We bought two lots in installment. We were able to pay a total of four years in amortization before we deferred our payments three years ago. Can the developer validly foreclose the property? Are we entitled to a refund?
Can they sell it to other people?
Republic Act (R.A.) No. 6552 or the Realty Installment Buyer Act was enacted to provide protection to buyers of real property in installment against the onerous and oppressive conditions which the sellers may impose upon them (Section 2, RA No. 6552). This law applies to 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 Republic Act No. 3844, as amended by Republic Act No. 6389.
R.A. No. 6552 primarily provides for the rights of a buyer who defaults in paying the installments due. A buyer who has paid for at least two years of installment shall be entitled to the following rights in case he defaults in the payment of succeeding installments: 1) to pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any; 2) if the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer (Section 3, RA No. 6552).
Since you are able to give amortizations for a total of four years, you are entitled to receive a refund from your seller in case the latter cancels your contract. Once the seller has cancelled your contract because of your failure to pay the amortizations due, the buyer can lawfully sell the lot you bought to other persons.
We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.