Can I get a refund from the downpayment I pay for the house? MACEDA LAW

Can I get a refund from the downpayment I pay for the house? This is a common question that Real Estate Professional encounters when the buyer has financial difficulties and is not any more capable of continuing the house installment purchase. We actually have a law to protect the buyer and this is under Republic Act 6552 or known as Maceda Law. Maceda Law is an act to provide protection to buyer of Real Estate on installment payment or known as “Realty Installment Buyer Act” . With regards to the question: Can I get a refund from the downpayment I pay for the house? The answer is: Depending on the house purchase and the number of months the installment has been paid. There are exceptions in the Maceda law. It exempts purchases of Industrial lots, Commercial Buildings, Sales to tenants and Sale with Mortgage. Sale with a mortgage are those housing installments being transferred already to the financial institution like Bank and Pag-ibig (HDMF). If your property purchase belongs to the above exemptions, then it is not covered under Maceda Law. Who is covered by Maceda Law?

1. The buyer who purchase residential lot, house and lot  who has paid AT LEAST (2)two years of installments.
2. The  buyer who has paid LESS that (2)two  years of installments.

1. The buyer who has paid at least (2)two years of installments

a. To pay without additional interest in 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 the contract, The buyer is entitled to 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.

For example:  Mrs. Go has been paying her subdivision house and lot in installment since January 2014 at the rate of P 10,000 / month. Her reservation fee from XYZ Realty is P 20,000. In February 2017, Mrs. Go defaulted her payment due to financial difficulties. After further notarial notices, XYZ Realty decided to cancel the contract. How many months is the grace period of Mrs. Go? Answer: Year 2017 – Year 2014 = 3 years x 30 days = 90 days or 3 months grace period Question: How much is the cash surrender value due to cancellation of Mrs. Go contract? Answer: Number of months paid= 36 months x P 10,000 / month = P 360,000.00 Additional downpayment (reservation fee) = P 20,000.00 Total = P 370,000.00 Refund Factor = 50% (for 3 years payment) Therefore, P 370,000 x 50% = P 185,000.00 (estimated less administrative cost if there is). Note: The developer might deduct administrative cost incurred upon the cancellation of house purchase. 2. The  buyer has paid LESS that two (2) years of installments a. The right to pay within a grace period of not less than sixty (60) days from the date installment became due. b. Failure to pay the installment due at the expiration of the grace period, the seller may cancel the contract after 30 days from receipt by the buyer of the notice of cancellation or demand for rescission of the contract by a notarial act. The following are the rights of the Buyer: – Right to Assign / Reinstate Contract (RA 6552 Sec 5) The buyer has a right to sell or assign his rights to another person or reinstate the contract by updating the account during the grace period and before the cancellation of the contract. – Right to Advance Payment (RA 6552 Sec 6) The right to pay in advance any installments or full payment without interest anytime and have such full payment annotate in the title.   #MacedaLaw