I bought a house and lot on installment. Will I get a refund from the developer if our contract is canceled because of my failure to pay amortizations?
Rights of persons who buy realty in installment are provided in Republic Act (RA) 6552 or the Realty Installment Buyer Act. This law covers all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under RA 3844 as amended by RA 6389 (Section 3, RA 6552).
The right of a buyer to receive a refund of his payments in case of cancelation of the contract because of non-payment of amortizations shall depend on the number of years that he has paid in installments. A buyer who has paid at least two years of installments and who has defaulted on the payment of succeeding installments shall be entitled to refund of the cash surrender value of the payments on the property he bought. The cash surrender value shall be equivalent to 50 percent of the total payments made, and, after five years of installments, an additional five percent every year but not to exceed 90 percent of the total payments made. It shall be necessary, however, that actual cancelation of the contract shall take place after 30 days from receipt by the buyer of the notice of cancelation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer. The downpayments, deposits or options on the contract shall be included in the computation of the total number of installment payments made (Section 3(b), RA 6552).
On the other hand, a buyer who has paid less than two (2) years of installment shall not be entitled to a refund. He will only be given a grace period of not less than 60 days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after 30 days from receipt by the buyer of the notice of cancelation or the demand for rescission of the contract by a notarial act (Section 4, RA 6552).
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