Assessments, Liens & Taxes
Understand how condominium assessments work under RA 4726, how unpaid dues become liens on units, the lien priority rules, and the separate tax assessment principle.
Assessments Become Liens on Units
“An assessment upon any condominium made in accordance with a duly registered declaration of restrictions shall be an obligation of the owner thereof at the time the assessment is made. The amount of any such assessment plus any other charges thereon, such as interest, costs (including attorney's fees) and penalties, as such may be provided for in the declaration of restrictions, shall be and become a lien upon the condominium assessed when the management body causes a notice of assessment to be registered with the Register of Deeds of the city or province where such condominium project is located.”
What This Means
Condominium assessments (monthly dues, special assessments) are not just personal debts. they can become liens on the unit itself. When the management body registers a notice of assessment with the Register of Deeds, the unpaid amount (plus interest, penalties, and attorney's fees) becomes a lien that attaches to the physical property. This means even if the unit is sold, the lien follows the property. The lien mechanism gives condo corporations a powerful enforcement tool against non-paying owners.
- Assessments are obligations of the owner at the time they are made
- Unpaid assessments can become liens on the condominium unit
- Lien is created by registering a notice at the Register of Deeds
- Lien includes the assessment PLUS interest, costs, attorney's fees, and penalties
- The lien attaches to the property. follows the unit even if sold
Real-World Scenario
A unit owner has P500,000 in unpaid condominium dues accumulated over 3 years. The condominium corporation registers a notice of assessment lien with the Register of Deeds. The owner then sells the unit to a buyer who was unaware of the unpaid dues.
Does the buyer inherit the lien?
Lien Priority & Foreclosure
“Such lien shall be superior to all other liens registered subsequent to the registration of said notice of assessment except real property tax liens and except that the declaration of restrictions may provide for the subordination thereof to any other liens and encumbrances. Such liens may be enforced in the same manner provided for by law for the judicial or extra-judicial foreclosure of mortgages of real property. Unless otherwise provided for in the declaration of restrictions, the management body shall have power to bid at foreclosure sale. The condominium owner shall have the same right of redemption as in cases of judicial or extra-judicial foreclosure of mortgages.”
What This Means
Assessment liens are powerful. they rank above almost all other liens registered after them, except real property tax liens. The management body can enforce unpaid assessments through the same foreclosure procedures used for mortgages (judicial or extrajudicial). This means a unit can be foreclosed and sold at auction for unpaid condo dues. The management body can even bid at the foreclosure sale to acquire the unit. The owner retains the right of redemption (to buy back the unit after foreclosure) just as in mortgage foreclosure cases.
- Assessment lien is SUPERIOR to later-registered liens
- Only real property tax liens rank higher
- Declaration of restrictions can subordinate the lien to other encumbrances
- Enforcement: same as mortgage foreclosure (judicial or extrajudicial)
- Management body can bid at the foreclosure sale
Real-World Scenario
A unit owner has both an unpaid bank mortgage (registered 2020) and unpaid condominium assessments (lien registered 2022, for dues from 2021-2022). The unit is to be foreclosed. The bank claims its mortgage has priority since it was registered earlier. The condo corporation disagrees.
Which lien has priority?
Separate Tax Assessment Per Unit
“Whenever real property has been divided into condominiums, each condominium separately owned shall be separately assessed, for purposes of real property taxation and other tax purposes to the owners thereof and the tax on each such condominium shall constitute a lien solely thereon.”
What This Means
Each condominium unit is taxed separately. not the building as a whole. This means each owner receives their own real property tax assessment and is responsible only for the tax on their own unit. If one owner fails to pay their property tax, the tax lien attaches only to their unit. not to other units or common areas. This is consistent with Section 6(f)'s principle that each owner's obligations are personal and do not affect other owners.
- Each unit is assessed SEPARATELY for real property tax
- Tax is the obligation of the individual unit owner
- Tax lien attaches ONLY to the specific unit. not to other units
- One owner's tax delinquency does not affect other owners
- Consistent with the principle of personal obligations under Section 6(f)
Real-World Scenario
The local government sends a single consolidated real property tax bill for an entire condominium building to the condominium corporation, demanding P5 million for the whole project. The corporation wants to pay from the common fund and pass the cost to unit owners through assessments.
Is the local government's approach correct?
Frequently Asked Questions
Can my condo unit be foreclosed for unpaid association dues?
Yes. Under Section 20 of RA 4726, unpaid assessments can become liens on your unit when the management body registers a notice with the Register of Deeds. These liens can be enforced "in the same manner provided for by law for the judicial or extra-judicial foreclosure of mortgages." Your unit can be sold at auction for unpaid dues.
If I buy a condo unit, am I responsible for the previous owner's unpaid dues?
If the management body registered a notice of assessment lien with the Register of Deeds, the lien attaches to the unit regardless of ownership changes. Always check the Register of Deeds for liens and request a clearance certificate from the condo corporation before purchasing.
Is my condo unit taxed separately or as part of the whole building?
Separately. Section 25 requires each unit to be "separately assessed, for purposes of real property taxation." Each owner gets their own tax bill, and a tax lien on one unit does not affect other units in the building.