What You Need to Know About Association Dues

These are monthly payments that tenants have to make so they can contribute
to the operational expenses of the condo building. The homeowners association
is the one usually responsible for enforcing these fees. You will automatically
become a member of the association once the unit or turned over to you or when
the title is transferred to your name. You qualify as a member once you have
signed the Deed of Sale for the unit.

The management office of the condo building collects the association dues and
other fees shouldered by tenants. The office staff is employed by the developer
and they act as caretakers of the building. The staff includes the maintenance
and security personnel and they are responsible for making the building secure
and that everything is operating as smooth as possible.

How Is It Used?

Your monthly dues cover the expenses needed for the upkeep of amenities in the
building. Your money will be used to repair and renovate the playground,
swimming pools, and gym. Maintaining the condition and safety of the building
requires manpower so your dues will also be used for the salary of the janitors,
security guards, and other maintenance personnel. Simply put, your payments will
be used to take care of the common areas of the building, which is used by all
tenants. A responsible and trusted real estate developer will make sure that
association dues are invested on the continued improvement of the building and
its facilities.

How Much Do You Need to Shell Out?

There is no fixed or standard amount for all unit owners since payment will depend
on the size of your unit, the number of amenities offered by the building, and
overall operating costs. For example, a luxury condo building charges PHP 96 per
square meter of your unit, VAT charges not included. So if you own a 100-square
meter unit, you will pay 9600 monthly, plus tax. So imagine how much your dues
will cost if you own a bigger unit. Payments apply as soon as the unit is turned over
to you. It doesn’t matter if you move in at a much later date; your scheduled dues
will still start on the month of the turnover.

Some developers offer unit owners the option of settling their dues annually
instead of monthly. Lump sum payments sometimes merit discounts, which could
be equivalent to a month’s worth of association dues.

What Will Happen If You Don’t Pay?

Penalties are applied if you fail to pay your dues. Conditions will depend on the
building’s developer. You may be charged as much as 4% for late payments.
Consequences for common condo due problems will vary but usually, you will be
denied basic utilities such as water and electricity. Since association dues are for
the upkeep of amenities, you will be denied the use of these facilities if you don’t
settle your payments.

Keep in mind that these fees are taxable. The Philippine government will collect
Value-Added Tax from association dues and other fees collected by the
homeowners association. Other taxes applicable to your condo purchase are
income/withholding tax, documentary stamp tax, and local transfer tax. These
should be discussed in detail with your broker.

What Are the Other Fees I May Need to Deal With?

Make sure to ask your broker about the connection charges for utilities. Not all
developers will take shoulder connection fees so this can be an additional
expense for you. Ask about any arrangements or exclusive agreements with
phone, water, cable, and electric companies. Developers may form agreements
with certain phone or cable companies that allow them exclusivity to tenants. If
you would rather subscribe to other utility companies, you may have to shell extra
to have connection, which is another additional expense for you.
If you have a vehicle, be prepared to include parking fees in your list of expenses.
Parking slots can be very expensive, especially if there are limited ones available.
If you have more than one car, you have to pay for separate slots for each
vehicle.

What is the Role of Your Broker in This Situation?

Finding a good broker is essential if you want a straightforward breakdown of your

expenses. You should steer clear of brokers who deliberately withhold information
in condo financing and do not properly declare all expenses just to close the deal
with a buyer. Remember that brokers earn by commission and the more you pay,
the more they will earn. You have to find a broker with a good reputation, one
who is not known to take advantage of clients.

Majority of buyers assume that condos with the lowest fees are the best deals,
which is not always the case. So it’s important that you ask your broker these hard-
hitting questions before you sign your name on the dotted line. Ask for a thorough
breakdown of fees, even for miscellaneous ones. Sometimes, miscellaneous fees
are made up of lumped charges that are actually worth a lot.

Even with all the fees involved, you shouldn’t be discouraged to buy a condo unit
that you can afford. Remember that these fees are made for a purpose: to make
living conditions in the condo building as safe, convenient, and comfortable as
possible. It’s important that you become aware of what this will cost so can align
it with your condo budgeting.
Condominium and Homeowners
Dues: Mandatory or Voluntary?
So the property was just turned over to you. You are now officially a homeowner.
A few weeks after, you receive your first invoice for your monthly homeowners’
association dues. What is it? Why do you need to pay it? What happens if you
don’t?

What are Condominium / Homeowners’ Association

Dues?
By definition, homeowners’ association fees are “the annual or monthly fee
charged by homeowner’s associations to fund maintenance and improvements for
property under their jurisdiction.”

Homeowners association is a nonstock, nonprofit association registered with the

Housing and Land Use Regulatory Board (HLURB), or one previously registered
with the Home Insurance Guarantee Corporation (now Home Guaranty
Corporation) or the Securities and Exchange Commission (SEC), organized by

[1] Owners or purchasers of a lot in a subdivision/village or other residential real

property located within the jurisdiction of the association;

[2] Awardees, usufructuaries, legal occupants and/or lessees of a housing unit

and/or lot in a government socialized or economic housing or relocation project
and other urban estates;

[3] Underprivileged and homeless citizens as defined under existing laws in the
process of being accredited as usufructuaries or awardees of ownership rights
under the Community Mortgage Program (CMP), Land Tenure Assistance
Program (LTAP) and other similar programs in relation to a socialized housing
project actually being implemented by the national government or the LGU.

Are these fees mandatory or voluntary?

The Presidential Decree No. 957, otherwise known as “The Subdivision and
Condominium Buyers’ Protective Decree,” is the basic law that protects the rights
of buyers in a subdivision project. Section 30 of P.D. 957 provides the following:

SECTION 30. 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.

Therefore, the developer of a condominium or subdivision project is mandated by

law to initiate the formation of a homeowners’ association from “among the buyers
and residents of the projects for the purpose of promoting and protecting their
mutual interest and assist in their community development.”

Pursuant to Sec. 30 of PD 957, developers often include a provision in their

contracts of sale that stipulates that the buyer in a condominium or subdivision
project automatically becomes a member of the homeowners’ association of the
particular project.

However, Section 9 of Resolution No. 887 Series of 2011, the “Implementing Rules
and Regulations of RA 9904,” notes that membership in the association is optional,
unless otherwise provided in the Contract to Sell, Deed of Sale, or other
instruments of conveyance, or annotated in the title of the property.

Therefore, HOA membership is still voluntary under RA 9904 with certain

exceptions.
What happens if you opt out of HOA and not pay the
monthly / annual dues?
By virtue of Section 22(a) of RA 9904, it is unlawful for any person to compel a
homeowner to join the association, without prejudice to the exceptions indicated in
the said provision.

Therefore, homeowners can opt not to become a member of the association.

However, Republic Act 9904, or the Magna Carta for Homeowners and
Homeowners’ Association, stipulates that a homeowner will get “the right to enjoy
the basic community services and facilities, provided that he/she pays the
necessary fees and other pertinent charges.”

Notice the use of the word “provided.” This connotes that as long as you pay
association dues, you will be allowed to use the condominium or subdivision’s
shared amenities and facilities. But if you don’t, then you can be denied of certain
benefits.

Know the difference between a condo corporation and a homeowners association

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.

When are association dues not

due?
IN the past, people strive to own a home to free themselves from the hassle and
burden of paying monthly rent. However, in the advent of subdivision and condominium
developments, gone were the days when purchasing your own residential unit will mean
an end of monthly payments. Nowadays, every square inch of your precious home is
assessed in order to contribute to a common fund for the common benefit. I guess this is
the modern concept of bayanihan among neighbors. The only difference is there is one
“property manager” who is tasked to collect the dues to defray all the community
expenses.
Subdivision and condominium developers cannot be faulted for collecting association
dues from the homeowners. Just like taxation, which is the lifeblood of the government,
association dues are the lifeblood of a homeowner’s association to ensure the
maintenance of the building, the roads and the community amenities.

Don’t fret though, because there are certain laws that aim to protect homebuyers from
unscrupulous practices of developers. One of these is Presidential Decree (PD) 957,
Regulating the Sale of Subdivision Lots and Condominiums, Providing Penalties for
Violations Thereof. Section 27 of the said law specifically provides that “[n]o owner or
developer shall levy upon any lot or buyer a fee for an alleged community benefit.

“Fees to finance services for common comfort, security and sanitation may be collected
only by a properly organized homeowners association and only with the consent of a
majority of the homeowners actually residing in the subdivision or condominium
project.”

Thus, dues for the common benefit may only be collected only by a properly organized
homeowners association and only with the consent of a majority of the homeowners
actually residing in the subdivision or condominium project. What will happen, however,
if the homeowners fail to organize a homeowner’s association?

Instructively, Section 30 of PD 957 puts the burden on the owner or developer of a

subdivision project or condominium project to 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.

Thus, until and unless there is a properly organized homeowners and majority of its
actual residents consented to the assessment and collection of association dues, no
developer or subdivision owner shall collect and assess association dues, lest they be
charged with unjust enrichment. In the case of Filinvest Land Inc., vs. Abdul Backy (GR
174715, October 11, 2012) the Honorable Supreme Court held that the principle of
unjust enrichment essentially contemplates payment when there is no duty to pay, and
the person who receives the payment has no right to receive it.

While it may be a little taxing and burdensome to comply with the above requirements, it
is still a law that needs to be complied with. On this note, be reminded of the penal
clause provided under Section 39 of PD 957, which provides for a fine of not more than
P20,000 and/or imprisonment of not more than 10 years for violations of this particular
law. You have been warned.