Protection for Installment Real Estate Buyers

The Act covers all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments. Section 3.
The Act excludes industrial lots and commercial buildings from its coverage under Section 3. Section 3.
The Act excludes sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four as amended by Republic Act Numbered Sixty-three hundred eighty-nine from its coverage under Section 3. Section 3.
The Act grants buyer rights in case the buyer defaults in the payment of succeeding installments, subject to the installment-payment thresholds in Sections 3 and 4. Sections 3 and 4.

Where the buyer has paid at least two years of installments and then defaults in succeeding installments, the buyer is entitled to the rights in Section 3. Section 3.
The buyer may pay without additional interest the unpaid installments due within the grace period earned. Section 3.
The grace period is fixed at one month grace period for every one year of installment payments made. Section 3.
The buyer must exercise the right to pay-within-grace only once in every five years of the life of the contract and its extensions, if any. Section 3.
When the contract is cancelled, the seller must refund the buyer the cash surrender value of payments on the property, computed as fifty per cent of the payments made, and after five years of installments, an additional five per cent every year, but not exceeding ninety per cent of the total payments made. Section 3.

The Act requires the actual cancellation of the contract to occur after thirty days from receipt by the buyer of either (a) the buyer’s receipt of a notice of cancellation or (b) the demand for rescission of the contract by a notarial act. Section 3.
Actual cancellation is conditioned upon the seller’s full payment of the cash surrender value to the buyer before cancellation takes effect. Section 3.
Down payments, deposits, or options on the contract must be included in computing the total number of installment payments made. Section 3.

If the buyer has paid less than two years of installments, the seller must give the buyer a grace period of not less than sixty days from the date the installment became due. Section 4.
If the buyer fails to pay installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from the buyer’s receipt of (a) notice of cancellation or (b) a demand for rescission by a notarial act. Section 4.

Under Sections 3 and 4, the buyer has the right to sell his rights or assign them to another person. Section 5.
Under Sections 3 and 4, the buyer also has the right to reinstate the contract by updating the account. Section 5.
The deed of sale or assignment must be executed by notarial act. Section 5.
Reinstate the contract by updating the account during the grace period and before actual cancellation. Section 5.

The buyer may pay in advance any installment or the full unpaid balance of the purchase price any time without interest. Section 6.
When the buyer makes full payment, the buyer has the right to have such full payment annotated in the certificate of title covering the property. Section 6.

Any stipulation in any contract hereafter entered into that is contrary to Sections 3, 4, 5 and 6 is null and void. Section 7.

If any provision of Republic Act No. 6552 is held invalid or unconstitutional, no other provision is affected. Section 8.