Condominiums – Pitfalls to Avoid

Condominiums are the most sellable and profitable product by most developers !  It’s affordable and offers a lifestyle that caters to most people.  After the worst storm the Philippines ever encountered in 2010, Ondoy, the demand for condominiums increased further.

The major developers have taken advantage of this situation and now offer affordable units by offering smaller units and flexible financing plans.   Some developers now offer fully furnished units making life simpler for the buyer / investor.

Since there are so many projects being developed, finding the right unit is important.   The following factors should be considered in helping one decide the unit to purchase.

1) Who is the developer ?  This is most critical as there are developers who have mastered the art of providing great showroom of units being sold but when the actual unit is delivered, the unit is very far from what was actually projected.  What’s worse is there are even some developers who have unfinished projects that was never delivered and have managed to develop other projects by creating another development company.

I have personal friends and relatives who invested in this company who offered and sold proprietorship to four country club shares to investors for Php 1M way back in the mid 90’s, and these particular company is now doing very well in several businesses but when will they deliver their promise ?  Our laws should prohibit these kind of developers from doing business until they’ve resolved their issues.

Another developer specializing in condotel developments also left a lot of investors in the cold on their development in Cebu. Again, this is over a decade already !

How long will those poor investors wait until justice is served ?

2) Who will manage the condominium building once it’s delivered ?  Again, this is an issue that needs to be addressed early on as poor management of the building and it’s facilities leads to deterioration and causes other owners to unload their units even at a loss out of humiliation ( believe me as I’ve seen this happen so many times with this particular developer ).  In addition, these also causes unit owners to avoid paying their association dues which of course affect the financial operations needed to maintain the building.

It’s best when its managed by the professionals such as CB Richard Ellis, FPD Asia, Colliers Jardine, although some developers have done an exceptional job in managing their own projects such as Ayala Land, Rockwell Land and Century Properties.

3) Who are the members of the board ?  Each condominium building votes for the board members of the association who then runs and makes decisions on the activities needed by the condominium.  If you want to make sure it’s run well, get involved !

4) What are the association dues involved and what does it cover ?  Some association dues are so exhorbitant you don’t even see where the money is being used.    Some already cover the insurance so it’s good to find out what’s covered.

5) If the condominium project is undergoing pre-selling stage ( under construction ), when will it be delivered ?  Some developers, the BTO ( Build to Own ) in particular have a good track record of delivering their projects ahead of schedule which was normally within 24 months or less.

Of course, other developers such as Ayala Land Inc. offer higher floors, more units, better amenities and quality materials that’s why their projects take 48 months to deliver but appreciation on the investment is almost guaranteed in time.

6) Is the mother title of the land already transferred to the Condominium Association and are the real estate tax payment on the land and improvement updated ?  There is a major developer who has had a history of leaving this problem unsolved.

7) Is the title of the Condominium project being sold mortgaged through a bank ?  This is important as the issuance of the title is dependent on this.

If the unit is already ready for occupancy, is the title clean ?  If mortgaged, then it’s actually safe as the bank already did their due diligence on property.  The loan just needs to be paid in order for the title to be released by the bank.

8) Does the condominium association allow pet / pets ?  Some condominiums allow dogs within a certain size.  If you’ re a pet lover, better check with the association first.

9) Are there any special assessment due in the condominium ?  A new elevator to be installed  in the building transforms into a special assessment.

10) Does the unit come with a parking slot ?  If it doesn’t come with the sale, does the development come with enough parking ?  I know of a project that had problems with insufficient parking thus some units were left unsold.

11) One way to find out about any issues of any condominium is to review the minutes of their board meeting ( this isn’t available to everyone but a homeowner can request this to be reviewed together with a prospective buyer ).

12) Location, location, location !  Does it flood ?  Is income potential good in case an income property is preferred ?  What rental income is expected ?  When it’s time to sell, it should just be a matter of price as demand should always be there !

Hope you find this article helpful and let’s all hope that due process to be done to those developers who should rightfully be penalized for their failure to deliver on their commitment.

robert

 

 

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