Why do Condo Developers Collect Condo Association Dues?

Aug 02, 2022

Many first-time buyers are unaware that condominium ownership includes a monthly association fee, which they must pay in addition to their utilities such as water, electricity, cable, internet, and so on. On the other hand, many condominium owners are unaware of what is included in their dues and what happens if condo owners fail to pay. This article will assist you with all of your questions about the condo association dues.

What are condo dues?

The term homeowners association (HOA) fee or condominium dues refers to the monthly fee certain residential property owners must pay their homeowners' associations (HOAs). These fees are collected to help the association with property maintenance and improvement. HOA fees are almost always levied on condominium owners, but they may also apply in some single-family home neighborhoods.

Understanding the purpose of condo dues for condos in the Philippines:

One of the best aspects of owning a condominium is enjoying amenities such as swimming pools and playgrounds without having to worry about their upkeep. You can also relax knowing that your family or household is comfortable and safe. However, someone has to do the maintenance or watch over the building, right? That's where your membership dues come in.

Homeowners associations are organizations formed to establish and enforce rules for specific properties and residents in them. These communities are usually formed in planned communities, subdivisions, or condo buildings. People who buy these properties are automatically members of the association. As a result, they must pay their dues in the form of monthly fees, known as homeowners association fees.

Your condominium dues go toward building maintenance and repairs, taxes and licenses, wages for condominium employees (property management staff, maintenance staff, security personnel, and so on), utility expenses for common areas, and other miscellaneous fees required to keep the building and all shared spaces in good working order. When the building requires repairs or repainting, the funds will be deducted from the association dues you have paid.

Vista Condominium dues paid by condo owners usually cover the costs of maintaining the building's common areas, such as lobby, hallways, patios, Gardens, Playgrounds, Landscaping, Swimming pools, and Elevators.

Some standard utilities, such as water/sewer and garbage disposal, may also be covered by fees. Suppose the association's reserve funds (funds set aside for major and emergency repairs) are insufficient to cover a huge repair or maintenance, such as a new elevator or roof. In that case, the association may levy special assessments from time to time.

These fees may also apply to single-family homes, particularly townhouses, in specific neighborhoods, primarily if standard amenities exist, such as tennis courts, a community clubhouse, or neighborhood parks.

Cond Dues vary greatly depending on the property or community. The monthly fees range starts between P1,500 to P3,000 pesos that can go up to P5,000 to P55,000 for upscale residential areas. The general and foremost rule is that the more services and amenities there are, the higher the fees. 

Who collects the payment?

The property management (PM) office is in charge of collecting association dues as well as other condo fees. The condominium developer hires them to manage and maintain the building. They provide the services that residents require, such as security personnel, maintenance personnel, janitorial services, and other building maintenance services.

What are the possible penalties if the condo owner fails to pay?

If you fail to pay your association dues on time, you may be charged a penalty, depending on the condominium developer. Some developers charge 3 to 4% interest. Developers like Vista Residences will consider your account delinquent if you do not pay at all. When this occurs, the building management has the authority to cut off or deny your essential utilities. They may also forbid you from using the shared amenities in some cases.

When do you start to pay?

The property management office must pay association dues and other condominium fees. The condo developer employs them to oversee and take care of the building. They offer inhabitants the services they require, such as janitorial services, security employees, maintenance personnel, and other essential services for the building's upkeep.

Are association dues subject to Tax?

Yes. The Bureau of Internal Revenue published Revenue Memorandum Circular No. 9-2013 earlier this year, specifying that value-added Tax is now charged on association dues and other homeowner associations (VAT) payments. BIR stated that the most recent decisions are still enforceable even though this has been disputed.

What are the benefits if you pay your association dues annually instead of monthly?

Certain real estate developers will give you a discount if you pay all of your annual association dues at once. They take one month off your overall bill - If your association dues are Php 1,995 each month, you will only pay Php 21,945 instead of Php 23,940 when you pay the total amount for a year.

What will happen if I don't want to become a member of the association and not pay the association dues?

Except as provided or negotiated in the contract, Deed of Sale, or property title, participation shall be optional according to Section 5 of Resolution No. 770 Series of 2004 (Framework for Governance of Homeowners Association).

You may decide not to join as a result. The Magna Carta for Homeowners and Homeowners' Association, also known as Republic Act 9904, provides that a homeowner shall get the "right to enjoy the basic community facilities and services, provided that the residents pay the necessary fees and other pertinent charges."

The key phrase here is offered. You won't be barred from using shared facilities and amenities as long as you pay your association dues. You can't utilize them if you don't, though.

Undoubtedly, buying a condominium is not inexpensive. You must continue to make monthly fee payments. Indeed, a requirement of condo living is the obligation to support and contribute to the homeowners association. Giving the residents and condo owners a better quality of life and the ability to use facilities that a typical home does not provide.

For more information on Vista Residences, email [email protected], follow @VistaResidencesOfficial on Facebook, Twitter, Instagram, and YouTube, or call the Marketing Office at 0999 886 4262 / 0917 582 5167.

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