What Are Your Refund Rights According to Maceda Law

Realty Installment Buyer Protection Act: How to Get a Refund

Have you bought a property in the Philippines and then decided to stop paying the monthly dues for some reason? You’re not alone. There are many Filipinos who purchased condos and suddenly can no longer pay due to financial issues. Now, can you refund the payments in full and just move on? This is where the Maceda Law comes in. So, what is this Republic Act 6552 and how much refund are you entitled to receive?

What Is the Maceda Law?

The Maceda Law, also known as the Realty Buyer Protection Act or Republic Act 6552, was created to protect buyers against problematic contracts from sellers. In real estate, this law will give you the right to ask for a refund in case you don’t want to continue paying for your mortgage anymore. But this will be given under some conditions to ensure both parties are protected under the law.

Conditions to Get a Refund from the Developer

So, you’ve realized you can no longer afford to pay your condo installments. You can ask your developer for a refund. However, there are some conditions that you need to meet – and one of them is that you should have paid at least two years or 24 months for the property. If so, you are entitled for a 50% refund based on your cash-out.
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For example, if you have paid Php 1 million, then you can get a Php 500,000 refund whether the seller or developer likes it or not. But then again, you might be wondering if that 50% is the only amount you can refund. According to the Maceda Law, this can increase by 5% every year if you have paid more than five years of installments. The refund will be released 30 days upon receiving the duly notarized cancellation notice.

Limits & Benefits of the Maceda Law for Refunds

Unfortunately, RA 6552 is not applicable for mortgage sales. Meaning, once the property has been turned over to the end-user financing like Pag-IBIG or bank financing, this will no longer be covered by the law. If you fail to pay your financing company, the property will be foreclosed. Aside from mortgage sale, this is also not applicable to rent-to-own properties, commercial properties, and industrial lots that you want to purchase.
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Another benefit once you’ve paid more than two years of installments is that there’s no interest or penalties, while you can enjoy a grace period which is equivalent to one month per year in every five years. In other words, if it’s your due date today and you have paid for two years already, then you have 2-month grace period.

But what if you did not reach two years of paying your installments? According to Maceda Law, you can’t request for a refund although you will be given a grace period. Let’s say today is your due date, then you will have two months or 60 days without penalty if ever you can’t pay today. If you still can’t pay after the grace period, the developer or seller will send you a notarized cancellation notice. You have one month to settle the balance, or the property will be forfeited.

Final Thoughts

Knowing your rights as a buyer can save you from headaches. But remember that you can only apply the Maceda Law for a refund under the given conditions. You may not get 100% of your payments, but you can still get at least 50% in case you decide to stop paying your monthly installments. Make sure to check out REALS.PH for the latest condominiums for sale in Baguio and other properties within the Philippines.