The Maceda Law, also known as the Republic Act 6552 or the Realty Installment Buyer Protection Act, is an act that protects the buyer or real estate investor on residential properties purchased through installment.
This article translates the Maceda law in simpler terms for you to better understand your rights as a buyer of real estate properties.
How Does the Maceda Law protect your rights in real estate installment purchases?
Section 2 of the Maceda law is declared as a public policy for the protection of buyers of real estate on installment payments against onerous and oppressive conditions.
Who is covered by the Maceda law?
Section 3 and 4 states the qualified buyers who are protected by this law. The buyer must be:
- the one who has paid all the installments in all transactions and contracts on any residential real estate properties (condominiums, apartments, houses, townhouses, and house & lots) for 2 years or more of installment payments. (under Section 3)
- the one who has purchased any of the residential real estate properties stated above but has paid less than 2 years of installment payments. (under Section 4)
What are your rights covered under Section 3 of the Maceda Law?
The buyer is entitled to the following rights for installments made more than two (2) years:
- The buyer earns the right to pay the unpaid installment without additional interest within 30 days after it became due. This will only be allowed once every 5 years during the life of the contract or any extensions made.
In case of cancellation:
- The buyer gets a refund for the cash default value of the property payments which is equivalent to 50%. There’s an additional 5% for every year on payments made after five (5) years but not to exceed 90% of the total payments.
Cancellation will take effect 30 days from notice and upon payment of cash default value.
What are your rights covered under Section 4 of the Maceda Law?
- If the buyer fails to pay the installment before its due date, the seller should give the buyer a grace period of at least 60 days to settle.
- If the buyer fails to pay within the 60 days grace period, the seller may cancel the contract after 30 days from the date the buyer received a notarized notice of cancellation or the demand for rescission of the contract. The buyer can still pay within the given 30 days grace period with interest.
Can the buyer sell his/her purchased property?
Section 5 of Maceda Law explains that the buyers protected under Sections 3 & 4 can sell their rights over the property or assign the same to another person by updating the account during the grace period given and before the actual cancellation of the contract. Deed of sale or assignment shall be done through a notarial act.
Can you pay the installments or total remaining balance in advance?
According to Section 6 of Maceda Law, the buyer has the right to pay in advance the installments or the remaining balance of the purchased property in full at any time without interest.
Now that you understand your rights as a real estate buyer, you’re feeling more confident to take on the next steps towards your future purchases. Want to scout some more? Check out The Median.