Maceda Law Realty Installment Buyer Protection Act: Own House Condominium

Are you planning to buy your own house or condominium?
If paying the full purchase price is just

too much for you, then you are better off paying in installments. If this is the case, then you
should know that there is a law that protects homebuyers who decide to purchase their homes
on an installment basis.
Republic Act No. 6552, or more commonly known as the Maceda Law or the Realty Installment
Buyer Protection Act, deals primarily with ones rights as a real estate investor or a real estate
buyer paying in installments. It also describes the rights of a buyer defaulting in payments for
such purchases. This law was authored by former senator Ernesto Maceda, hence its name,
and took effect on August 26, 1972.
Lets say you plan to buy that dream condominium unit in Makati, and being the posh, new
building it is, the developers have offered it at a price with a lot of commas and zeroes in it.
Unfortunately, your salary does not have as many commas or zeroes to match the propertys
price, so you have availed yourself of the initial installment plan they offered, thinking that you
could get a loan for it after two or three years of building equity.
But then after waiting, you ultimately did not get approved for a housing loan, and ended up
defaulting. Now, you are in a pinch, and you do not know what to do or what your rights are.
Well, keep reading and find out what the Maceda Law can offer you in your current situation.
1. How do I know that the state would protect my rights?
Section 2 of RA 6552 states that the protection of buyers of real estate on installment plans
against oppressive conditions shall be declared a public policy.
2. Who is covered by the Maceda Law?
There are two categories of qualified buyers who are afforded protection. Under Section 3 of RA
6552, a qualified buyer is one who has paid at least two years of installments in all transactions
or contracts involving the sale or financing of real estate on installment payments. Properties
covered include residential condominiums, apartments, houses, townhouses, and house and
lots, among others, but exclude industrial lots, commercial buildings, and sales of properties to
existing tenants.
Under Section 4, on the other hand, a qualified buyer is also one who has purchased any of the
properties enumerated above, but who has paid less than two years of installments.
3. What rights do I have under Section 3 of the Maceda Law?
Under Section 3 of RA 6552, buyers who default on their payments of installments are entitled
to pay, without additional interest, the unpaid installments due within the total grace period they
have earned. This total grace period has been fixed at the rate of one-month grace period for
every one year of installment payments made. However, this right can only be exercised by the
buyer once in every five years of the life of the contract and its extensions.
If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the
payments on the property, which is equivalent to 50 percent of the total payments made. After
five years of installments, an additional five percent for every year of payments will be added,
but not to exceed 90 percent of the total payments made.
For the above paragraph to apply, the actual cancellation of the contract must take place 30
days after receipt by the buyer of the notice of cancellation. This notice of cancellation, or a
demand for rescission at that must be by a notarial act and upon the full payment of the
aforementioned cash surrender value to the buyer.
In a nutshell, buyers are entitled to a refund, as well as grace periods, so long as they have paid
for at least two years.
4. What rights do I have under Section 4 of the Maceda Law?
In contrast with Section 3 , Section 4 of RA 6552 deals with cases where less than two years of
installments have been paid by the buyer. In this case, the buyer is entitled to a grace period of
not less than 60 days. This is counted from the date the installment became due.
The seller, on the other hand, is entitled to the cancellation of the contract, if the buyer fails to
pay the installments due at the end of the grace period. The seller, however, must first notify the
buyer of the cancellation, or of the demand for rescission of the contract. This notice or demand
must be by a notarial act, and shall only render the cancellation or rescission effective 30 days
after such notice or demand has been made.
5. Can I sell or assign my rights to the property to another person?
Section 5 of RA 6552 stipulates that those buyers covered by Sections 3 and 4 have the right to
sell or assign their rights over the property to another person. They may also reinstate the
contract if they so choose by updating the account during the given grace period, as provided
for in Section 4. This transaction, however, must be made prior to the actual cancellation of the
contract. The corresponding deed of sale or assignment must be done by notarial act.
6. What if I won the lottery or got a big break, and decide that I want to pay off my
balance ahead of the due date? Will I be allowed to do so without incurring the
corresponding interests?
Section 6 of RA 6552 grants you the right to do so. It stipulates that buyers shall have the right
to pay in advance any of the installments or the full unpaid balance of the propertys purchase
price. This can be done any time without incurring interest. This full payment may also be
annotated in the certificate of title over the property.
7. What if the contract I entered into clashes with the law? Which would prevail
Ordinarily, the Constitution would tell us that no law impairing the obligations of contracts shall
be passed, but in this case, the Maceda Law, under Section 7, provides that any stipulation in
any contract that are contrary to Sections 3, 4, 5, and 6 are to be deemed null and void. This
particular provision serves to protect those who may have overlooked the fine prints of contracts
during signing that have been stipulated by real estate contractors or developers.
8. Does the Maceda Law apply when I pay through a bank?

<img class="size-full wp-image-4605" src="http://www.lamudi.com.ph/journal/wp-
content/uploads/2015/07/Contract-to-Sell-Maceda-Law.jpg" alt="Things You Need to Know about the
Maceda Law" width="630" height="420" /> Image via Shutterstock
Transactions today are often done through financing schemes. Developers nowadays merely
require that the buyer pay a downpayment, which constitutes a percentage of the purchase price.
The remaining balance would then often be shouldered by a financing scheme (usually a
housing loan) that may be provided by commercial banks, the Pag-IBIG Fund, by the
developers themselves through their in-house financing schemes, or by other financing
institutions.
Opting for the first optionthat is, taking a housing loan from a bankmeans that the balance
that you have to pay the real estate developer has already been paid for in full by the bank
through the loan. In other words, you, in essence, have already paid the purchase price in full by
availing of the loan. The subsequent monthly payments you now make to the bank are not to
pay for the balance of the purchase price, but for the loan itself, the interests accruing on the
principal loan, and the charges that may be or may have been incurred.
Hence, having been fully paid insofar as the purchase price is concerned, the only balance you
are liable for is that of the loan, and since you are not exactly paying in installments anymore,
considering that the property is technically fully paid for, RA 6552 or the Maceda Law would no
longer apply.

Maceda Law Realty Installment Buyer Protection Act: Own House Condominium

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Maceda Law Realty Installment Buyer Protection Act: Own House Condominium

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Are you planning to buy your own house or condominium?

If paying the full purchase price is just

1. How do I know that the state would protect my rights?

2. Who is covered by the Maceda Law?

3. What rights do I have under Section 3 of the Maceda Law?

4. What rights do I have under Section 4 of the Maceda Law?

5. Can I sell or assign my rights to the property to another person?

8. Does the Maceda Law apply when I pay through a bank?

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