4 Fast Facts on Real Estate Installment

Today, we’re gonna talk about a very important topic which concerns a lot of property owners. And today we’re gonna talk about installment payment laws.

The Republic Act 6552 is also known as the Realty Installment Buyer Act or more commonly known as the Maceda Law. What is this Law? Or we’re gonna talk about long text and small fonts here and because were just gonna fall asleep you know, it’s not gonna work. Don’t pause the channel. This is actually a very good law, it really protects the installment buyers from onerous and malpractices that some sellers might be doing.

So, it’s a very good law that protect buyers and most especially those who are paying installments on their properties. The Philippine Law knows that the property purchase for a normal Filipino is done usually through their hard-earned money and there are laws and act to protect the buyer in this kind of transactions.

This particular law protects the buyer so that, say for example, you missed one payment, the seller may not automatically cancel all of your installments most especially if you have been amortizing for quite a number of years.

So, this is a very good law, but mind you, the law is not to be abused and its there to protect your right as a property owner and not to be taken cared of as a loophole or a new way to exploit other people.

First fact that you have to remember, 2 Years.

According to the Republic Act 6552, you have to be paying at least 2 years worth of amortization for your property bought before you are able to of the following rights.

The Second fact is, 1 Month.

You have a 1-month grace period for any amortizations missed for every year that you have been faithfully paying your property, so say for example, you’ve been amortizing your property, you’ve been paying the installments for the past few years and for this particular month you may not meet the required amortization.

What do we do? If you have been paying for the past few years, then your will have a grace period of 1 month for every year that you have been faithfully paying your dues.

So, this is actually protected by the laws, so that the deal will not have to be cancelled on the first missed payment. So, this something that will protect you, but it doesn’t give you a like a long year, like a year or two or five years, before you’re able to find the payment before they reinstate the contract that will just between abuse of your leeway.

The law will give you a month for every year’s worth of faithful amortization as your grace period to find the fund so that you can faithfully pay your installments. This grace period is to be exercised only once every 5 years.

The Third fact is 60 days.

What do I mean by this? If your amortization is less than 2 years, so earlier we talked about someone paying an amortization beyond 2 years, now if you’re paying a property and you have been amortizing for less than 2 years, 60 days is the grace period provided by the law.

According to Section 4 of Republic Act 6552, In case where is 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. So, what is this mean? So, we do have a sixty day grace period if you’ve been paying a property and you’ve been amortizing for the first two years you have a grace period of not less than 60 days to scramble and find the funds so that you can meet the deadline.

But, if you fail to find the funds and paid amount dues in the next 60 days, below 2 years. Your seller will have the right to cancel your contract provided that the following happens: A notice of cancellation or the demand of rescission of the contract by a notarial act.

What does it mean? This simply means that it has to be a written document that is notarized that they are cancelling the purchase of your property.

Fourth fact, the buyer has the right to fully pay in advance without interest.

According to the law if you are amortizing a property and you wanna fully pay in advance or pay a few installments in advance then you have the right to do so without additional interest. Because sometimes, when a seller is selling his property, for example, you’re selling it at worth 10 million and if you’re gonna be paying it in the next 5 years, the interest rate would be, just for example, 500,000.00 so the total price with interest would be 10.5 million.

If you are amortizing for an x number of years and if you wanna fully pay it or if you wanna pay a few installments in advance then you have the right to fully pay it or pay a few amortizations because some sellers might refuse and say that “Ok I’m not gonna accept this without interest” but according to the law you have the right pay advance installments or the full balance without any additional interest for that particular payment.

This law really aims to protect the buyers of real estate properties so that their contract is not gonna be just cancelled right away if you missed one payment. There are grace periods provided so that you will have some sort of leeway to fulfill your commitment to the seller and it’s not prone to abuse. There are really strict rules as far as the provisions are concerned.

First if you’re amortizing you need to have at least 2 years of qualified amortizations paid. Second, you have 1 month grace period for every year that you’ve been faithfully paying your amortization. Third, if you’re paying your installments with the 2 years you the minimum of 60 days grace period to fulfill your amortization commitment. Fourth, you have the right to pay your property in full or in advance without any additional interest.

That’s it for today, I hope this topic was able to give you more value and a better insight as to your right as a buyer for your installment purchase.