Real Estate: Buyer’s Rights: RA 6552, PD 957, Philippine Civil Code 1


1. Give two (2) laws which protect buyers of subdivision and condominium on installment

  • RA 6552 (Maceda Law)- Installment Buyers Protective Act
  • PD 957- Subdivision and condominium buyers Protective Decree
  1. Applicability of Maceda Law
  • Installment sales of residential properties only
  • Under contract to sell
  • Applicable to residential subdivision and condominium only
  1. Give examples of installment sales not covered by Maceda Law
  • Sale of commercial buildings
  • Sale of industrial lots
  • Sale to tenants under RA 3844
  • Installment sale covered by Deed of Sale with Mortgage and not Contract to sell
  1. Two requisites under Maceda Law to be complied by real estate developer before cancellation of Contract to Sell where buyer has paid at least 24 monthly installments.
  • 30 day notarial notice
  • Payment of refund
  1. Rights and privileges of installment buyers under Maceda Law
  • Thirty (30) days grace period for every year of payment
  • Transfer of rights;
  • Acceleration of payment;
  • Thirty (30) day notarial notice before contract cancellation;
  • Right of refund if buyer has paid at least 24 monthly amortizations
  1. If buyer has paid less than 2 years-rights before cancellation
  • 60-day grace period
  • 30-day notarial notice
  • No right of refund if less than 2 years of payment

6.A Options of an installment buyer of a subdivision and condominium when the developer failed to complete the development of the projects within the required period under PD957

  • Get clearance from HLURB
  • Suspend amortization payment after notice to developer and after getting clearance from HLURB
  • Refund: 100% refund based on total payments, less penalty, plus legal interest at the legal rate

 

OTHER FEATURE OF PD957

  1. 17: Registration
  • All contracts to sell, deeds of sale and other similar instruments relative to the sale or conveyance of the subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered by the seller in the office of the Register of Deeds of the province or city where the property is situated.
  1. 18: Mortgages
  • No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the authority . Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. The loan value of each lot or unit covered by the mortgage shall be determined and the buyer thereof, if any, shall be notified before the release of the loan.
  • The buyer may, at his option, pay his installment for the lot or unit directly to the mortgage who shall apply the payments to the corresponding mortgages indebtedness secured by the particular lot or unit being paid for with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereof.
  1. 19: Advertisements
  • Advertisements that may be made by the owner or developer through newspaper, radio, television, leaflets, circular or any other form about the subdivision or the condominium or its operations or activities must reflect the real facts and must be presented in such manner that will not tend to mislead or deceive the public.
  • The owner or developer shall be answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures advertisements and other sales propaganda disseminated by the owner or developer or his agents and the same shall form part of the sales warranties enforceable against said owner or developer, jointly and severally. Failure to comply with these warranties shall also be punishable in accordance with the penalties provided for in this Decree.
  1. 24: non-forfeiture of payments
  • No installment payment made by a buyer in a new or existing subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer and clearance from the Board desists from further payment due to the failure of the owner or developer to develop the project according to the approved plans and within the time limit for complying with the same.
  • Such buyer may at his option be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.
  1. 25: Registration of Conveyances
  • Sales or conveyance of the subdivision lots and condominium units shall be registered within 180days from execution thereof by the seller with the Register of Deeds of the province or city where the property is situated pursuant to section 17 of the Decree. Except as may otherwise be provided for by law, the Board may in appropriate cases cause the Register of Deeds to cancel registration, entries or annotations on titles made on this regard.
  1. 26: Mortgages
  • Mortgage of any unit or lot by the owner or developer shall be cleared with the Board pursuant to Section 18 of the Decree.
  1. 27: Realty Tax and other Charges
  • No realty tax assessment or other charges shall be imposed on a lot or unit buyer except as provided for in Section 26 & 27 of the Decree.
  1. SEC, 28: Complaints Against Owner, Developers, Dealers, Brokers and Salesmen
  • Complaints or proceedings against owners, developers, dealers, brokers and salesmen shall be resolved in accordance with the Rules of Procedures to Govern the Conduct of Hearings before the Board
  1. 32: Broker/Salesman as Witness to Sales
  • The broker or salesman who negotiated the sale of a subdivision lot or condominium unit shall act as one of the witnesses to the sales document with an indication of his Certificate of Registration number and renewal date. If the sale was directly made by the owner or dealer, that fact must be so stated in the sales document.
  1. Ground for revocation of registration certificate and license to sell (PD 957/BP220)
  • The owner or dealer is insolvent;
  • Has violated any provisions of the law;
  • Has been engaged in fraudulent transactions
  1. Grounds for suspension of license to sell/cease and desist order (PD 957/BP220)
  • Upon verified complaint of the buyer;
  • Misleading information in the registration;
  • When the developer/dealer is engaged in any act or practice which constitute violation
  1. Priority rights in case of double sale
  • Buyer in good faith who first registered the sale;
  • In the absence of registration, the buyer in good faith who first took possession;
  • In the absence if registration and possession, the buyer in good faith who can present the oldest title.

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