What is the Realty Installment Buyer Protection Act (Maceda Law)?

It is Republic Act No. 6552, enacted in 1972, which provides protection to buyers of residential real estate who pay in installments, granting them grace periods, refund rights, and the ability to assign or reinstate contracts.

Who is protected by the Maceda Law?

The law protects buyers of residential real estate, including condominium units, who are making installment payments; it does not cover industrial lots, commercial buildings, or sales to tenants under other specific statutes.

What rights does a buyer have if they default after paying at least two years of installments?

The buyer can pay the overdue installments without additional interest within a grace period of one month per year already paid (usable once every five years), or they may have the contract cancelled and receive a cash surrender value of 50% of payments made plus 5% for each year after the fifth, up to 90%.

How is the cash surrender value calculated when a contract is cancelled?

The seller must refund 50% of the total payments the buyer has made; after the buyer has completed five years of payments, an additional 5% is added for each subsequent year, but the total refund cannot exceed 90% of the payments made.

What grace period is given if the buyer has paid less than two years of installments?

The seller must grant a grace period of at least 60 days from the due date of the installment; if the buyer still fails to pay, the seller may cancel the contract after giving a 30‑day notice.

Can a buyer sell or assign their contract rights to another person?

Yes, the buyer may sell or assign their rights, or reinstate the contract by paying the overdue amount, provided the deed of sale or assignment is executed by a notarial act.

Is a buyer allowed to pay the remaining balance early without interest?

The buyer may pay any installment or the full unpaid balance at any time without interest, and the full payment must be annotated on the property's title certificate.

What happens to contract clauses that conflict with the Maceda Law?

Any contract provision that goes against Sections 3, 4, 5, or 6 of the law is declared null and void.

RA 6552 - Realty Installment Buyer Protection Act - Maceda Law (1972)

Philippine lawLegal status not independently verified

In brief

AI summary. Verify against the source below.

The Realty Installment Buyer Protection Act (RA 6552), also known as the Maceda Law, safeguards buyers who purchase real estate on installment plans by granting them grace periods, refund rights, and the ability to assign or reinstate contracts.

Who it affects: It applies to buyers of residential real estate (including condominium units) who are paying for the property in installments.

Key provisions

Public policy. The law declares that protecting installment buyers from harsh contract terms is a matter of public policy. [Section 2]
Grace period after 2 years of payments. If a buyer has paid at least two years of installments, they may pay the overdue amount without extra interest within a grace period of one month for each year already paid, but this can be used only once every five years. [Section 3(a)]
Cash surrender value on cancellation. When a contract is cancelled after the buyer has paid two years, the seller must refund 50% of all payments made, plus an extra 5% for each year beyond five years, up to a maximum of 90% of total payments. [Section 3(b)]
Grace period when less than 2 years paid. If the buyer has paid less than two years, the seller must give at least a 60‑day grace period to settle the due installment; failure to pay allows the seller to cancel the contract after a 30‑day notice. [Section 4]
Right to assign or sell contract rights. The buyer may sell or assign their rights under the contract, or reinstate the contract by paying the overdue amount, provided the deed of sale or assignment is executed by a notarial act. [Section 5]
Advance payment without interest. A buyer can pay any installment or the entire remaining balance at any time without incurring interest, and the full payment must be noted on the property's title certificate. [Section 6]
Invalidity of contrary contract terms. Any contract clause that conflicts with Sections 3, 4, 5, or 6 of this law is considered null and void. [Section 7]

Common questions

What is the Realty Installment Buyer Protection Act (Maceda Law)?: It is Republic Act No. 6552, enacted in 1972, which provides protection to buyers of residential real estate who pay in installments, granting them grace periods, refund rights, and the ability to assign or reinstate contracts. [Section 1]
Who is protected by the Maceda Law?: The law protects buyers of residential real estate, including condominium units, who are making installment payments; it does not cover industrial lots, commercial buildings, or sales to tenants under other specific statutes. [Section 3]
What rights does a buyer have if they default after paying at least two years of installments?: The buyer can pay the overdue installments without additional interest within a grace period of one month per year already paid (usable once every five years), or they may have the contract cancelled and receive a cash surrender value of 50% of payments made plus 5% for each year after the fifth, up to 90%. [Section 3(a) and Section 3(b)]
How is the cash surrender value calculated when a contract is cancelled?: The seller must refund 50% of the total payments the buyer has made; after the buyer has completed five years of payments, an additional 5% is added for each subsequent year, but the total refund cannot exceed 90% of the payments made. [Section 3(b)]
What grace period is given if the buyer has paid less than two years of installments?: The seller must grant a grace period of at least 60 days from the due date of the installment; if the buyer still fails to pay, the seller may cancel the contract after giving a 30‑day notice. [Section 4]
Can a buyer sell or assign their contract rights to another person?: Yes, the buyer may sell or assign their rights, or reinstate the contract by paying the overdue amount, provided the deed of sale or assignment is executed by a notarial act. [Section 5]
Is a buyer allowed to pay the remaining balance early without interest?: The buyer may pay any installment or the full unpaid balance at any time without interest, and the full payment must be annotated on the property's title certificate. [Section 6]
What happens to contract clauses that conflict with the Maceda Law?: Any contract provision that goes against Sections 3, 4, 5, or 6 of the law is declared null and void. [Section 7]

REPUBLIC ACT No. 6552

AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS. (Rep. Act No. 6552)

Section 1. This Act shall be known as the "Realty Installment Buyer Act."

Section 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.

Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, 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.

(b) If the contract is canceled, 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.

Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.lawphi1™

Section 4. 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.

Section 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

Section 6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.

Section 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void.

Section 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall be affected thereby.lawphi1™

Section 9. This Act shall take effect upon its approval.

Approved: August 26, 1972.

The Lawphil Project - Arellano Law Foundation