Understanding Maceda Law in the New Normal

Due to this pandemic, a lot of property buyers are now facing problems with their monthly payments for their property that they made with real estate developers.

As such, I have received inquiries as to how to recover their monetary investment in case they cancel the purchase or what other options are available to them in case of default.

The Maceda Law

In an effort to assist persons who would fail to pay installments, former Sen. Ernesto “Ernie” Maceda introduced what was subsequently enacted as Republic Act (R.A.) No. 6552, the Realty Installment Buyer Protection Act or more popularly known as the “Maceda Law.”

The government through the said law seeks to protect buyers of real estate on installment payments against onerous and oppressive conditions. It also describes the rights of a buyer defaulting in payments for such purchases.

Maceda Law only protects the transactions and contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments, and NOT industrial lots, commercial buildings, and sales to tenants under R.A. No. 3844, as amended.

Who is covered by the Maceda Law?

Basically, 2 qualified buyers, those who have paid less and those who have paid at least 2 years of installments in all transactions or contracts involving the sale or financing of real estate on installment payments.

What if I cannot pay anymore?

The following options are available to you:

Grace period - The Maceda law would give you two months grace period to consider your decision. But with the health crisis, and through the Republic Act (RA) No. 11469 or the Bayanihan to Heal Law, a grace period of 30 days is applicable in areas under enhanced community quarantine (ECQ).

Purchase Contract Cancellation - After the grace period, if you still want to cancel, the Maceda law states that if you have gone through at least two years of installment, you will get 50 percent of what you paid for as a refund. If after five years of installments, an additional five percent for every year of payments will be added, but not to exceed 90 percent of the total payments made.

For those who paid less than 2 years however, there is no refund. The grace period is given to allow dwellers to sell the property and let the new owner assume the balance. This only applies if you are paying installments directly to the developer.

Bank Loan cancellation - If you are paying through a bank loan installments, it is a different story. If you are taking a housing loan from a bank like most people, this means that the balance that you have to pay the real estate developer has already been paid for in full by the bank through the loan. This is a common misconception about the law. Considering that the property is technically fully paid for, then the RA 6552 or the Maceda Law would no longer apply.

Also, banks don’t have a refund policy. One option is to sell the property. If you cannot find a buyer, another option for you is to cut your losses and initiate a “Dacion en pago” with the bank, which means returning the property to the lender as the latter dismisses mortgage debt rather than not paying and running from the bank.

I hope this helps you with your property payment situation and I pray that everyone will be able to overcome the tough challenges brought about by this health crisis and recession. Stay Safe!