or explain these experiences.
Here are some surprising insights and revelations on the 8
most-ranted-about issues of buying condo units in the Philippines
Condos don’t come with the parking slots. One reader/buyer ranted:
“Developers don’t provide units with their own parking slot. We have to
buy a separate lot with a separate title just for parking.”
Architect Edilberto J. Morcilla did confirm that parking slots are not
bundled with the condo unit most of the time. “It is an option for a
client to buy or not. It has a separate title, thus, a separate
acquisition cost. Many buyers would also opt not to have a parking
slot. Designers therefore do not provide a one-to-one ratio for units
and parking slots.”
National Real Estate Association chair Alejandro S. Maņalac agreed with
this observation. “Most developers do provide parking slots, but yes
you have to buy them separately. This gives the buyer a choice whether
to get one or not. It is more practical than automatically offering the
unit with parking (with the corresponding additional price, of course)
and ‘forcing’ the clients to buy them even if they don’t have use for
them, especially those who are just intending to lease out their units.
But, as a piece of advice to condo buyers, it is really more practical
to buy a parking slot. You may not have use for them but you can
definitely easily lease them out.”
Enrique M. Soriano, Ateneo program director for real estate and senior
adviser for Wong+Bernstein Business Advisory, explained that developers
must balance parking provisions vis-ā-vis various unit sizes, and
usually priority slots are given to bigger sized units. The building
code provides a certain ratio, sq m over parking, making a parking
purchase not automatic and separate from the condo unit.
2. Lost deposits
“If you are in the process of buying a condo, you will go through all
kinds of problems from (agents). You will lose your deposit if you
don’t follow up all the time,” another buyer ranted.
Soriano confirmed this happening. “Agents come and go, however, buyers
must also have the initiative to track their purchase and not be overly
dependent on agents.”
Maņalac said, “If you buy from the wrong agent, you will experience
this whether you are buying real estate, cars, insurance, etc. Some
buyers also tell their agents that they will just buy through their
friends or relatives who are not really into the property business but
just to give them a favor. This messes up the whole thing. Also, if you
buy from an agent, and you ask for all their commissions, why should
you expect good service?”
Morcilla explained that condo projects, especially the fast-moving
ones, follow strict deadlines when it comes to unit reservations.
Buyers must be mindful of the deadlines to submit pertinent documents
as other agents might be eyeing the same units for their own clients.
Failure to submit needed documents can and will result to the
forfeiture of reservation fees, because there is also what is called
the “lost opportunity” for the developer.
3 Overseas Filipino workers are taken advantage of
“Overseas Filipino workers have more problems (when buying condo units
in the Philippines) as they are being taken advantage of. Buyers lose
their deposits and payments because of corruption in the system.
Sometimes, the OFW isn’t aware that he or she has been paying for a
unit owned by many other buyers or existing owners, and corrupt agents
collect payments from all of them. If you’re not in the Philippines
they take advantage of your absence. And there are just too many paper
work which are so complicated,” an angry reader writes.
“Agree,” Soriano quipped, as he added, “And I empathize. Overseas
buyers really go through the wringer. The key is to invest on reputable
developers with a long history of delivering quality projects on time.”
Maņalac revealed, “It is true that there are other agents selling
abroad. Some were officially sent by their companies to do roadshows,
while some are there on their own. It is very important for our OFWs to
be very careful in dealing with these agents since they will not be
here to personally attend to their accounts.” He then urges OFWs to
answer these important questions whenever they encounter agents
offering condos in the Philippines:
Does the agent belong to a credible company with a good track record of delivering their projects with good quality and on time?
Is he or she an official representative of the company? It would be
better if the developer has an official and legitimate office in that
particular foreign country.
Are the agents quoting you the official prices and availability of the
units? It would be better if their inventories and official computation
templates were online.
Does the agent’s company maintain an online client portal where buyers
can securely access their accounts anytime? This would be useful,
especially when the agents are inaccessible or have left the company.
Maņalac said paperwork is necessary, whether they are buying properties
here or abroad. Basically, though, this paperwork is really just part
of a contract printed in several sets for buyer’s signatures, which
makes it seem already voluminous for some. Expect additional paperwork
when buyers avail of financing either through banks or a Pag-Ibig
Morcilla said OFWs acquiring condo units can expect the process to be a
“little more complicated,” more so if the overseas Filipino assigns a
local representative not knowledgeable in such transactions.
“Being taken advantage of can happen in any business transaction. It is
best that one must first solicit for a recommendation from relatives or
friends for a more reliable developer, marketing firms or agents for
that matter, before negotiating for a unit. Also, be cautious and
discerning with your agent who might be ready to move heaven and earth
just to close a sale. Most of all, if one is serious in buying a condo
unit and after paying reservation fees, make sure to have the necessary
documents delivered on time to avoid forfeiture as they are allowed to
do so, for the reason given above,” Morcilla cautioned.
Condominiums are no longer the exclusive domains of the moneyed. They
have also become financially attainable by the working class. Consider
the competitive prices of condominiums at P45,000 to P80,000 per square
meter in the city, and one can understand how tempting it is to buy a
place to live in and be literally a stone’s throw away from the
However convenient condo living may be, buying a unit can be
frustratingly difficult, as Inquirer Property started revealing last
week, based on the experiences of actual buyers who e-mailed their
buying “woes.” This series started by citing the first three of the
eight most-ranted-about issues: condos with no parking slots; lost
deposits; and overseas Filipino workers taken advantage of.
Before proceeding to the next rants, let’s expound a bit more on the
overseas Filipinos’ complaints, particularly on payment forfeiture. A
disgruntled reader/buyer wrote Inquirer Property online, “As a result
of an OFW’s ‘absence,’ paperwork does not matter to selling agents, as
they do not help you out. They just forfeit your payments.”
National Real Estate Association chair Alejandro S. Maņalac shed light
on this issue. Most developers, he said, make “forfeitures their last
resort. However, in most cases, this is not done without due process.
Notices and reminders are sent with ample time/grace period for
settlement before a final demand or notice of forfeiture is served (via
Maņalac stressed that the most important action in situations like
these would be to communicate with the developers and “never ignore”
“If they have valid reasons and are not in habitual default of their
payments, considerations and even restructuring of payments are
accommodated. The problem is that some buyers ignore these letters and
use the lame excuse that they are not receiving these notices (that is
why it is very important to indicate the mailing address in the buyer’s
info sheet that they fill up because this will be the same address used
for the contract. Also, make sure that in case they decide to use their
local address here, the people residing in the local address are
responsible enough to inform them about such notices. There are many
cases where relatives do not inform the buyers that the account is
already delinquent),” Maņalac said.
Veteran real estate broker and educator Enrico Cruz of Marikina said
OFWs should seek out reliable salespersons and brokers (before buying).
Cruz said he always taught his students at Urban Institute that brokers
and salespersons should always remember that the buyer is their
principal, even if the commission fee they receive comes from the
4“Multiple ownership leads to manipulation of condominium units.” A
reader lamented that “Koreans, Chinese and Filipino politicians who own
a number of units are renting out their units to ‘balikbayans’ for the
duration of their vacation… Are they (unit owners) even paying income
tax for renting out?”
Architect Edilberto J. Morcilla agreed with the observation. “Since
foreign nationals are not allowed by Philippine law to own land, but
allowed to own condominium units, these enterprising foreigners opt to
buy several units for their investments. I am not sure, though, whether
it will be easy for them to evade paying taxes as we now have stricter
rules on taxation,” Morcilla said.
Maņalac said: “I am not sure whether the reader is referring to the
‘co-development/comunidades/Build-your-Own’ set-up where all the buyers
are considered ‘coowners’ or ‘codevelopers.’
He added, however, that it is true that “some units were sold to
investors to be operated as condotels where the investors enjoy monthly
returns through short- and long-term leasing of their units without
personally managing it since it is being done by professional hotel
operators, and there is absolutely nothing wrong with it.”
5. No price regulation of association dues
Enrique M. Soriano, Ateneo program director for real estate and senior
adviser for Wong+Bernstein Business Advisory, said: “Again, it’s a
balancing financial act played by the developer in the initial stage
prior to the turnover. Then, another challenge will come from the
facilities manager managing the condo using as baseline variables like
security, staffing, cost of maintenance, brand value and
Maņalac said rates for association dues really depend on several
factors: a) who manages the condo (in-house or professional building
managers?); b) number of units/residents (to share in the operating
expenses); and, c) size of common areas, amenities to maintain and to
secure. “Thus, comparisons should be done apples to apples,” he
Morcilla said the varying rates would be due to “project cost and
package prices of condominiums differing greatly, depending on
location, amenities, specifications and of course, target market.” Cruz
said such wildly varying dues happen “especially if the condominium
corporation is still controlled by the developer.”
“However, for condominium corporations already in the hands of the unit
owners, all dues and assessment emanates from the boards after thorough
discussion with the members. Besides, any excess becomes property of
the corporation, which is owned by unit owners,” Cruz said.
6. Geological background
Some developers don’t reveal the “geological background” of the
location. “I agree (with this rant). There should be full disclosure,”
quipped Soriano, while Manalac said, “Buyers should always exercise due
diligence before buying a property, especially if a particular area has
a recent history of problems like flooding, faultlines, landslides and
Morcilla said such geological data would be “too technical for most
buyers, but for those who would want this particular information, the
local government is the best entity to solicit documents from.” Cruz
discloses that “development permits are issued by the Housing and Land
Use Regulatory Board for the condo projects. The LGU issues building
permits. These two should be able to prevent such an occurrence where a
condo project is located in geo-hazard zone.”
7. No clear policy for discounts on bare or damaged units
No clear policy for discounts on bare or damaged units. Soriano agreed
with this complaint, observing that “buyers must catch up on a lot of
issues before investing or buying a condominium.” Morcilla explained
“This is also dependent on package prices of condominiums. Damaged
units also differ on extent, thus, discounts cannot be encapsulated in
the form of policy.”
Cruz agreed, saying discounts on bare/damaged units are the prerogative of the developer.
8. No clear policy on accountability
No clear policy on accountability when man-made disasters occur. The
unfortunate incident involving unit owners of the West Tower
Condominium Building in Makati and the busted gas pipeline of First
Philippine Industrial Corp. comes to mind. In such cases, Soriano said
“legal remedies are provided through the condo corporation, but then
again unit owners must contend with the Philippine legal system.”
Maņalac said “this problem would already be outside the developer’s
concern and control.” Morcilla explained that “this falls on a
different law of the land called ‘Writ of Kalikasan,’ where the
Filipino people are empowered to assert their rights for a healthier
Cruz said building codes, structural codes, fire codes and development
permits pinpoint responsibilities. “In the case of the pipeline leak,
this is not the responsibility of the developer,” he said
Do the eight rants have basis?
The past two weeks, Inquirer Property has enumerated the eight most
common complaints of buyers of Philippine condominiums. Now, we ask the
property experts and analysts: Do these rants have basis? The unanimous
response seems to be in the affirmative.
“Yes, a significant component (of the condominium business) comes from
the most neglected part of the development phase—the post sales and
service delivery process. Developers look at this phase as ministerial
and an added cost. So they end up using poorly trained frontliners and
account managers employing archaic methods that breed bureaucracy. This
can be a recipe for a higher attrition rate,” analyzed Enrique M.
Soriano, Ateneo program director for real estate and senior adviser for
Wong+Bernstein Business Advisory.
Soriano added that buyers must read and understand the Reservation
Agreements (RA). They must also make sure that they take the initiative
in monitoring their deposits and downpayments. Agents, he noted, come
and go, and it would be hard to rely on agents and developers’
representatives to provide the servicing when there are thousands of
units being processed.
“Real estate buying should never be an emotional decision, and it pays
to do extensive research not only on projects but on the track record
of the developer. That includes doing a full check on agents and
brokers,” he said.
Soriano added that buyers must ask these questions: Is the agent an
organic part of the property firm? Is he/she an accredited broker? Is
he/she on full time with property brokering or with the development?
He also urged buyers to ask to meet with the most senior head of the
sales organization so you can have the assurance of a fair deal.
National Real Estate Association chairman Alejandro S. Maņalac, for his
part, said: “Basically, it all boils down to the choice of company and
choice of agents.”
He advised buyers to be wary of deals with new agents with no real
estate experience. He said that buyer security would “hopefully improve
with the strict implementation of the RESA [Real Estate Service Act]
law requiring PRC licenses for brokers and accreditation for agents.”
Stress-free buying experience
Paul Vincent Chua, Colliers International associate director for
valuation and advisory services and head of consultancy and research,
said that with the amount of units being sold in the market these days,
“what separates a good developer from one that is not is the quality of
“One of the primary responsibilities of the agent is to make sure that
the buying experience of their client is as stress-free as possible.
That is the reason people go through agents anyway. Now, if the agent
does not explain properly the requirements or the timelines needed to
process the documents needed to complete the reservation, then the
agent is at fault.”
Chua added that “buyers must be fully informed and it is their right to
be informed. If the agent cannot answer your questions, particularly on
the documents, then you have the right to request for a different agent
or talk with your agent’s superior. It is their money and they have
that right. You have to have everything documented (official receipts
are issued, etc.)”
Veteran broker and real estate educator Enrico S. Cruz also agreed that most of the complaints have basis.
“I have been receiving information on these unfortunate situations. The
usual case is where the buyer signified something verbally and not in
black and white with the ‘agent’ (who should be called a real estate
salesperson) or to the developer who initially agreed but later on
It would be best to deal only with reputable developers when buying a unit, whether you’re an overseas Filipino or not.
Cruz said buyers should be advised to make all their communications
with the developer or salespersons in written form, and properly
received by them. As much as possible, he said, buyers should directly
communicate with the developer.
Buyers should be careful to read and fully understand the contents of
all the documents they sign, specially the fine print. Buyers should
also demand any explanation or replies to be made in writing.
Cruz said double sales are prohibited. Pesidential Decree 957 requires
developers to register all sales made, even if on installment, with the
Register of Deeds. Even though with this requirement, buyers should
first verify the Transfer Certificate of Title or Condominium
Certificate of Title before buying any property, if it is clear of any
annotation of previous sale or mortgage
Real estate buying should never be an emotional decision, and it pays
to do extensive research not only on projects but on the track record
of the developer.
Cruz said that upon deposit or payment of down payment and signing of
the Contract to Sell, buyers should take the initiative of registering
the sale with the Register of Deeds. This will prevent the seller from
making a second sale of the same property, or if ever there is a second
buyer, the first buyer who registered the sale has the right over the
Chua said buyers should understand that prior to any condominium
launched, it must be approved by the local government unit and the
Housing and Land Use Regulatory Board—two government agencies that
should be able to identify based on their zoning plan the areas where
residential buildings should be built. “Admittedly, some of our
land-use plans are outdated and should be studied by the local
government again, to ensure the safety of the would-be buyers in these
developments,” Chua added.
Soriano said that in his engagements in other Asian countries,
developer initiatives provide prospective homebuyers with a
neighborhood directory that provides a detailed natural history of the
area, contact information of local officials, support institutions like
schools and hospitals as well as destination landmarks.
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