Rights under Realty Installment Buyer Protection Act

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Persida Acosta

Dear PAO,
My friend, a sales agent for a realty developer, offered to sell me a condominium unit located in Pasay City.
She said this is a good investment because I can lease the unit if I do not intend to reside there. I am really interested in buying it especially that I can pay for it on installments for 10 years. I just want to know, though, if I will be refunded assuming that I can no longer continue paying for it. I just somehow want to have an idea what my options are just in case my financial situation changes undesirably. On the flip side, is it also possible for me to settle the contract price in full if my finances grow favorably? Please advise me on this matter.
Jane

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Dear Jane,
When entering in any kind of contract, it is most advisable to constantly go over the provisions, stipulations and conditions indicated therein so that parties are well-informed of the extent of their respective obligations as well as their rights. If the contract is silent or does not provide adequate information, the provisions of pertinent laws may be relied upon.

Applying the foregoing in the situation that you have presented to us, we firmly urge you to first peruse the contract/s, which will be used for the sale of the condominium unit you are eyeing. This will give you an opportunity to look into all the details of the agreement, which may eventually bind you should you decide to pursue buying the condominium unit. This will also afford you the chance to apprise yourself, at this early stage, of what your possible remedies are assuming you are not able to comply with your obligation to pay the full amount of the contract price or if you opt to terminate early your contract by paying the contract price or the balance thereof.

Should the contract be silent on any or all of your mentioned concerns, you may rely on the provisions of Republic Act 6552, or the Realty Installment Buyer Protection Act. Corollary, if you can no longer continue paying for the unit after the contract has been perfected, your remedies are as follows:

“Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments x x x 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 canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made, and, after five years of installments, an additional five percent 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.

Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty 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 thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.” [Emphasis supplied] (Id.)

Apart from the foregoing, you may also sell your rights or assign the same to another person or to reinstate the contract by updating your account during the grace period and before actual cancellation of the contract. (Section 5, Id.)

On the other hand, if you have the means, you may pay in advance any installment or even the full unpaid balance of your contract price at any time without interest. You also have the right to have such full payment annotated in the certificate of title covering the subject property. (Section 6, Id.)

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.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.

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