In the news, Ecoland 4000 Residences in Ecoland, Davao City partially collapsed due to 6.5 magnitude earthquake last 31 October 2019. Prior to this earthquake, the 5-story condominium suffered major cracks due to 6.6 magnitude earthquake hit Cotabato last 29 October 2019. The building administrator was instructed to vacate the building because it is no longer safe for its residents. Apparently, the administrator did not comply and he was arrested for disobedience to a lawful order.
This incident inspired me to write about condo destroyed by earthquakes. Since it is an act of God, are there liabilities of the developer, contractors, engineers, architects, etc.? What are the options of the condo owners?
So, what happens to your condo unit?
1. Condominium is Declared Inhabitable
The local government will assess whether the condominium building is still habitable or not. When the authority declare the building is no longer safe for habitation, it will notify the condo administrator (or homeowners' association) for the evacuation of its residents and plan for the demolition of the building.
Section 11 of RA 4726 or "The Condominium Act" states: "The term of a condominium corporation shall be co-terminus with the duration of the condominium project, the provisions of the Corporation Law to the contrary notwithstanding." Thus, the dissolution of the corporation and the condominium building.
Section 12 states: "In case of involuntary dissolution of a condominium corporation for any of the causes provided by law, the common areas owned or held by the corporation shall, by way of liquidation, be transferred pro-indiviso and in proportion to their interest in the corporation to the members or stockholders thereof, subject to the superior rights of the corporation creditors. Such transfer or conveyance shall be deemed to be a full liquidation of the interest of such members or stockholders in the corporation. After such transfer or conveyance, the provisions of this Act governing undivided co-ownership of, or undivided interest in, the common areas in condominium projects shall fully apply."
The homeowners' association/corporation can decide to demolish the building and build a new condo project in the land area. It can enter into an agreement with the developer (or any interested developer) for the said plan.
2. Repair of the Partially Destroyed Condo.
When the condominium is declared by the local government as habitable or safe for human use, the homeowners' association/corporation can decide to repair the destroyed portion of the building, particularly the common areas. The affected condo owner shall repair his/her own condo. His insurance will cover the expenses of the repair of his unit.
3. Condominium Insurance
The homeowners' association/corporation shall review the master policy (homeowner’s association policy) if it includes insurance against earthquakes. If none, it is wise to include it. There are insurance agencies that offer earthquake insurance.
Three types of master policy for Homeowners' association: (1) The comprehensive "all-in and all-inclusive policy" which covers the exterior and interior of each individual unit, including fixtures, installations, and additions, (2) the "special entity policy" covers the entire condo structure and fixtures in units but not structural improvements or unit additions, and (3) the "bare wall-in and wall studs policy" which covers only the basic structure of each condo unit.
4. Condo Unit Insurance
The best practice is to have your condo unit covered by comprehensive insurance which includes fire and smoke damage, explosion damage, wind and hail damage, lightning damage, theft, vandalism, and burst pipes. Add earthquake insurance, if your insurer does not cover the earthquake.
For instance, a non-life insurance company offers "Condo Security" for condo owners. It is a comprehensive property insurance for your condominium unit's contents and improvements which covers event of fire and lightning, acts of nature (earthquake, typhoon, flood) with riot/strike, and malicious damage.
Two forms of coverage: cash value, or replacement cost. Cash value coverage recovers the value of insured items less depreciation, while replacement cost coverage looks at how much it will cost to replace the insured item. It is important to know the coverage of the master policy to determine what type of condo insurance you get.
5. Earthquake as an Act of God and Human Responsibility
Earthquakes, like other natural disasters, are Acts of God. You know that earthquakes will occur but you don't know when it will happen. You can blame no one except God. If you don't believe in God, you blame nature.
If an earthquake is an act of God, does it mean that no human person is responsible? How about the developer? How about the contractor, the civil engineer, the architect, etc.?
Article 1723 of the Civil Code states that "The engineer or architect who drew up the plans and specifications for a building is liable for damages if within fifteen years from the completion of the structure, the same should collapse by reason of a defect in those plans and specifications, or due to the defects in the ground. The contractor is likewise responsible for the damages if the edifice falls, within the same period, on account of defects in the construction or the use of materials of inferior quality furnished by him, or due to any violation of the terms of the contract. If the engineer or architect supervises the construction, he shall be solidarily liable with the contractor…"
6. Hire a Competent Lawyer
The legal remedy, through the help of the lawyer, is to take a look at the contract, its terms and conditions, relevant to the issue at hand. The condominium corporation (you and your fellow condo owners) can question the quality of the construction use, the soundness of the building plans and specifications, among others.
While the earthquake destroys, totally or partially, the condominium, there might be a participation of the human agency, whether active involvement or negligence, therefore the developer, contractor, civil engineer, architect, etc. are also responsible.
7. Always ask for the License to Sell
This is why you always inquire about the License to Sell (LTS) issued by the Housing and Land Use Regulatory Board (HLURB) to the condominium project to ensure that the condominium building plan passed the standards set in the Building Code. See the 2009 Revised Implementing Rules and Regulations of PD 957.
8. Inquire if the Condo is outside the fault lines
When you buy a condo unit, make sure that the condominium is not within the fault lines. The Cebu fault line system cuts through the cities of Danao, Naga, Toledo, Talisay, Carcar, and Cebu City; and in the towns of Compostela, Balamban, Minglanilla, Sibonga, Argao, Badian, Moalboal, Alegria, Dalaguete, Alcoy and Boljoon. If so, where can you find a safer place?
Don't rely on what your agent will say. Ideally, you must be told about the fault line where the condo project is located. And no wise developer would build a condo project near the fault line. In practice, however, fault line changes location depending on where your agent wants you to buy. :) If you are interested to buy a house in Consolacion, the agent would be quick to tell you that fault lines are in Talisay City when you inquire about fault lines. Always make your own research.
For more information about the topic or any inquiries about buying a property in Cebu, please contact us at 0917-811-3530 or send us an email at cebuhousefinder@yahoo.com. We help home buyers to find their dream house at the best price and location… for free!
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