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Maceda Law

What is the Maceda Law? (R.A. 6552)

R.A. 6552 or “An Act to Provide Protection to Buyers of Real Estate on Installment Payments” is also known as the Maceda Law. It governs the sale or financing of real estate on instalment payments. It is for the purpose of public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.

Where does the Maceda Law apply?

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 Numbered Sixty-three hundred eighty-nine, x x x

*This would apply to transactions or contracts involving the sale OR financing of real estate on instalment payments, including residential condominium apartments; and buyer defaults in payment of succeeding instalments.

What re the rights of the buyer under the Maceda Law?

  1. If buyer has paid at least two (2) years of installments

Section. 3 x x x 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 earned by him which is hereby fixed at the rate of one month 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 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.

Section 6. The buyer shall have the right to pay in advance any installment 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.

*The buyer must pay, without additional interest, the unpaid instalments due within the total grace period earned by him. There shall be one (1) month grace period for every one (1) year of instalment payments made. Note that this right shall be exercised by the buyer ONLY once in every 5 years of the life of the contract and its extensions.

In actual cancellation can only take place after 30 days from receipt by the buyer of the notice of cancellation OR demand for rescission by a notarial act AND upon full payment of the cash surrender value to the buyer. Note that the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to 50% of the total payments made. After five (5) years of instalments, there shall be an additional 5% every year but not to exceed 90% of the total payments made

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 buyer shall have the right to pay in advance any instalment 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.

  1. If buyer has paid less than two (2) years of instalments 

Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became 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.

*The seller shall give the buyer a grace period of NOT less than 60 days from the date the instalment became due. If the buyer fails to pay the instalments due at the expiration of the grace period, the seller may cancel the contract after 30 days from receipt by the buyer of the notice of cancellation or the demand for rescission of contract by a notarial act. 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 buyer shall have the right to pay in advance any instalment 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.

 

Reference:

REPUBLIC ACT No. 6552- An Act to Provide Protection to Buyers of Real Estate on Installment Payments. (Rep. Act No. 6552)

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