Slide 1Engr. Raul T. Punzalan
Engr. Raul T. Punzalan
REPUBLIC ACT NO. 4726
CONDOMINIUM ACT
AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS
CREATION, AND GOVERN ITS INCIDENTS.
COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING
(CREASAT)
Engr. Raul T. Punzalan
A condominium is an interest in real property consisting of
separate interest in a unit in a residential, industrial or
commercial building and an undivided interest in common, directly
or indirectly, in the land on which it is located and in other
common areas of the building.
COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING
(CREASAT)
Engr. Raul T. Punzalan
Title to the common areas, including the land, or the appurtenant
interests in such areas, may be held by a corporation specially
formed for the purpose (hereinafter known as the "condominium
corporation") in which the holders of separate interest shall
automatically be members or shareholders, to the exclusion of
others, in proportion to the appurtenant interest of their
respective units in the common areas.
COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING
(CREASAT)
Engr. Raul T. Punzalan
DEFINITION OF TERMS
"Condominium" means a condominium as defined in the next preceding
section.
"Unit" means a part of the condominium project intended for any
type of independent use or ownership, including one or more rooms
or spaces located in one or more floors (or part or parts of
floors) in a building or buildings and such accessories as may be
appended thereto.
COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING
(CREASAT)
Engr. Raul T. Punzalan
"Project" means the entire parcel of real property divided or to be
divided in condominiums, including all structures thereon.
"Common areas" means the entire project excepting all units
separately granted or held or reserved.
"To divide" real property means to divide the ownership thereof or
other interest therein by conveying one or more condominiums
therein but less than the whole thereof.
COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING
(CREASAT)
Engr. Raul T. Punzalan
A condominium project can be defined as a vertical subdivision on a
parcel of land and a multi-storey building structure erected
thereon.
A condominium project can be a residential, commercial or
industrial project .
The unit-owners enjoys a fee simple ownership on the unit and
enjoys a common ownership (with the other unit-owners) on the land
and the common elements of the building.
COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING
(CREASAT)
Engr. Raul T. Punzalan
Major documents associated with a Condominium Project which the
appraiser should be familiar with are:
Condominium Certificate of Title (CCT).
Master Deed and Declaration of Restrictions.
Articles of Incorporation and By-Laws of the Condominium
Association or Corporation.
House Rules and Regulations.
COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING
(CREASAT)
Engr. Raul T. Punzalan
Description of the land or lot.
Description of the building structure.
Description of the condominium units.
Statement of the nature and interest required in the units and
common areas and whether title to the common areas is to be held by
the condominium corporation.
Purpose for which the building and condominium units are
intended.
Survey plan of the land.
Diagrammatic floor plans of the building and units and their
relative locations and approximate dimensions.
Any reasonable restrictions in the rights of the unit owners and
the condominium corporation not contrary to law, morals or public
policy.
COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING
(CREASAT)
Engr. Raul T. Punzalan
ADDITIONAL FACTORS AFFECTING VALUES OF CONDOMINIUM PROJECT OR
UNITS
Location – relative location to center of activity, relative
location of the unit within the project….
Classification – residential, commercial, industrial, …
Type of Unit – regular, corner, single level, with loft …
Size – floor area is ideal to its utility or highest and best
use…
Layout – floor plan lay-out…
Highest and Best Use – maximum potential of property is
realized…
Design – architectural, floor lay-out, building features…
Depreciation – condition, physical wear and tear…
COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING
(CREASAT)
Engr. Raul T. Punzalan
VALUATION METHODS
Whether the appraiser’s assignment involves the valuation of a
condominium unit or several condominium units, or the entire
condominium project, the three approaches to value can be
applied.
The three approaches to value –
Market Data Approach
Engr. Raul T. Punzalan
Land: 900 sq. m. @ P60,000 P 54,000.000
Bldg: 7,560 sq. m. @ P24,000 181,440,000
Bldg ME: 7,560 sq. m. @ P 6,000 45,360,000
Swim. Pool 6,000,000
Spa & Gym 5,000,000
Development Cost P291,800,000
Selling Expenses: 5% of Devt Cost 14,590,000
Cost of Borrowed Money: Devt Cost x 60% x 12% x 2 years
42,020,000
Developer’s Profit: 30% 87,540,000
Total Cost P444,704,000
Average Selling Price: P444,704,000 / 6,048 sq.m. = P 73,500 per
sq.m.
Based on market research, going prices of condo units in the area
ranges from P70,000 to P75,000 per sq.m. Therefore, project is
feasible.
COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING
(CREASAT)
Engr. Raul T. Punzalan
SUBJECT
Engr. Raul T. Punzalan
VALUATION OF A CONDOMINIUM UNIT BY INCOME APPROACH
The value of a condominium unit is the present worth of the rental
income plus the reversion value of the unit at the end of lease
contract.
Rental Income:
124 sq. m. @ P350 per sq.m. per month x 12 months P 520,800
Present Worth Factor as annuity for 5 years at 10% x 3.79079
Present Value of Rental Income P 1,974,200
Plus: Reversion Value of Condominium Unit
Value of Unit at end of contract x present worth factor
124 sq.m. @ P 60,000 per sq.m. = P 7,440,000
Present Worth Factor (lump sum) x 0.62092 P 4,620,000
Indicated Value P 6,594,200
Engr. Raul T. Punzalan
Engr. Raul T. Punzalan
Engr. Raul T. Punzalan
Engr. Raul T. Punzalan