REPUBLIC ACT NO. 6552AN ACT TO PROVIDE PROTECTION TO BUYER OF REAL ESTATE ON
INSTALLMENT PAYMENTS
[Also known as MACEDA LAW]
Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:
SECTION 1. This Act shall be known as the “Realty Installment Buyer Protection Act.”
SECTION 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.
SECTION 3. In all transactions or contracts, involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-Eight hundred forty-four as amended by Republic Act Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within the total grace period for every one year of installment payments made; provided, That this right shall be exercised by the Buyer only once in every five years of the life of the contract and its extensions, if any.
(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made; provided, that the actual cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.
SECTION 4. In case where less than two years of installments were paid the seller shall give the buyers a grace period of not less than sixty days from the date the installment become due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.
SECTION 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.
SECTION 6. The buyer shall have the right to pay in advance any installments or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.
SECTION 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void.
SECTION 8. If any provisions of this Act is held invalid or unconstitutional no other provision shall be affected thereby.
SECTION 9. This Act shall take effect upon its approval.
Approved August 26, 1972.
[END of RA 6552]
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QUESTION: Sir John, what are the rights of real estate installment buyers? ANSWER: Most unlicensed (colorum) real estate agents will keep you away from knowing the Realty Installment Buyer's Act, and sometimes the buyer would not notice that the prepared Contract to Sell form of the Developers have fine-prints that are disadvantageous to the buyer. When the buyer signs it, he waive his rights as an installment buyer. So, deal only with a Licensed Real Estate Broker so you get your protection.
Under the Realty Installment Buyer’s Act (RA 6552) otherwise known as the Maceda Law, if the buyer has paid less than two (2) years of installments, he is entitled to a grace period of not less than sixty (60) days; if he fails to pay the installments due within the grace period given, he is still entitled to a notarial notice of at least thirty (30) days duration before the seller may cancel or rescind the contract.
If the buyer has paid at least two (2) years of installments, he is entitled to:
* Pay, without additional interest, unpaid installments due within the total grace period earned by him (i.e.) one (1) month for every year of installments payment effected; provided however, that such right shall be exercised by him only once in every five (5) years during the life of the contract or its extension, if any
* Refund, if contract is cancelled after the notarial notice of cancellation or rescission of at least thirty (30) days duration, of the cash surrender value of payments made (i.e.) 50% of total payments effected during the first five (5) years but not exceed 90% of total payments made
* Downpayments, deposits or options on contract shall be included in the computation of total payments made.
In both categories of installment buyers, they shall have the additional right to:
* Transfer or assign their rights to the contract
* Pay in full the purchase before the expiration of the contract term without interest
* Have the contract annotated on their titles
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I dedicate this blog to my FB freinds who celebrate their birthdays today.
Bahnarin Dhats Samama, Corales Rhalen Kyle, Dhen Usmann, Jeanna Garcia, Jerine Ramos, Jocelyne Mamanao, Malou Marapao, Marie Anne Sa, Roger Petalcorin, Sandy Yap Glipa, Twinny Remollo Batal
4 comments:
alexis igloria: "i was planning then to purchase a house and lot...i paid the reservation fee...the down payment is payable for 12 months...im on my 5th month now,..then i changed my mind and planning to cancel such...would all my money not be refunded?"
RESC RESPONSE: If you stop payment, you have to go to the Developer to formally cancel the purchase. The money that you paid for months 1-5 would not be refunded. Moneywise, to recoup a some of the moneys you already shelled out, better sell/transfer your rights on the Contract to Sell to someone else for a reasonable fee.
Dear Rltr John, under the Maceda law, who is referred as the Seller, is it the Developer who sold the unit or the Mortgagee bank where the Mortgagor Buyer pays his monthly installment or amortization. Under b) of Sec.3, it says,(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.
To whom will I refund, from the Developer or the Mortgagee Bank. Please advise. Thank you. - For Alex Dimapilis
Dear Rltr John, under Sec. 3,b) of the Maceda law, it says, "If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer". Who is the Seller mentioned. Is it the Developer who sold the unit or the Morgagee Bank where the installments/amortizations are paid by the Mortgagor Buyer? Please advise. Alex P.
When Developer, Bank, and Buyer get themselves into a deal, there are actually three transactions closed:
(1) Developer is the Seller who sells the property to the Buyer on installment basis as evidenced by a document called Contract to Sell;
(2) Buyer loans money from the Bank and makes the Title of the property as the Collateral as evidenced by a document called Mortgaged Contract;
(3) Bank pays the Developer the whole amount of the property as evidenced by a document called Financing Agreement.
Your question is, "who is the seller?" referred to by the Maceda Law. The answer by default is --- THE DEVELOPER.
Nevertheless, the lesson does not stop there and look at the exemptions. You also have to consider the question, "from whom did you buy the property"? The answer to this is, "always look at the Contract to Sell". There are actually three answers below:
(1) Direct from Developer.
(2) Dealer. Dealers buy bulk from developers and resell it at a higher price for profit.
(3) Bank as in the case of when you buy a foreclosed property.
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