Yes, you can rent your condominium unit. But we highly advise that you read the declaration and the by-laws to be sure if renting out a unit is allowed within your condominium complex, as some condominium corporations do not allow. When you rent a unit, you will typically inform the condominium corporation through a formal writing which will contain your projected length of stay and the rental amount. You have to note that even if condominium corporations allow unit rental, they only allow long-term lease agreement. In this case, you will automatically become a landlord and will need to abide with the Residential Tenancies Act on top of the Condominium Property Act.
First, you have to remember that every condominium complex has its own by-laws so it very important to know your own by-laws. Many condominium by-laws have strict rules on the alteration of the unit space together with its architectural appearance. Examples of this are restrictions on the change of exterior fixtures, installation of a satellite dish, adding new gazebo, installation of window type air-conditioning and other changes that may affect the condominium’s overall structure and safety. But still you can do so with the changes as long as the condominiums Board of Directors will approve the changes and as long the by-laws grants the Board of Directors the power to approve such request. Other rules may also include the restrictions to the number of occupants per unit, raising of pets, noise and parking limitations.
Your rights will include to vote on matters that will affect unit owners, use common areas, access to information from the condominium corporation and you may use the services of a mediation or arbitration court if there are any disputes within the condominium corporation, the board of directors or just between unit owners that needs to be resolved. On the other hand, your responsibilities will include familiarization of the by-laws and abide with it, attend general meetings, information sessions, read the minutes of the general meetings, maintain your own unit and the provision of your own insurance covering your property and belongings and to pay the condominium fees on time.
After receiving all the needed documents, the buyer has a 10-day period to review the documents. In case the buyer found anything on the documents that affects the purchaser’s decision to push through with the purchase, the buyer can make an objection to the seller in writing within another 10-day period. In case the buyer and the seller cannot come into a settlement that will lead into the implementation of the contract, then the agreement itself will be null and void. Further, the deposit shall be returned to the buyer without any deductions, interest, or liability by the seller, for any damages due to the non-purchase. In short, the buyer gets a 100 percent refund for its deposit made.
An Agreement to purchase and sale is a contract by which one party agrees to sell his or her condominium unit and another party agrees to purchase. The seller can either be a declarant in cases of new condominiums or an existing unit owner. There are accompanying or supporting documents that goes along with the Agreement of purchase and sale, but will depend on whether you will buy it as a pre-sale purchase or as a resale. It is a good practice to consult with a lawyer and ask the relevant questions you are having concerns with.
An Estoppel Certificate is a signed statement from the Condominium Corporation, which certifies that all the documentation they have provided to you as a buyer are true and accurate. Further, the certificate will tell you any back accounts by the unit owner against the condominium corporation. It also indicates the address and contact numbers of the Condominium Management in case you need some query. The certificate further gives you information on the current amount of the common expenses and how the reserve fund is being collected. In can also indicate if there are any lawsuits instituted or pending by or against the condominium corporation.
It is very important that you write the owner, if not the condominium corporation, for an Estoppel Certificate and be sure to read and understand its contents before you finalize and make your offer to purchase. Usually, you will receive the Estoppel Certificate within 10 days from receipt of the written request. If you made the request address to the condominium corporation, they may charge you a small amount. Aside from this document, it is also a good practice to talk to people who are living within the condominium complex where you can gather valuable information about the living conditions of the area and some details as to how the condominium is being managed.
Condominium projects are sometimes developed in phases. If you are purchasing a unit that is in a phased development, you should review the conditions of the Development Disclosure Statement and understand how the key points in the disclosure would affect you. The disclosure statement should include how the phase development will take place plus the timeline on how long each phase will last. As usually stipulated in the disclosure statement, you have to remember that the declarant will not be required to any works after the phase has been successfully completed and that it will become the unit owner’s responsibility and the condominium corporation in the case for common areas.
Buying from a developer involves a pre-sale contract making sure that you know if your unit is ready for occupancy or does it still need some work. Your developer should provide you with a copy of the Agreement of Sale and Purchase, which further indicates the condominium plan and its proposed by-laws. In some cases, condominiums are offered through a phased development wherein it is important to know the disclosure statement on how the project will take place, the timeline of the different phases of development, the number of proposed units and the statement of proportions of common areas and expenses attributed to each phase of development.
There are different documents that should be given to you before buying a condominium unit and it is very important that you read them. First thing, you should determine if you are buying from a developer or is it a re-sale. Establishing the unit boundaries and knowing the condominium and maintenance fees is also a good thing to know. You should be knowledgeable if there are major renovations that will take place in the next 10 years and how much money is in the reserve fund. You should also be aware of the by-laws of the condominium complex that you are buying and ask if the condominium corporation is being run by a professional management company or just the unit owners themselves.
As an effect to the implementation of the Condominium Property Act, the Declarant for a new condominium project is responsible for hiring a professional who will prepare the completion of the study. This has become a pre-requisite before a new project can be approved. In case of a full occupancy and the management of the condominium has been turned over to the condominium corporation and since the law requires that the reserve fund study be conducted once in 10 years, it will become the responsibility of the Condominium corporation where it can now be charged as part of the reserve fund expenses.
For condominium complex that were built before January 1, 2010 they are given 5 years to complete their reserve fund study as provided in the Condominium Property Act. For condominiums built after January 1, 2010 they must conduct a primary study every 10 years and can be updated every 3 years if the need arises. You must take note that none of the unit owners can conduct the reserve fund study and only an engineer or an appraiser who is qualified and sanctioned by the Condominium regulations can conduct the said study with knowledge on property depreciation, operation and maintenance of depreciated property and the cost of repair or replacement.
There is a trend for condominium corporations to follow wherein the reserve fund will depend on the size of the condominium complex. For a small complex that consists of 10 units and below, the reserve fund must be equal to the annual budget. Meaning for a 30- year projection, a fund equivalent to a year’s operational budget must be intended for major repair works. For larger complex having 10 or more units, the reserve fund must not be lower than the minimum amount recommended in the reserve fund study. In case the reserve fund is not sufficient enough to shoulder the repair works due to unforeseen factors, yet deemed necessary, the unit owners can be asked to equally contribute to pay for the remaining balance needed in the repair.
Reserve fund studies are very important since they help the condominium corporations in determining their upcoming major expenses that will incur a relative high percentage amount of budget from the reserve fund. The study will also detail out all the mandatory repairs as a result of the wear and tear over time. In cases where the reserve fund cannot shoulder major repairs, especially in simultaneous repairs in different parts of the complex at the same time, the condominium corporation can prioritize the repair works according to necessity. For example, the replacement of the roofing system is more important than the repainting of the building.
A reserve fund study is both an analysis and a forecast of at least 30 years of all projected major repairs within the condominium complex. The study should indicate the details of the projection on what particular part within the condominium complex will need repairs or replacement within a period of 30 years. It should also contain the estimated budget, which will also become the basis for the amount needed from the collective contributions in the condominium fee. For purposes of benchmarking, the study should also assess the current condition of the common property of the condominium, which will become the basis in determining the life span of a certain common condominium property.
A contingency fund is set up by the condominium corporation, that is purposely allocated to cover unexpected expenses like emergency repairs that is not included in the annual operational budget. In can also cover budget shortages at the end of a year and any expenses specified in the by-laws. In cases of an unforeseen event aside from emergency repairs, a contingency fund can also be used. For example, a contingency fund can cover the cost of sudden increase in raw materials and utilities like water and electricity. In cases where the contingency fund will be exhausted and the budget needed for a major repair is still short, the condominium corporation can either increase the condominium fees or charge additional fees for a certain amount of time through a special agreement amongst unit owners.
A reserve fund is derived from a portion of the collected condominium fees which will be used to pay for major repair and maintenance of the common areas within the condominium complex. Specifically, as specified and regulated in the Condominium Property Act, that the reserve fund shall be used not in ordinary or minor repairs but only in major repairs. Example of this major repair works are replacement of roof or painting of the building. Further, reserve fund cannot shoulder emergency repairs or unexpected expenses, and as such, a separate account can be allocated for that purpose like a contingency fund. For condominiums built before January 1, 2010, which is not sanctioned by the Condominium Property Act, they are given a 5-year moratorium to build up their reserve fund.
Condominium fees are fees where all condominium unit owners collectively pay to cover the common expenses incurred in the operation of common areas. Collected fees will also cover the maintenance of common property elements like snow removal, gardening, property management fees, utilities and contribution to its reserve funds and more. The fees will also shoulder the payment of insurance premiums which is one of the primary requirements of sustaining a condominium complex. The amount of the condominium fee will be based on an estimated annual operating cost to run the condominium complex and that it will be equally divided among all unit owners. Unit owners usually have the option to pay the fees either in a monthly basis, quarterly or a one- time annual fee.
Every Condominium complex must have its own set of by-laws that will govern its units, common space including the rights and responsibilities of unit owners as well as other persons living inside the condominium. You can note that by-laws will vary from every complex. For example, some complex allows pets to live within the unit while some do not. Some may also require proper permission if you want your unit to be renovated while some do not explicitly require. Owners can change their by-laws to purposely suit their needs and as long that it is done with the consent of all owners and members of the condominium corporation. But this revision does not permit you to include the practice of illegal acts and that all by-laws should still be in consonance with national laws.
All unit owners have the right to vote, not just in the election of Board of Directors but also on matters presented in the general assembly or meeting that needs the consensus of the Condominium Corporation. In cases of a unit that is being owned by more than 1 person, regardless of their quantity their vote will only be counted as one unless otherwise explicitly stated in the by-laws. A common practice of voting during a general assembly is conducted by the raising of hands. Proxy can be allowed as long as the original unit owner manifest the person in exchange for his presence.