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Understanding the Maceda Law

November 21, 2022

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Being able to finally purchase the residential lot you always wanted or perhaps, are in the process of owning your real estate. It definitely is one of life's pinnacles. But making big purchases like real estate require more than just having the financial means. Whether finally moving into that condo for sale or any residential property, it's important to be more equipped with handling your real estate investment. This requires knowing your rights as a buyer and laws that would protect you and your properties. The Maceda Law Philippines should just be one of the things you should be familiar with as you enter into real estate.

 

Maceda Law Summary

Named after former Senator Ernesto Maceda, the “Maceda Law” or ``Realty Installment Buyer Act” protects real estate buyers from onerous and oppressive conditions paid through an installment. Buyers of real estate should be wary of the Maceda Law to understand their rights and be a qualified buyer of real estate.

 

How does the Maceda Law affect me?

Certain scenarios involved that the Maceda Law would help you would be the odds of a default on a loan, meaning you did not meet the obligations while applying for a loan in an installment plan offered to you. Another case is real estate sellers or developers who do not cooperate with buyers in terms of getting their refund after cancelling due to a health crisis. The Maceda Law would determine the necessary measures given in these situations.

 

This article summarizes Maceda Law for you in simpler terms.

 

Property Payments

 

Property Payments

 

Under Section 3 states, if the buyer has paid at least two (2) years of installments, they are entitled to the following:

  • Pay without additional interest, the rest of the unpaid installments, within the total grace period or within 30 days after its due. For each year of installment, by a fixed rate with one month grace period. This is only once every five years or during the life of the contract or its extension. 

  • In the event the contract is canceled, the seller must surrender the cash value equivalent to 50% of the total payments made. This shall be made 30 days after the receipt by the buyer on notice of cancellation or demand for recession by notarial act.  

 

In case the buyer fails to pay

Section 4 of Maceda Law states that if the buyer fails to pay on the due date within the last two years, or unpaid installments, the buyer may cancel the contract after thirty days its grace period followed by a notice of cancellation and a contract by notarial act.

 

Grace period

In an event of a crisis such as the pandemic, according to property experts, having paid 2 years of installment payments grants buyers two month grace period. During these times, buyers must consider before the actual cancellation of the contract.

 

Maceda Law Refund

No refunds will be made to those who only paid for two years. Cancellation of the contract allows the buyer to be refunded 50% of the property payment made to the seller. An additional 5% will be made after 5 years but should not exceed ninety percent of the total property payment.

 

Advance Payments

Don't worry about paying interest when you pay in advance. Buyers may pay full payment or any of the installment payments in advance with no interest as specified under Section 6.

 

Law v2

 

Maceda Law Vs. Recto Law

Both are concerned with protecting the rights of property holders. However, Recto Law is a Civil Code concerning personal property, anything of which can be owned and moved.

 

Maceda Law is a Republic Act that governs real estate property, to put it simply, anything that cannot be moved, property fixtures, or fixed assets. Under the Maceda Law Philippines, buyers of realtors or property owners are protected with two years of paid installments. Real estate properties included are house and lot, condominiums, apartments, and townhouses. 

 

Inconsistent with the Existing Law

According to this Republic Act, any stipulation of contract under sections 3, 4, 5, and 6, are to be considered null or void. This is so any overlooked signs or prints during the contract involving the land developers or real estate contractors would protect buyers.

 

Selling or Transfer of Property Rights

Buyers may sell or transfer their property rights to someone else in which they reinstate a new contract. This is applicable during the grace period however they must finish the transaction before it is canceled and must be done under a notary act.

 

Notarization

Under Section 112 of the Property Registration decree, contracts to sell or buy registered will be made available in public records and the Registrar of Deeds for documentation purposes. 

 

Contract of Sale

In the New Civil Code Article 1458, is a contract or agreement that states the seller transfers the property's ownership to the buyers once full payment has been made. Transactions covered are consent to which both parties fulfill their obligations pertaining to the value discussed and the property involved. Keep in mind that contract of sale is different from contract of sale. The contract of sale transfers seller ownership to buyers on such full payment. Whereas, Contract to sell

 

Real Estate Loan v2

 

Maceda Law in terms of Bank Loan

Most real estate buyers often have a misconception about the term coverage of Maceda Law when applying for housing loans. Generally, most land developers now merely require a downpayment for the property's purchase price. The rest would be shouldered by the commercial banks such as PAG-IBIG or other financial institutions. When you have availed of a housing loan, it means that you, the buyer, have already paid a full payment. The loan that you are now paying for is the loan for the loan itself and not the bank loan, that and other principal charges concerned with the loan itself. In the long run, banks don’t offer refunds so selling the property is one thing you can do if you decide not to return it to the lender. Once paid in full, the Maceda Law no longer applies. 

 

Now that you have an idea of the Maceda Law, as a buyer you would now feel more confident and prepared for situations on better handling your venture on real estate. So go ahead and expand your real estate investments with housing residences, possible condo for sale, or any residential properties.

 

Read more: Understanding the RESA Law and the Right-Of-Way Law

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