The Rules on the Sale of Real Estate on Installment under the Maceda Law

The Maceda Law, formally known as the Realty Installment Buyers Protection Act (Republic Act No. 6652), provides critical safeguards to buyers of real estate who purchase property through installment payments.

The Maceda Law applies only if all of the following conditions are met:

• The property is residential.
• The sale is made on an installment basis.
• The buyer is under an in-house financing arrangement with the seller.

The law does not apply if the buyer used bank financing or PAG-IBIG financing.

Important Notes:

1) 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.

Note: If the contract is cancelled, 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.

2) 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.

There is no payment of cash surrender value.