REALTY INSTALLMENT BUYER ACT

What is the Realty Installment Buyer Act?

Commonly known as the “Maceda Law.” It is embodied in R.A. 6552 which provides for certain protection to particular buyers of real estate payable on installments. The law declares as "public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.

Note: The purpose of the law is to protect buyers in installment against oppressive conditions.

What are the transactions/sale covered by the Maceda Law?

The law involves the sale of immovables on installment (Maceda Law, R.A. 6552).

1. Coverage: Residential Real Estate (Villanueva, p. 431)

2. Exclude:

     a. Industrial lots

     b. Commercial buildings (and commercial lots by implication)

     c. Sale to tenants under agrarian laws

What are the rights granted to buyers?

1. Buyer paid at least 2 years installment

     a. Pay without interest the balance within grace period of 1 month for every year of installment payment. Grace period to be exercised once every 5 years.

     b. When no payment – cancelled; buyer entitled to 50% of what he has paid + 5% for every year but not exceeding 90% of payments made

Note: Cancellation to be effected 30 days from notice & upon payment of cash surrender value.

2. Buyer paid less than 2 years installment

     a. Grace period is not less than 60 days from due date

     b. Cancellation if failure to pay w/in 60 days grace

     c. 30 days notice before final cancellation

Note: buyer can still pay w/in the 30 days period with interest.