Can I get a refund from the downpayment I pay for the house?
Understanding Maceda Law: Your Rights as a Realty Installment Buyer
A common question asked by real estate professionals arises when a buyer faces financial difficulties and can no longer continue with their house installment payments:
“Can I get a refund for the downpayment I made on the house?”
The answer: It depends on how much has been paid and whether the property is covered under Republic Act 6552, more commonly known as the Maceda Law.
🏡 What is the Maceda Law?
RA 6552, or the Realty Installment Buyer Act, was enacted to protect buyers of residential real estate who purchase properties through installment payments.
❌ Exemptions (Not Covered by Maceda Law)
Maceda Law does not apply to the following:
- Sales of industrial lots
- Commercial buildings
- Sales to tenants
- Sales with a mortgage, meaning transactions already transferred to financial institutions (e.g., banks, Pag-IBIG Fund/HDMF)
If your property purchase falls under any of these categories, the Maceda Law does not apply.
✅ Who is Covered?
Maceda Law applies to buyers of residential lots or house-and-lot packages who are paying in installments. It provides different protections depending on the length of payment:
- Buyers Who Have Paid At Least 2 Years of Installments
Rights under the law:
- Grace Period: One (1) month grace period for every year of paid installments (no additional interest). This right can be exercised once every 5 years of the contract.
- Refund in Case of Cancellation:
- 50% refund of total payments made.
- If the buyer has paid 5 years or more, an additional 5% per year is added to the refund (up to a maximum of 90% of total payments).
- The refund is granted 30 days after receiving a notarized notice of cancellation or demand for rescission.
Example:
Mrs. Go began paying for a house-and-lot from XYZ Realty in January 2017 at ₱10,000/month, plus a ₱20,000 reservation fee. She defaulted in February 2020. After proper notification, the developer canceled the contract.
- Total months paid: 36 months = ₱360,000
- Total payments including reservation: ₱360,000 + ₱20,000 = ₱380,000
- Refund Factor: 50% (for 3 years of payment)
✅ Estimated Refund:
₱380,000 × 50% = ₱190,000
(Less any administrative fees that may be charged by the developer)
- Grace Period: 1 month × 3 years = 3 months (90 days)
- Buyers Who Have Paid Less Than 2 Years of Installments
Rights under the law:
- Grace Period: At least 60 days from the date the installment became due.
- If the buyer still fails to pay after the grace period, the seller may cancel the contract 30 days after issuing a notarized notice of cancellation or demand for rescission.
Section 4 of RA 6552, “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 (60) 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 (30) days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.”
🛡 Buyer’s Rights Under Maceda Law
- Right to Assign or Reinstate the Contract (Sec. 5):
The buyer may assign the contract to another person or reinstate it by updating payments within the grace period and before formal cancellation. - Right to Advance Payments (Sec. 6):
The buyer has the right to pay in advance, in full or in part, without interest. Full payments must be annotated in the title.
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