• Are you a first-time home buyer?
• Do you prefer to buy your first home by installment?
• Do you know what will happen if you default on your installment?

As a first-time home buyer, you should know your rights in case of a default on paying installments. The Realty Installment Buyer Act (Republic Act No. 6552), commonly known as the Maceda Law in the Philippines, protects the home buyer in this situation.

The Maceda Law, under sections 3 and 4*, says that in case of a default on paying installments, the home buyer’s rights fall into two categories:

1. If the home buyer has paid at least two years of installments, the buyer can still pay–without additional interest–the unpaid installments due within the total grace period for every one year of installments made. This right can be exercised only once in every five years of the life of the contract and its extensions, if any.

If the contract is cancelled, the homeseller should refund to the home buyer the cash surrender value of the payments on the property equivalent to 50 percent of the total payments made and, after five years of installments, an additional five percent every year, but not to exceed 90 percent of the total payments made.

Down payments and deposits should be included in the computation of the total number of installments paid.

2. If the home buyer has paid less than two years of installments, the buyer should be given at least 60 days grace period from the installment’s due date.

If the buyer still fails to pay the installments due after the grace period, the homeseller can cancel the contract after 30 days.

There is no refund.

*Below is the full text of the Maceda Law.

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