I bought a house and lot on installment. What are my rights in case I defaulted in paying my monthly amortizations or in case of cancelation of my contract of sale?
The rights afforded to a buyer of realty on installment in case of default in the payment of the amortizations or cancellation of contract shall depend on the total number of years that he had paid his amortizations. Section 3 of Republic Act (RA) 6552 or the Realty Installment Buyer Act enumerates the rights given to a buyer who has paid at least two (2) years of installment, to wit:
“Sec. 3. In all transactions or contracts involving the sale or financing of real estate on install–ment payments, including resi–dential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:
a. 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.
b. If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equiva–lent to fifty percent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety percent 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 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.
Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.”
The buyer shall not be entitled to a refund if he has paid less than two years of installments. In such case, he shall only be given a grace period of not less than sixty days from the date the installment became due (Section 4, RA 6552).
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