Condo Living Philippines: Do Condominiums have different types?

Have you already asked yourself this question? Or you don’t have any idea that there are different types of condominiums for sale? If the latter is the case, well you’re on the right page.

In general, condominium types fall into two categories: leasehold and freehold, and four subcategories for freehold condominiums: standard, phased, common elements, and vacant land.

Leasehold Condominiums

A leasehold condo is when you own the interior space but you are on “long term” or ground lease for the land beneath it. It is a condominium that is built on leased lands. The developer is not the owner of the land, but has a lease that permits the condominium to be built. What the developer can sell is the right to lease the land. These lease terms run from 50 years to 99 years. These types are 20% to 30% less expensive than conventional condos because there is more uncertainty for the long term and they are considered differently when financing.

The purpose why this concept was created was to broaden the range of options for land use for institutions, such as hospitals and universities that cannot sell their lands.

Leasehold Condominiums are quite rare.

Free hold Condominiums

In a freehold condominium, the owner both owns the unit and the land on which the building stands. The term “freehold” really means that the declarant and the developer own the land. This means that he also owns any buildings that have been standing on the land, including the condo building itself. Because the declarant owns the land, the ownership of the units can be transferred to potential purchasers. Freehold condos can be found as high-rises, low-rises and row condominiums.

There are noticeable advantages of having a freehold condominium.

• The investment is much more valuable
• You have the freedom to make improvements, maybe in the lawn and other landscaping areas or do what you want to do with the exterior

With this type, you are responsible for the care of the entire unit and common property elements like recreational facilities, visitor parking area, and garden. These items may be the responsible of the condominium corporation. All unit owners pay a monthly condominium fee toward their upkeep.

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As stated above, there are four subcategories of Freehold condominiums

1. Standard Condominium

• Generally comprised of buildings that are subdivided into units and common elements
• Common elements may include but not limited to recreational facilities, parking, lawn, garden, basketball court, gym and much more
• Owners have the ownership interest in the common elements, having the obligations to contribute to the maintenance and repair of these
• Traditional kind of condominium

2. Phased Condominium

• A standard condominium that is developed in phases or stages as the project is completed
• Allows the developer to begin to sell individual units before the entire project is completed.
• The developer has up to 10 years to add to the condominium project and amend the declaration and description
• Each phase should have all the necessary services to be self-sufficient in case the developer does not choose to go through with the additional phases as planned in the project
• Commences with the registration of a declaration and description plan creating the initial units and common elements of the condominium
• Primary advantage is that the developer and unit owners do not have to wait until completion of a large or diverse condominium project before sales of individual units can actually be completed
• Once a unit is created by registration of the declaration and description or a subsequent set of amendments, title of the unit can be transferred

3. Common Elements Condominium

• There are no units but only common elements. The common interest in the common elements is attached to existing parcels of the land known as “parcels of tied land” or “POTLs”
• The owners of the POTLs have obligations to maintain the common elements as well as the common expenses
• These are generally used where the owners of existing properties wants to create and share the use of and responsibility for a facility or services

4. Vacant Land Condominium

• Consists only of bare land at the time it is registered
• Units need to be constructed upon at the time the condominium is registered.
• Portions of the land are sold as units of the Vacant Land Condominium and then be constructed upon
• The declarations of the condominium would set out the rules and restrictions for the type of structures that could be constructed
• Generally used for condominium projects that are similar in design and use to a regular plan of subdivision

Conclusion

There are benefits and disadvantages to the different types of condos. Developer should consider which type is best suited for their projects. As a potential purchaser, we should inquire as to the type of condominium we are purchasing to better understand the rights and responsibilities of condominium ownership.

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1. Things to Consider Before Buying a New House
2. 4 tips in Buying a Property in the Philippines