Condo renting in the Philippines is gaining popularity as elsewhere in the world. It offers holistic lifestyle in which urbanites commute less and live more in a secure and eco-friendly environment. A condo community also provides solution to urban migration that results to shortage in accommodation; this vertical housing complex maximizes limited spaces in cities. No wonder more Filipinos and foreign residents are investing in condos. The rents are a reliable source of passive income.
If you're interested in buying a condo, whether for your own use or for leasing, there are important things you should know about. Familiarize yourself with the condo turnover process, applicable fees and your rights and obligations. Understand the factors that affect a condo turnover delay and your options in this extraordinary situation.
The turnover and possible delays
“Turnover” pertains to the process wherein the real estate developer physically develops the condo unit to the buyer. The turnover date may be influenced by a number of factors such as the completion of the condo project, the buyer's payment of a certain percentage of the price, and the satisfaction of the buyer's requested furnishings.
There had been instances when a developer is unable to meet the turnover dates because of construction delay. This was prevalent during the Asian financial crisis in the 90s in which numerous condo projects were either suspended or totally scrapped. The financial crisis is an extraordinary situation, but turnover delays still happen due to regulatory issues, financing problems, mismanagement, etc. To avoid condo turnover issues, choose your developer wisely. If you're already facing these problems, seek assistance from the regulatory body, the Housing and Land Use Regulatory Board (HLURB).
Requirements to trigger the turnover process
The turnover process is triggered by the release of the Documentation Group of the clearance for turnover. The main requirement for the clearance is payment of a certain percentage of the contract price. Generally, developers require payment at least twenty percent (20%) of the price and that financing for the balance is approved by a bank or financing company. You will be informed of such requirements in the initial stages of the sale and shall also be stipulated in your contract.
What you should prepare for the turnover date?
Once the Documentation Group forwards the turnover clearance, the Turnover Group will then be tasked to notify you via a phone call or email. You will need to confirm the dressing up of your unit, which involves the standard furnishings and any request that you may have. Some buyers want a divider to separate various parts of the condo space. Others request to conjoin rooms.
The Turnover Group will also inform you of the tentative turnover date and the DMCI turnover fees that you need to settle upon acceptance of the unit. The fees shall cover the Meralco Service deposit, deposits for power and water bills, one-time joining fee for Condominium Corporation, association dues (prorated for the current month and two months in advance) and other special assessments.
Be warned of “hidden” charges by other developers
Some developers wittingly withhold information about the turnover fees until the turnover date nears. In one instance, a developer charged a huge turnover fee apart from the transfer fees the buyers were initially informed about. Unfortunately, the buyers were left with no choice but to pay given the amount they have already invested.
It doesn't matter if you have 100% confidence with your developer and broker – read the fine print of your contract. The inclusions in the turnover fees should be stipulated therein. If there are miscellaneous charges, inquire whether these are included in the turnover fees or charged separately. The same principle applies on utility service connection fees.
Carefully inspect the condo unit before accepting the unit
On the turnover date, be sure to make yourself available because you will be inspecting the unit. This is your opportunity to check whether the furnishings were installed according to the agreement and whether there are areas that require changes. It's advisable to have a companion, a family or friend, to do the inspection to make sure you will not miss anything. If the unit is acceptable to you, you can then sign the acceptance document. Otherwise, your rectification requests shall be noted in the punchlist form to be endorsed to the Construction Group. The final turnover date shall rescheduled depending on the rectification job on your unit. Wait for the notification from the Turnover Group.
Are you satisfied with your new condo unit? You must signify your assent by singing the Certificate of Acceptance. As part of the final turnover process, you will also need to complete the Meralco application forms and settle the turnover fees.
Make sure your representative has authority to act on your behalf
If you're unavailable on the turnover date, you can send an authorized representative to receive the unit on your behalf. Take note that your representative must have a Special Power of Attorney (SPA), explicitly stating the authority vested in him/her. Your rep must also present two valid identifications and a photocopy of one of your identifications. Remember that the acts of your rep are your acts, thus make sure you give him/her clear instructions before signing the Acceptance Document.
What if you fail to inspect and accept your unit on the turnover date? You have thirty (30) days from the written notice from the Turnover Group to accept the unit otherwise it will be deemed accepted in its condition. Moreover, the association dues shall start to run from the date of acceptance either through your act or inaction.
Learn from the horror stories of other unfortunate buyers
The glossy brochure shows a stunning 30-sqm studio unit with a charming balcony. However, upon turnover, the buyer was shown a smaller space with a tiny patio. Sadly, this is a common story among condo buyers of projects by lesser-known developers. They were promised one thing, but given another thing. Few buyers protest this practice, which may be a reason why developers repeatedly commit such an unfair practice.
If you're not happy with the unit, don't sign any acceptance document or sign under protest. If the contract stipulates a 30-sqm unit, delivering anything different is a breach. You can seek remedies from a regulatory body or court of law, whichever is indicated in the agreement.
When the unit is considered legally delivered to you
Upon signing of the Certificate of Acceptance, the unit is considered delivered to you. You will then be introduced to the Property Management Office (PMO) for briefing and orientation on rules and regulations. Every unit owner and tenant is bound to comply with these policies to ensure a harmonious community living. You will be given a copy of the Homeowner's Manual and the complete set of keys in your unit.
Is the use of the fitness gym for free?
Even before the turnover process commences, there are things that you need to clarify with your developer. Are tenants free to use the facilities and amenities? Most condo communities allow unlimited use of the swimming pool and playground. Some charge tenants a separate fee for the fitness gym and basketball court. There may also be restrictions on the number of guests that can use the amenities at any given time. Ask your broker about policies concerning the use of condo features. If putting up your condo for lease, make sure you inform your potential tenants about these before they sign the lease contract.
Understand the restrictions imposed on unit owners
Your purpose of getting a condo may be to set up an English training school or a boutique call center, but are these allowed in the condo community? If you're signing a contract of sale of a residential home, you're prohibited from using it for commercial purposes. There may also be restrictions in using gasoline-powered appliances or doing certain renovations. The contract shall stipulate these conditions and any breach may be subject to payment of damages.
If you're engaged in condo leasing, you're obliged to inform your tenants about the policies imposed on unit owners because these are also applicable to them as temporary possessors of the condo. Make sure the rules and regulations are explicitly indicated in the lease contract and that your tenants understood them before adhering to the agreement.
A condo for rent in Metro Manila is a viable long-term investment. There is an increasing demand for condo homes among young professionals and students, offering you a reliable source of passive income. Choose the right developer to avoid turnover delays, subpar furnishings and other hassles.