MACEDA LAW (R.A. No. 6552): TRANSACTIONS COVERED

The Maceda Law or Republic Act No. 6552, formally known as the “Realty Installment Buyer Protection Act,” provides protection to buyers of residential real property under installment payment schemes. Below is a detailed explanation of the transactions covered by the law:

1. NATURE OF TRANSACTIONS COVERED

The Maceda Law governs sale or financing agreements involving residential real property on an installment basis.

Specific Transactions Covered:

Sales of Residential Real Property:
- Includes houses, lots, and condominiums intended for residential use.
- Covers transactions involving raw lots intended for residential purposes, even if not yet developed.
Installment Payment Agreements:
- Applicable when buyers pay the price of the real property in monthly, quarterly, or other periodic installments.
Direct Sale or Financing Agreements:
- Includes sales where the seller directly finances the installment payments.
- Also includes transactions with third-party financing but involving installment payments to acquire residential real property.

Scope of the Law:

Residential real properties only.
Does not cover industrial lots, commercial buildings, or agricultural lands.
Protects buyers with payment records, emphasizing equitable treatment and fairness.

2. EXCLUSIONS FROM COVERAGE

The following transactions are not covered:

Rent-to-own agreements without a definitive sale commitment.
Sales involving non-residential property (e.g., commercial or industrial real estate).
Transactions where the buyer has already fully paid the property but is dealing with separate legal disputes (e.g., title issues).

3. PROTECTION OFFERED UNDER THE MACEDA LAW

Key Buyer Rights Based on Payment Period:

A. If Buyer Has Paid Less than Two Years of Installments:

Grace Period: Buyer is entitled to a grace period of 60 days from the due date of the installment to pay any unpaid installment without penalties.
Notice of Cancellation: Seller must issue a written notice of cancellation after the lapse of the grace period.
Right to Reinstate: Buyer can reinstate the contract during the grace period by paying the due amount.

B. If Buyer Has Paid Two Years or More of Installments:

Buyer is entitled to refund of the cash surrender value of the payments made, equivalent to 50% of the total payments, in case of cancellation.
Additional Refund: An additional 5% refund for every year beyond the second year of installment payments, up to a maximum of 90% refund.
Grace Period: Buyer is entitled to one month of grace period for every year of installment payments made.

Conditions for Refund:

The refund is due only if the sale is canceled due to the buyer’s default.

C. Prohibition of Unjust Cancellation:

Sellers cannot unilaterally cancel the contract without complying with the Maceda Law’s procedural safeguards, including the notice requirement and observance of grace periods.

4. OBLIGATIONS OF THE SELLER

Written Notice of Cancellation:
- A seller intending to cancel a contract must issue a notarized notice of cancellation to the buyer.
- Cancellation becomes effective only after compliance with the grace period and notice requirements.
Grace Periods:
- The seller must honor the grace periods stipulated under the law.
- During the grace period, the buyer has the right to reinstate the contract without additional charges beyond the due amount.
Issuance of Refund:
- Upon cancellation of the contract, the seller is obligated to refund the appropriate cash surrender value to buyers who have paid at least two years of installments.

5. LEGAL REMEDIES FOR BUYERS

Judicial Enforcement of Buyer Rights:
- Buyers may file a complaint in court if the seller violates the Maceda Law, such as failing to provide refunds or honor grace periods.
Right to Specific Performance:
- Buyers may compel the seller to comply with the contract if the seller’s actions are deemed prejudicial or unlawful.
Damages and Attorney’s Fees:
- Buyers may recover damages and attorney’s fees if the seller’s violation causes undue harm or inconvenience.

6. IMPLICATIONS FOR DEVELOPERS AND SELLERS

Developers and sellers must adhere to the law to avoid penalties, legal challenges, and reputational damage.
Failure to comply with notice and refund requirements can result in lawsuits, financial losses, and administrative sanctions.

SUMMARY

The Maceda Law (R.A. No. 6552) provides a strong framework to protect residential property buyers under installment plans. It ensures fairness by granting:

Grace periods for delayed payments,
Refunds for cancellations after two years of installment payments, and
Procedural safeguards against unjust cancellation.

However, its coverage is limited to residential real property and does not extend to non-residential real estate. Compliance with the law ensures equitable treatment of buyers while fostering trust and accountability in real estate transactions.