REAL ESTATE LAWS

🏠 1. Maceda Law (Republic Act No. 6552) Full Title: Realty Installment Buyer Protection Act Purpose: To protect buyers of real estate on installment payments against oppressive conditions from sellers or developers, especially in cases of default. Key Provisions and Buyer Protections: Coverage: Applies to the sale or financing of residential real estate (houses, lots, or condominium units) on installment basis, except industrial lots, commercial buildings, or sale to tenants under agrarian reform. Grace Period: If the buyer has paid at least two (2) years of installments, they are entitled to a grace period of one month per year of payment made. Within this period, the buyer can pay missed installments without additional interest or penalty. Example: If you’ve paid for 3 years, you get a 3-month grace period to pay arrears. Cash Surrender or Refund Value: If the contract is cancelled, the buyer is entitled to a refund of 50% of total payments made, including down payments, deposits, and installments. After five years of installment payments, the refund increases by 5% per year up to a maximum of 90%. Right to Reinstate the Contract: Before cancellation, the buyer can reinstate the contract by paying overdue installments within the grace period. Advance Payment Option: The buyer may pay off the entire balance in advance without interest or additional charges, encouraging early settlement. Right to Sell or Assign: The buyer may sell or assign their rights to another person before cancellation of the contract. Practical Impact: Buyers who face financial difficulties are given breathing room and protection from immediate forfeiture, preventing developers from taking undue advantage. 🏢 2. Condominium Act (Republic Act No. 4726) Purpose: To govern ownership, sale, lease, and management of condominium projects in the Philippines. Key Provisions and Buyer Protections: Definition of a Condominium: A building or group of buildings in which units are individually owned, but common areas (e.g., hallways, elevators, gardens) are co-owned by all unit owners through a condominium corporation. Ownership Rights: Unit owners have exclusive ownership of their unit and co-ownership of common areas. Owners may sell, mortgage, or lease their unit subject to the condominium’s rules and the Condominium Corporation’s bylaws. Foreign Ownership: Foreigners can own condominium units up to 40% of the total units in a project. The remaining 60% must be owned by Filipino citizens or entities. Management: A Condominium Corporation is formed to manage and maintain the building and common areas. Each unit owner automatically becomes a member. Termination: The project can only be dissolved if the building is destroyed beyond repair or when a majority of owners agree to sell it, subject to specific legal requirements. Practical Impact: Buyers—especially foreigners—are assured of legal mechanisms to own property in the Philippines within constitutional limits, and owners are protected by clear management and voting rules. 🧾 3. Presidential Decree No. 957 (PD 957) Full Title: The Subdivision and Condominium Buyers’ Protective Decree Purpose: To curb fraudulent and abusive practices in the real estate industry and ensure fair dealings between developers and buyers. Key Provisions and Buyer Protections: Coverage: Applies to the sale and development of subdivision lots and condominium units, including both residential and commercial types. Developer Obligations: Developers must secure a license to sell and a development permit from the Department of Human Settlements and Urban Development (DHSUD, formerly HLURB). They must complete the development (roads, drainage, water system, etc.) before selling lots or units. Advertising materials must match the actual plans; false advertising is prohibited. Buyer Protections: Buyers who default may still pay arrears without interest before cancellation. Developers cannot forcibly eject buyers without proper notice and compliance with legal processes. Title transfer must be done promptly once the buyer fully pays. Right to File Complaints: Buyers can file administrative complaints before DHSUD for non-delivery, misrepresentation, overpricing, or defective titles. The agency may suspend or revoke a developer’s license. Practical Impact: Ensures transparency, proper delivery of promised amenities, and accountability of developers—protecting buyers from scams and substandard projects. 🧑‍💼 4. Real Estate Service Act (Republic Act No. 9646) Purpose: To professionalize and regulate the practice of real estate services, ensuring that only qualified and licensed professionals handle property transactions. Key Provisions and Buyer Protections: Covered Professionals: Includes real estate brokers, appraisers, consultants, and salespersons. They must pass licensure exams and be registered with the Professional Regulation Commission (PRC). Professional Conduct: Brokers and agents must act in good faith, disclose material facts, and prioritize clients’ interests. They are prohibited from engaging in fraud, misrepresentation, or deceit. All advertisements must be truthful and accurate. Penalties: Practicing without a license or misrepresenting oneself as a professional is punishable by law (fine and imprisonment). Developers must employ only licensed real estate service practitioners. Buyer Protection: Buyers dealing with licensed brokers or agents are assured of professional accountability, as these individuals are subject to PRC discipline and Code of Ethics. Practical Impact: Safeguards buyers from being deceived or exploited by unqualified agents or “colorum” brokers and ensures professionalism in every transaction.