Q&A: What Is the Difference between a Homeowner’s Association and a Condo Corporation?

When you purchase a condominium, a townhouse, an apartment, or any kind of property in a planned development, you will have a big stake in maintaining and improving its surroundings. Since you will be sharing common areas like the swimming pool, parking lots, or even the subdivision gate with your co-owners, you will be obligated to join an organization and pay association dues or fees. These fees are usually paid to the respective group on a monthly basis. Many first-time owners are not familiar with what this entails, so we will break it down for you. First, let us take a look at what homeowners association (HOA) and condominium corporations are all about.

When you purchase a condominium, a townhouse, an apartment, or any kind of property in a planned development, you will have a big stake in maintaining and improving its surroundings. Of course, you will be sharing common areas like the swimming pool, parking lots, or even the subdivision gate with your co-owners and you will be obligated to join an organization to maintain its upkeep. Many first-time owners are not familiar to what this entails, so we will break it down for you. First, let us take a look at what homeowners association (HOA) and condominium corporations are all about.

What Is a Homeowners Association?

A homeowners association (HOA) is a nonstock, nonprofit organization organized by the owners of purchasers of a housing unit and/or lot in a subdivision, village, or planned community that makes and enforces rules within its jurisdiction. Registered with the Housing and Land Use Regulatory Board (HLURB), an HOA assumes the responsibility and control of common lands within the community and ensures that the maintenance of community facilities is properly undertaken, which includes the village’s parks, swimming pools, clubhouses, parking areas, sidewalks, security gates, and even signages.

The purpose and procedures by which an HOA operates as well as its certain conditions on the property owners will be outlined in their governing documents, which are the Articles of Association and the Bylaws. The Bylaws will also dictate the financial responsibility of an owner, such as monthly association fees or annual dues. Whenever a homeowner falls behind on their dues, the HOA can place a lien on a property.

What Is a Condominium Corporation?

A condominium corporation, on the other hand, is the legal entity representing the collective interests of condominium unit owners. It operates pursuant to the provisions the Condominium Act. It is not a company or corporation in the strictest sense, but it serves as the management body of the condominium. It is also responsible for the control and administration of common areas and may have other obligations and responsibilities placed on it through the property’s master deed or the corporation’s own bylaws. It allows individuals to own a property while sharing the cost of maintaining the condo’s common areas (such as hallways, function rooms, swimming pool, etc.) with the other unit owners through condominium fees.

Are the Fees Mandatory or Voluntary?

Presidential Decree No. 957, also known as “The Subdivision and Condominium Buyers’ Protective Decree,” is the basic law that protects the rights of buyers in a subdivision or condo project. Section 30 of PD 957 stipulates the following:

Organization of Homeowners Association. The owner or developer of a subdivision project or condominium project shall initiate the organization of a homeowners association among the buyers and residents of the projects for the purpose of promoting and protecting their mutual interest and assist in their community development.

It is mandated by the law to initiate an association “among the buyers and residents of the projects for the purpose of promoting and protecting their mutual interest and assist in their community development” whether it is for a condominium or a subdivision project.

More so, developers often include a provision in their contracts that stipulates that the buyer in a condominium or subdivision project automatically becomes a member of the homeowners’ association of the particular project, in pursuant of Section 30 of PD 957.

However, it is also important to note that the implementing rules and regulations of Republic Act 9904 (also known as the Magna Carta for Homeowners and Homeowners Association) states that membership is optional, unless otherwise provided in the contract, title, or other instruments of conveyance. Therefore, membership is still voluntary under RA 9904 with certain exceptions.

What Are Their Similarities?

Condo corporations are very similar to a subdivision’s HOA as both of them empower their residents to be involved in the different aspects of the community. Members can express their concerns over management, maintenance of common areas, and security, among other things. These two entities are also similar in terms of the financial responsibilities they impose upon an owner of a property.

How Do They Differ?

Property owners in a subdivision development own the land on which their home stands; hence, they have the exclusive right to sell or donate the real property as they see fit. In contrast, an individual property owner in a condo development automatically becomes a member of the condo corporation (whose stake depends upon the size of his or her condo property), who in turn is the owner of the common areas and the land on which the condo stands. Therefore, if a decision to sell the land has to be made, the condo corporation must make this decision collectively. Ultimately, HOAs and condo corporations are separate legal entities with separate rights, responsibilities and available remedies.

Another big difference between an HOA and condo corporation, according to licensed real estate broker Jake Loria, founder of The Real Estate Group Philippines, is that HOA fees are much lower compared to condo fees imposed by condo corporations. Let’s take, for example, Dasmariñas Village in Makati. Despite being the second most luxurious village in the country, the HOA fees are only Php25 per sqm. In contrast, 8 Forbes Town Road, which located just one barangay away, imposes a condo fee of approximately at Php101 per sqm. According to Loria, readers should know this so they could make informed decisions in choosing between living in a subdivision versus residing in a condominium. Overtime, these fees add up to their cost, it is financial prudence to know these two factors.

Main image via Deposit Photos

 

For further information on the rules, regulations, and other responsibilities of the Housing and Land Use Regulatory Board, as well as additional articles related to the HLURB and its attached agencies, visit the Lamudi HLURB page.

 

2 COMMENTS

  1. I am a unit owner of one of the ayala condo. recently I have my condo unit rented .I have a problem because the condo management plans to charge the unit owner 300 php every renter that rent and 3,000 php at the end of the yr. ii it fair the condo mgt is collecting 2,200 a month for studio unit and 3,500 a month for a single room. is these charges legal. what can we do to avoid this abusive practices.

  2. I am a condo unit owner and have diligently paid the association dues for the pass nine (9) years. There are other unit owners that has been paying their dues for the past 15 years.
    At present, the developer still handles the management of the condominium and have not submitted an accounting report as to the collection versus expenses. Furthermore,our building is not properly amaintained and only 50% of elevators are functional.
    Please advice steps to take.

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