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 property’s 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? Transactions today are
often done through financing schemes. Developers nowadays merely require that the
buyer pay a down–payment, 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
developer’s themselves through their in-house financing schemes, or by other financing
institutions. Opting for the first option—that is, taking a housing loan from a bank—
means 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. To make it clearer, you are covered by the
Maceda Law if you are paying for the property through installment basis paid directly to
the developer themselves. The moment you entered to the loan agreements where the
bank or other financial institutions, Maceda Law no longer applies. Because technically
the banks or the financial institutions already paid the house on your behalf. And your
obligation to pay is already with the bank and no longer to the seller or project
developer. I hope this helps you out understanding your rights as a buyer and seller of
real estate properties. Maceda Law protects buyers who are paying for the properties
through installment basis.

1.

Essential Features of Maceda Law

Maceda Law or Republic Act 6552 is an act to provide protection to buyer of REAL
ESTATE on INSTALLMENT PAYMENTS – known as “ Realty Installment Buyer Act.”
This includes residential house and condominiums. However there are exemptions on
the Maceda Law coverage. It excludes Industrial lots, Commercial Buildings, Sales to
tenants and Sale with Mortgage. The Maceda Law two important categories: 1. The
buyer has paid AT LEAST (2)two years of installments 2. The buyer has paid LESS that
(2)two years of installments 1. The buyer has paid at least (2)two years of installments
a. To pay without additional interest the unpaid installments due within the total grace
period earned. One (1) month grace period for every one year of installment payments
made. The right can only be exercised by the buyer only once in every five years of the
life of the contract. b. In case of cancellation of contract, Entitled for a 50% refund of his
total payments. If the buyer has paid five years or more, the buyer is entitled to an
increase of 5% every year and so on… However the cash surrender value shall not
exceed 90% of his total payments. This can be done after thirty days from receipt by the
buyer of the notice of cancellation or demand for rescission of the contract by a notarial
act. Example Scenario:

Mr. Santos has been paying installment for a subdivision lot since 2005 at the rate of
2,000 / month after a down payment of 20,000 to ABC Realty. In Jan 2013, due to some
financial problems, he defaulted to pay his installment. ABC Realty decided to cancel
the contract after giving him notarial notice. How many months is the grace period of Mr.
Santos? Answer: Year 2013 – 2005 8 years x 30 days 240 days or 8 months grace
period Question: How much is the cash surrender value due to cancellation of Mr.
Santos contract? Answer: Total monthly amortization paid inclusive of penalty (96
amortization at P2,000) = P192,000 Additional Down payment = P20,000 TOTAL=
P212,000 Refund Factor: 65% —- > (2 years = 50% refund additional 5% after 5years,
since it is equal to 8 years, therefore 50%+ 15% = 65%) THEREFORE, 212,000 X 65%
= P137,800 2. The buyer has paid LESS that two (2) years of installments a. The right