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June 1, 2022

WHAT IS REALTY INSTALLMENT BUYER ACT?

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Published — February 10, 2021 

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

Aside from Installment Buyer Act more on realty and property: LEASE OF PERSONAL PROPERTY WITH OPTION TO BUY

  • Buyers of real estate on installment payments are protected against oppressive conditions

  • Buyers may pay their unpaid installments without additional interest

  • If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments made on the property

Maceda Law or the Realty Installment Buyer Act was approved on August 26, 1972.

In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments, the buyers are protected.

In what way are the buyers protected under the Maceda Law?

The law says:

First, determine whether the buyer has paid at least two (2) years of installments or not.

If the buyer has paid at least two years of installments, he is entitled to pay his unpaid installments due without additional interest. However, the payment of the unpaid installments shall be within the total grace period earned by him. Such grace period is fixed at the rate of one month period for every one year of installment payments made. Take note that this right can be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

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 (50) percent of the total payments made, and, after five years of installments, an additional five (5) percent every year but not to exceed ninety (90) percent of the total payments made.

Always remember that down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

How about if the buyer has paid less than two (2) years of installment?

The law says:

In case the buyer has paid less than two (2) years of installment, the seller shall give the buyer a grace period of not less than sixty (60) 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 (30) days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.

In both cases, whether the buyer has paid at least two years of installments or not, the buyer has 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 the actual cancellation of the contract.

Also, nothing in law which prohibits the buyer 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. Any stipulation which is inconsistent with the above is considered null and void.

When may the contract of sale between the buyer and the seller be actually canceled? A related article will be posted in a few days.


Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

All rights reserved.


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