- The buyer who purchase residential lot, house and lot who has paid AT LEAST (2)two years of installments.
- The buyer who has paid LESS that (2)two years of installments.
a. To pay without additional interest in the unpaid installments due within the total grace period earned. One (1) month grace period for every one year of installment payments made. The right can only be exercised by the buyer only once in every five years of the life of the contract.
b. In case of cancellation of the contract, The buyer is entitled to a 50% refund of his total payments. If the buyer has paid five years or more, the buyer is entitled to an increase of 5% every year and so on… However the cash surrender value shall not exceed 90% of his total payments. This can be done after thirty days from receipt by the buyer of the notice of cancellation or demand for rescission of the contract by a notarial act.For example: Mrs. Go has been paying her subdivision house and lot in installment since January 2014 at the rate of P 10,000 / month. Her reservation fee from XYZ Realty is P 20,000. In February 2017, Mrs. Go defaulted her payment due to financial difficulties. After further notarial notices, XYZ Realty decided to cancel the contract. How many months is the grace period of Mrs. Go? Answer: Year 2017 – Year 2014 = 3 years x 30 days = 90 days or 3 months grace period Question: How much is the cash surrender value due to cancellation of Mrs. Go contract? Answer: Number of months paid= 36 months x P 10,000 / month = P 360,000.00 Additional downpayment (reservation fee) = P 20,000.00 Total = P 370,000.00 Refund Factor = 50% (for 3 years payment) Therefore, P 370,000 x 50% = P 185,000.00 (estimated less administrative cost if there is). Note: The developer might deduct administrative cost incurred upon the cancellation of house purchase. 2. The buyer has paid LESS that two (2) years of installments a. The right to pay within a grace period of not less than sixty (60) days from the date installment became due. b. Failure to pay the installment 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 cancellation or demand for rescission of the contract by a notarial act. The following are the rights of the Buyer: – Right to Assign / Reinstate Contract (RA 6552 Sec 5) The buyer has a right to sell or assign his rights to another person or reinstate the contract by updating the account during the grace period and before the cancellation of the contract. – Right to Advance Payment (RA 6552 Sec 6) The right to pay in advance any installments or full payment without interest anytime and have such full payment annotate in the title. #MacedaLaw