Living In The Philippines Forum

It’s Your Money => Building in the Philippines => Topic started by: philippineexplorer on June 01, 2009, 06:02:56 PM

Title: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 01, 2009, 06:02:56 PM
I am planning to build a 5 story luxury condominium building on a piece of land that I own. There will be 4 total units 3, of those being offered for sale as I will retian ownership of one unit. They will be total turn key like in America with all the finishing provided including appliances, etc.....

My question is as follows. How should my condominium be legally structured? I want simplicity, little to no headaches, best for all parties involved and legal protections. The property and building ownership will be in my wifes name and she is a Filipina with our children as beneficiaries.

I have heard arguments that if I incorporate there are a million fees involved, taxes, stringent tax and filing issues and on top of that I can possibly become a minority shareholder and other shareholders could turn the condo docs inside out and change things that I want built in such as 1. No Pets of any kind or farm aninmals allowed on the property, 2. No hanging of laundry outside the building and other lifestyle considerations

I have been suggested that the best route would retain property and building ownership and then lease out (at a sale oriented pricing)  the units on a 40 year term with right to automatically renew indefinetely. I would also be giving the leasee full rights to transfer to another owner/leasee. I would control the board and all rules and regulations would be in my control. T

On the negative side I have heard this would not be attractive to Filipino owners. These units will sell for around 15 to 20 million each for the 200sqm.

Bottom line is I want simplicity while at the same time maintaining the condo doc rules and not having them put in jeopardy. Live and enjoy but not wake up with a couple of roosters greeting me in the morning
Title: Re: Best Legal Structure for a Condo Project?
Post by: Lee2 on June 01, 2009, 06:49:54 PM
Sorry, I do not know about all the other legality issues but I would first suggest you have 5 not four, since the law of ownership says 60/40 and it will be harder to do with just 4 and might really hamper who you can sell the 3 units to. With 5, 2 could be foreign owned, otherwise only one could be.

As far as ownership might go, many of the people who you might sell such units to might also be married to a Philippine citizen, so those would not be considered foreign owned from what I have been told, so you might be able to sell to more foreigners that way.

Last, I always thought a great idea might be a small hotel geared toward foreigners with the penthouse on top being mine and the elevator being a key system so only we or guests we allowed, could get up to that floor, but that is only a dream for me because I could never afford such a project, but maybe something you might want to think about for your project.

The best of luck with it.
Title: Re: Best Legal Structure for a Condo Project?
Post by: c_a_p_t_a_i_n_r_o_n on June 02, 2009, 02:07:03 AM
.................................

Last, I always thought a great idea might be a small hotel geared toward foreigners with the penthouse on top being mine and the elevator being a key system so only we or guests we allowed, could get up to that floor, but that is only a dream for me because I could never afford such a project, but maybe something you might want to think about for your project.

The best of luck with it.




Not that expensive..............20 metres of rope and you\'re sorted..................
instant elevator to the penthouse  ;D

see here

















(http://www.sunkissvillas.com/assets/wallpaper/Tarzan/Tarzan_hanging_with_friends1024x768.jpg)
Title: Re: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 02, 2009, 06:16:21 AM
Any chance we can be serious here and just deal with the subject at hand.
Title: Re: Best Legal Structure for a Condo Project?
Post by: on June 02, 2009, 07:19:42 AM
Any chance we can be serious here and just deal with the subject at hand.

Captain Ron be serious  ;D ;D ;D

I think your project is well outside the league of the members of this forum so I doubt if you will get many serious replies.

Personally, I would think that anyone with P15M-P20M to spend would prefer to use the money to buy a lot and have a luxury house built to their own specification, I know I certainly would. Getting tied up leases and legal wrangling is best avoided in the Philippines. Just my opinion.

Colin
Title: Re: Best Legal Structure for a Condo Project?
Post by: maricel on June 02, 2009, 09:13:00 AM
Any chance we can be serious here and just deal with the subject at hand.

Captain Ron be serious  ;D ;D ;D

I think your project is well outside the league of the members of this forum so I doubt if you will get many serious replies.

Personally, I would think that anyone with P15M-P20M to spend would prefer to use the money to buy a lot and have a luxury house built to their own specification, I know I certainly would. Getting tied up leases and legal wrangling is best avoided in the Philippines. Just my opinion.


Colin

What Colin says is true, a Filipino with that kind of amount of money will just but a very big lot and have his house built in his own choice of design and specs.  Filipinos are not fond of condos unless it is located in a place like metro manila or Cebu, but then again if they would get one, they won\'t purchase that much. Most reason of why Filipinos acquire condo units is they can be accessible to their work or business or whatever their reason to acquire such property. IMHO as a Filipino, we view condos as a luxury but don\'t consider it as our home. This is not to discourage your plan but do make a very thorough feasibility studies in the area you\'re planning to built in.
Title: Re: Best Legal Structure for a Condo Project?
Post by: kiwiruss on June 02, 2009, 10:49:33 AM
Hi, im a little curious where you intend to build ? Thats top of the line Boracay prices for a Condo
Title: Re: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 02, 2009, 01:16:25 PM
I appreciate the commentary. In general I would have to agree with you. It is a freakin lot of money for sure.  Most condo\'s these days which sell in the 100,000 per sqm range are found mostly in Manila. However there is lots of locals money in this country and of course there are the well heeled foreigners looking for their piece of paradise and this represents that kind of place.  I am patient, but still it would be great to sell these units in the quickest amount of time and I intend to use every savvy smart marketing tool I can get my hands on to do it. Remember I only have 3 units to sell.

First off I will have a design that will stand out from the outright ugliness that calls itself architecture in this country. Something magazine worthy in the league of Lor Calma or Jerry Contreas (local architects) who are supreme at Tropical Modern. It may take a little while to find the right architect but I will. Probably will a bright young recent graduate of a design school. Who knows from where.

Second, I am offering a turn-key ultra deluxe space that you would have to be an ignoramus from the bowels of Arkansas/Mississippi not to appreciate (no insult intended). Only a person with the kind of money to spend on this will appreciate it. Just add furniture and you are done.

There will be a dedicated web site to promote and only the top realtors will handle it both in and out of the country.

I am not trying to be cocky as I know nothing is quite so easy here in the Philippines. Nevertheless, I will take nothing for granted and it will get done and the units will be sold.

Would still appreciate the help on best type of selling legal structure it should have. Once the project takes more shape I intend to share the building and selling aspects here so others can learn what to and not to do from my experience.
Title: Re: Best Legal Structure for a Condo Project?
Post by: tom.inbigdtexas on June 02, 2009, 01:49:00 PM
I am planning to build a 5 story luxury condominium building...
How should my condominium be legally structured...
I want simplicity, little to no headaches...
I have heard arguments that if I incorporate there are a million fees involved, taxes, stringent tax and filing issues...
These units will sell for around 15 to 20 million each for the 200sqm.
Bottom line is I want simplicity... Live and enjoy...

Philippineexplorer,

First, if you do not already know the answers to all of the above questions from an attorney highly experienced in condominium construction in the Philippines...  then your plan is dead in the water until you get those answers from that source.

Second, seeking \"simplicity\" & \"no headaches\" - while becoming a real estate developer/owner in a foreign country - is a plan that is doomed to failure.  I can assure you such a plan is an impossibility in the U.S., and I strongly suspect your complications will increase by at least 10 fold in the Philippines, which will result in a severe, long-term migraine.

Third, if you have the necessary funds to properly capitalize the project you envision, but you truly do seek \"simplicity\" while you \"live and enjoy\" life in the Philippines... then you might want to re-evaluate other options available to you with that sum of money that do not involve major construction projects or other activities that will require lengthy and intensive interaction with the Philippine legal system and local government entities.

I truly do wish you the best of luck with your pursuits, but unless you have very deep pockets and can lose your entire investment in your contemplated project, I would hope that you will not gamble your dreams on being able to profitably construct and sale condos in the Philippines.

Best of luck to you,

Tom

       
Title: Re: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 02, 2009, 06:47:20 PM
Tom

I appreciate your thoughts. Again I am simply asking about legal structure and not about building it.

1. I am not so nieve, ignorant or stupid not to have most of a plan of responsible action in place;

2. I have an extremely credible builder who builds hotels and private residences for numerous savvy and sophisticated foreigners who DON\'T lose money here with their projects and some of these clients are I looked at and his pricing is more or less close to any other builder in the Philippines depending on where you are. As a general rule based on my experience in many areas of the country I have been....In the Province you pay less for labor and more for materials. In Manila and vicinity you pay more for labor and less on materials. The bottom line is building costs will generally range between 15,000 to 20,00 per sqm for a decently finished house no matter where you are unles you build it yourself for 12,000 sqm.  I am calculating around 25,000 for my endeavor and even as high as 28,000 per sqm due to the extremely high quality of my finishings. The job will most likely be a cost plus 15% anyway and once my architectual stuff is done I will know my costs fairly well.

My initial question here was soley about a legal structure. My friends and others I have spoken have their opinions and I was simply asking for others here on the forum. Go corporate or go lease or any other avenues......I have a very good handle on the building aspects.

Thanks to all
Title: Re: Best Legal Structure for a Condo Project?
Post by: aerosick on June 02, 2009, 07:56:58 PM
Hello,

I assume that your earlier Post about looking for an \"Ultra-Modern Architecture utilizing lots of glass for a residential building job in Tagaytay\" is for this Condo Project. Is this correct?

In this Post you state that you have a Builder in place that has \"numerous savvy and sophisticated foreigners who DON\'T lose money here with their projects\".

What is the Builder telling you about how his other Clients have set up for their legal structures? Have you researched the legal structures of these \"savvy and sophisticated foreigners\"?

I would think that this would be easy information to find out from the Public Offices.

But if you are just here looking for 2 or 3 prospects wanting to spend a 1/2 mil US$ of their retirement egg on a Condo, count me out...

Just an ignoramus from the bowels of Arkansas,

Billy
Title: Re: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 02, 2009, 09:33:21 PM
Thanks Bill. Big help! (that\'s sarcasm for those of you from Mississippi and Arkansas)

The builder has clients that are 1. Filipino corporations for restaurants and hotels 2. Private Individuals for  residential buildings 3. Joint Foreigner/Filipino corporation for Hotel project.

Have already spoken to some of his clients about building using a Filipino/foreign owned corporation and I see mostly cons to that structure so I keep seeking out more opinions.

Obviously I have heard the opinions of my friends, builders and others and am looking for more and I figured that this is a forum dominated by foreigners who are engaged in building here so naturally I wanted those opinions as well and how it has worked out for them on stuff other than residential.

Anway thanks for all you wonderful suggestions. See ya!!
Title: Re: Best Legal Structure for a Condo Project?
Post by: tom.inbigdtexas on June 03, 2009, 06:21:08 AM
Tom
I appreciate your thoughts. Again I am simply asking about legal structure and not about building it.
My initial question here was soley about a legal structure.

I have a working knowledge of various ownership/equity structures applicable to the U.S. - Corporate; C corp; S corp; Prof. Corp.; Prof. Asso.; LLC; Partnership; Limited Partnerships; and Sole Proprietorship being the most common.  However, I do not know squat about legal ownership entities  available to a foreigner in the Philippines for purposes of building and owning a multi-unit residential property... unless there is an attorney licensed by the RP who specializes in transactional law who is a member of this Forum, I suspect that the collective knowledge of the members of this Forum on this limited subject also equals \"squat.\" ( ;D no offense intended to any know-it-alls).

That having been said, based solely on what I have seen posted by others on this and other groups, it appears that your options are to select a structure that will:

1) give up control to your wife;
2) give up control to majority shareholders;
3) give up control to someone who is a Philippine citizen eligible for ownership.

If you discover method for a foreigner to own and control real property in the RP, please post it, as I have seen about 1,000 posts searching for this \"holy grail.\"

Good luck,

Tom         
Title: Re: Best Legal Structure for a Condo Project?
Post by: kiwiruss on June 03, 2009, 11:28:56 AM
Friends are doing similar to what you want. They set up a corporation which owns the land. Apartments are sold under Condo laws. (research with a lawyer) Ultimately someone else has a finger in your pie (the corporation) And yes things change when you have built a magnificent building and EVERYONE wants to take a bit more. Tread carefully especially with the famous architects builders etc as they are out to make money like everyone else. A friend here just blew 4.5mill euro to build his dream resort...1/3 finished. gave up and went home (for sale).
Standard build price Boracay for the finish quality you are looking for is 35k+ meter..just for you to compare, but they do sell for $300k+
Title: Re: Best Legal Structure for a Condo Project?
Post by: tom.inbigdtexas on June 03, 2009, 12:54:03 PM
A friend here just blew 4.5mill euro to build his dream resort...1/3 finished. gave up and went home (for sale).... they do sale for $300k+.
I have an extremely credible builder who builds hotels and private residences for numerous savvy and sophisticated foreigners who DON\'T lose money here with their projects

Kiwiruss, please introduce your friends to Philippineexplorer\'s builder immediately.  My consulting fee for having saved the Dream Resort project is a $300k condo in Boracay.  My fee for having conferred the ideal marketing name on the project is on the house.

Thank you,
Tom   

PS - Please title my condo in the name of \"Dream Resort Corporation d/b/a Dream Resort, LLC., d/b/a Cayman Island Resorts Holding Company, LTD., d/b/a TominbigDtexas Consulting, P.C.\" 
Title: Re: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 03, 2009, 02:01:25 PM
Thanks Russ & Tom

Appreciate the advice. Yes I agree about the knowledge base of this forum perhaps is limited in this area. Hopefully, when my project is fininshed I can expand on it here for all to learn from. And btw, having it all in my wifes name is fine by me and there was never any consideration otherwise. I have no interest in creating more obstacles or inviting an endless supply of held out hands for \"Compliment$$$$$\" for those of you who may be familiar with that particular expression or experience. Nevertheless, I have heard of better vehicles to use other than a corporation and indeed I will be investigating those options this week with a competent attorney.

Will keep you informed when I get it all figured out. I am sure many foreigners could benefit from the information I find out on the various Ownership Structures.



 
Title: Re: Best Legal Structure for a Condo Project?
Post by: c_a_p_t_a_i_n_r_o_n on June 03, 2009, 03:24:16 PM
On a serious note, yes they drift by from time to time.

Those with (Filipino born) kids can set up trusts for their kids, but still effectively control real assets as the trustee.......I\'m resonably au fait with UK/US/Euro trusts but can\'t advise on how they operate in Philippines
You will need a lawyer you can trust, start them on small projects first

I don\'t know if this\'ll be appropriate for philippine explorer, don\'t know his name let alone his family situation
Title: Re: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 03, 2009, 04:30:06 PM
Hi captain.

It is not so much a question of whether I own it, a corporation owns it, my wife owns it or my kids own it in trust. It is about the best legal structure that protects me and my family as a eventual unit owner ourselves from any future owners that may want to change the by-laws or condo docs to their own end and possibly force me from the lifestyle I wanted for the place to begin with as the actual developer LOL.

I heard of one foreign guy in Cebu who built a half a million dollar house on an expensive property for his retirement in one of the best subdivisions overlooking the city (up near the marco polo I think) This place had a homeowners association. About one month after completion of the foreignes house, the assoication changed the rules for I guess an influential lot owner and allowed him to use his vacant lot (located unfortunately next to this foreigners house)to breed Roosters.

This is what I want to avoid happening in my condo building with me and my family as tenants. A Philippine corporation with condo owner shareholders can allow this to happen.

So in a nutshell I need a LEGAL STRUCTURE  that allows us to keep CERTAIN RULES as they pertain to the condos that cannot be changed by the eventual purchasers of the Condo units. This means a legal structure that is in our (the developers) contol for all time. So some powerful person doesn\'t bully us around.

Am I being paranoid? maybe... as most associations do generally enforce rules that provide a quality of life for thier owners BUT.......but I don\'t want to take anythinig for granted and mind you anyone on this forum that thinks they are immune form this should look at the association rules that apply to where they live so as to avoid future headaches.

Possibly it involves buyers signing doecuments that are ironclad about certain rules of owning in the condo. Perhaps it involves leasing the condos for 40 years with 20 year automatic renewal and we retain ownership of the land. Who knows

Sorry for beating this dead dog to death. Wish it was a rooster LOL


thanks again - suggestions are welcome

Title: Re: Best Legal Structure for a Condo Project?
Post by: c_a_p_t_a_i_n_r_o_n on June 03, 2009, 08:14:18 PM
Sounds like you need to investigate freeholder v leaseholders rights

To wit.....Your wife or trust will be the freeholder of the land
tenants/owners of the condos are leaseholders

I doubt leaseholders can override freeholders will in any aspect of the land usage (absolutely the freeholders ownership) anywhere in the world
Title: Re: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 03, 2009, 08:37:45 PM
Captain

Thanks kindly. Time to do some homework. Are you aware of other luxury priced condo properties that use this formula successfully.

Would I be wrong in guessing that most of the time this formula is probably being used by a foreign husband seeking security on a house he has built for himslef and family. He gets the house on a long term renewal lease and the wife gets the property. Both are protected in case of a seperation or divorce

Just wonder how this might work with a luxury condo development such as I propose. I know the buyers would have the same financial security owning their unit in this legal structure, but  how would a potential buyer in your mind perceive this value when coughing up $400,000 big ones from this type of arrangement versus being a shareholder of a corporation as most condo buildings seem to operate as?

thanks again
Title: Re: Best Legal Structure for a Condo Project?
Post by: tom.inbigdtexas on June 04, 2009, 02:33:24 AM
PhilippineExplorer,

No need to apologize... beating a \"dead dog to death\" is the specialty of all on-line groups and forums. ;D

Perhaps your persistence in seeking this non-existent \"legal structure\" that will allow you, a foreigner, to --

1) own and control land and the improvements on that land (even after the improvements are sold or leased to very wealthy Filipinos),

2) to hold on to that control for all of eternity, and

3) provide you with an effective legal shield from being bullied by the rich and powerful in the Philippines---

--- stems from a basic misunderstanding of the structure and purpose of the constitution, statutes and regulations of the Philippines.

The very first sentence of your first post of this thread states that you are going to build a five story condo \"on a piece of land that I own.\"  That is simply impossible.  You do not own a piece of land in the Philippines.  You will never own a piece of land in the Philippines unless they amend their constitution.   

You further state, with regard to this luxury Filipino condominium, that \"I would control the board and all rules and regulations would be in my control,\" and that you want this control for \"all time.\"  Sorry, this is just not possible unless the statutes and regulations of the Philippines are amended.  Look into the corporate structure, ownership and control of banks, hotels, resorts, etc., in the Philippines.  Whatever the name on the building, Filipinos retain final control. You are not going to find a legal loophole to exploit and accomplish something in the Philippines which giant multi-national corporations have been unable to accomplish.     
 
The constitution, statutes and regulations (\"laws\") of the Philippines were designed to be protectionist in nature.  Unfortunately (IMHO), their laws are not designed to encourage investment in the Philippines by non-Philippine individuals, corporations or any other entity.  Their laws are certainly not administered in such a manner as to encourage such investments.  Whether by design or not, their laws have stymied foreign investment in the Philippines --- and, their laws are the reason you will never build, own or control your proposed condominium project.

Sorry... \"beat the dead dog\" all you wish, but right or wrong, fair or unfair, the laws of the Philippines accomplish what they are designed to do... which is to prevent you from accomplishing the exact thing you are attempting to accomplish.

Tom

BTW... If you would provide a little background on yourself pertinent to the issue of real estate development, in foreign countries or otherwise, or other start-up business ventures you have managed, it might help in understanding the perspective from which you view your proposed project and help us in getting that long-suffering \"dead dog\" some relief.   


Title: Re: Best Legal Structure for a Condo Project?
Post by: tom.inbigdtexas on June 04, 2009, 03:23:44 AM
PhilippineExplorer,

Take a look at Myril\'s post today in “Its Your Money” - “Real Estate Information” - “Club Morroco Subic Bay”

Do you believe she could have avoided these problems by reading the association rules?  How would you handle her complaints if you were the developer of her subdivision?

Tom
Title: Re: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 04, 2009, 06:57:46 AM
Tom For some reason you keep harping about me being a foreigner when I have explained many times in the other posts that is irrelevant. My wife will own it all or my kids will own it all.  She is a Fiilipina. My kids are Filipina. Can we be clear about that!!!! Even if I continue to use \"I\" just take that as \"My Wife\" talking or writing this.

Now back to the legal structure. Using \"Captain\" Freehold/Lease scenario. Will that work and allow My Wife the control she wants to be able to enforce with the condo by-laws and documents. She would retain ownership of the property while leasing out long term the Condo units. I assum no one can do anything on the property since she owns it correct? And she can take legal action against those who tresspasses on it as an example
Title: Re: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 04, 2009, 07:18:20 AM
As for Myrils post. It is sad that she and the other owners have to go through all that. They should sue and if enough join the class action perhaps something will happen.

I live in a sub-division and HAD similar issues. Stray dogs, late night karaoke. No squatter though. Initially we spoke to the association office about this but they are useless. So we decided to take care of those problems ourselves and without conflict or stress. We hired some people to take care of the dogs and enough other people were complaining about the late night karaoke that they ended up stopping at a reasonable hour.

I am surprised Sta Lucia allows this to happen in Myrils sub-division as they are an upscale property developer and usually their properties are highly secured.

These are not issues my wife would run into as developer/owner of our condo project. There are literally no neighbors where the project is located so for now there are no dogs, roosters or noises to be seen or heard from presently. And it is unlikely there would be for many years to come as there is no other practical property to build on anywhere near us. 

That\'s the point. For us it\'s the other way around......As developers we are not concerned about outside the property assaults on our peace of mind but from our own condo purchasing tenants following the rule of their ownership. And again what ownership scenario will give MY WIFE the most power and ability to put a stop to any situation that may arise with a one of the Condo Owners.
Title: Re: Best Legal Structure for a Condo Project?
Post by: tom.inbigdtexas on June 04, 2009, 11:20:20 AM

Using \"Captain\" Freehold/Lease scenario. Will that work and allow My Wife the control she wants to be able to enforce with the condo by-laws and documents. She would retain ownership of the property while leasing out long term the Condo units.


Ahhhh, now this question is a dead dog of a different color from the little pooch you posed many posts ago... and with a minor modification, in a word, I believe the answer is \"yes.\" 

Minor modification - substitute \"apartments\" for \"condo\" and substitute \"lease provisions\" for \"by-laws.\"  \"Condominium\" is typically a legal word of art with ownership connotations that are contrary to the \"lease rather than sale\" question you are now posing above.

Good luck and post some pics when the building starts to take shape.

Tom.   
Title: Re: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 04, 2009, 12:51:02 PM
Final question along these lines

Since we are leasing these puppies for a very pretty song, do potential buyers understand that the stability, security of the leasing/owning their apartment is no different than a traditional Condo they may purchase. Its only a matter of semantics to a degree. In a nutshell this will be no different than any real estate purchase they may make. It is theres to do with as they want within the confines of the leasing rules just like any Condo? I assume the documents will allay any fears about ownership security that may crop up?
Title: How do Ayala and SM do it? Best Legal Structure for a Condo Project?
Post by: bowlofsopas on June 05, 2009, 06:05:43 PM

Here\'s my two cent\'s worth...  When people buy property (which is always a big expense) they would balk at anything which would make the transaction out of the ordinary from the structure of regular property transactions - notwithstanding the fact that the property itself may be an outstanding one (especially if the difference is materially disadvantageous compared to regular property transactions).

Having said that, I was wondering about how to achieve some of your goals... where you said that you wanted to control usage of the properties... even to the degree that the majority property owners could not hang their laundry outside or have pets in their property if they wanted to. Again, notwithstanding the case where even if all the laws, regulations and rules were iron clad against these things yet you had to try to enforce the rules against occupiers who ignored those rules (you can see how this could be a headache in itself)... I was wondering how the really big boys in the business handle these issues.

What I mean is, for example, Ayala (including Avida and Alveo) and even SM are making housing developments: condos and gated communities (SM just condos I think) where, of course, the buyers even get the plot of land on which their house sits - which means a whole bunch of property rights much more than what you may be giving away in your development. Even so, I imagine that these big corporations would never think of EVER ceding control of the whole development for years and years even after all units have been built, sold and occupied and families there grow and grow (not least of all is the consideration of the unending stream of lucrative association fees set at a high rate and other service/management/maintenance contracts).

How do they do it? How do these big boys ensure that they get their way in the development FOREVER? (Unless of course these big corporations decide to sell those management rights in the future...) What is the power of the \"majority\" property owners in this case? And as an aside: can they (these big developers), and do they, lock in their rights to association dues and management rights forever? Does this happen overseas as well?

Do some research. I would love to hear what answers anyone comes up with. (Let me give the first JOKE answer: they hire a big name lawyer!) I think these considerations are in the minds of all large developments from big name corporations.


Title: Re: Best Legal Structure for a Condo Project?
Post by: c_a_p_t_a_i_n_r_o_n on June 05, 2009, 11:23:53 PM
Captain

Thanks kindly. Time to do some homework. Are you aware of other luxury priced condo properties that use this formula successfully.


I believe ALL condos are bought on a leasehold basis EVERYWHERE, some places it\'s a 999 year lease, others 99 years
There\'s usually a nominal yearly ground rent (£1, $1) to the freeholder so no one forgets who owns the actual land

When buying a condo from previous owner/lessee it\'s important to know how many years left on his original lease......if there\'s only a few.....caveat emptor 
Title: Re: Best Legal Structure for a Condo Project?
Post by: philippineexplorer on June 06, 2009, 11:30:26 AM
It\'s sounding better all the time. I knew we\'d get there eventually with so many intelligent participants on the Forumn here. So even if most are leasehold as Captain says, can they still be marketed as Condos. Seems must more appealing than apartments ya think.
Title: Re: Best Legal Structure for a Condo Project?
Post by: tom.inbigdtexas on June 06, 2009, 11:55:56 AM
I believe ALL condos are bought on a leasehold basis EVERYWHERE, some places it\'s a 999 year lease, others 99 years
There\'s usually a nominal yearly ground rent (£1, $1) to the freeholder so no one forgets who owns the actual land

Captainron,

With all due respect (uh-oh, this means this SOB is fixing to disagree ;D) in the U.S. the ownership structure of condominiums is that each unit of the building or complex are owned individually, whereas the common areas and the land on which the complex sits is owned jointly by all of the individual unit owners in fractional amounts.  Leases are not involved in condominium ownership.

Tom

I was wondering how the really big boys in the business handle these issues.

Even so, I imagine that these big corporations would never think of EVER ceding control of the whole development for years and years even after all units have been built, sold and occupied and families there grow and grow.   

How do they do it? How do these big boys ensure that they get their way in the development FOREVER?

Bowlofsopas,

The answer is they do not keep, or want, control after the project is sold out. For a subdivision, they make their money by buying a tract of land, selling the lots at an aggregate price many, many times the purchase price of the original tract of land, make a big profit on the building of each house... and when the subdivision is near sold out, turn over control to the homeowners association and go on to their next project.

Same basic premise for a condominium, which as noted above results in the total sale of both the units and land upon which it is constructed.

Why would they want the headaches associated with a subdivision or condo as it ages... when they no longer own any part of it.

If they do wish to control, or retain future profit potential of, a piece of land used for residential or similar use, they build an apartment complex, a resort or other entity whereby they retain ownership of the land and lease the individual units or dwellings.

Too bad you and I don\'t have a few tens of millions to spare, we could partner up and build something.  ;D

Tom

Title: Re: Best Legal Structure for a Condo Project?
Post by: coutts00 on June 06, 2009, 11:56:57 AM
I think the longest lease available in RP is 50 years, with an automatic right of renewal for another 50. Best to check it out though and make sure its in writing and all siblings know about the agreement, lest the land pass from your asawa to kids or siblings and they try to change the agreement.

Wayne   ;D ;D