Real Estate Sale Rights After Partial Payment (Philippines)

All-in-one practical explainer in the Philippine context. This is general information, not legal advice.

1) What “partial payment” can mean in real estate

You’ll see at least four setups:

Earnest money + Deed of Sale (spot cash later): Earnest money is part of the price and proof that a sale is perfected. Ownership usually transfers upon delivery (traditio) and full payment unless otherwise agreed.
Contract to Sell (installments): Title passes only after full payment or fulfillment of conditions. Until then, the buyer holds an equitable interest; the seller retains legal title as security.
Pre-selling under a developer (subdivision/condo): Governed by P.D. 957 and rules of the housing regulator, plus the contract. Common: reservation fee + down payment + monthly amortizations.
Private resales on installment: Typically governed by the Civil Code and the Maceda Law (R.A. 6552) if it’s a residential sale on installments.

Recto Law (Art. 1484) does not apply—that’s for personal property, not real estate.

2) Core legal frameworks that kick in after partial payment

A) Civil Code of the Philippines

Perfection of sale: Consent on the object and price is enough; form is generally not essential for validity between the parties. But Statute of Frauds requires writing to enforce an executory sale of immovables in court; substantial performance (e.g., partial payments + possession) can take it outside the Statute.
Earnest vs option money: Earnest = part of the price (proof of a perfected sale). Option money = consideration for the option; it is separate and not part of the price unless agreed.
Rescission for breach (Art. 1191): In reciprocal obligations (seller delivers/title; buyer pays), the aggrieved party may rescind or demand fulfillment, with damages. Courts may grant additional time if equity demands.
Sale of immovables—right to pay despite delay (Art. 1592): Even if there’s a rescission clause, a buyer may still pay after due date until the seller makes a notarial demand to rescind. After a proper notarial demand, courts generally won’t grant a new term.
Double sale (Art. 1544): Between competing buyers of immovables, the one who first registered in good faith wins; absent registration, the one who first took possession in good faith; else, the one with the oldest title in good faith.

B) Maceda Law (R.A. 6552) – Realty Installment Buyer Act

Applies to sales/financing of residential real estate on installments (typical for residential lots/units). Key rights after you’ve started paying:

If you’ve paid at least 2 years of installments:
- Grace period: 1 month for every year of installments paid, to pay without additional interest on the unpaid installments.
- Cash Surrender Value (CSV): If the seller cancels, you’re entitled to not less than 50% of total payments made, plus 5% per year after the 5th year, capped at 90% of total payments.
- Cancellation formalities: Cancellation is effective only after a notarial notice and 30 days from your receipt of that notice.
If you’ve paid less than 2 years:
- Grace period: 60 days to pay unpaid installments.
- Cancellation: Only after failure to pay within the 60 days and after 30-day notarial cancellation notice.
Other Maceda rights (typical):
- To assign your rights, to pay in advance without interest and get the corresponding discount, and to reinstate before effective cancellation by updating due amounts within the grace period.

Scope notes: Maceda focuses on residential sales on installment. Pure commercial/industrial sales or one-time “spot cash” deals are generally outside Maceda; those fall back to the Civil Code and the contract.

C) P.D. 957 – Subdivision & Condominium Buyers’ Protective Decree

Protects buyers of subdivision lots and condominium units (especially pre-selling). Distinct protections include:

Failure to develop: Buyers may suspend payments or cancel and refund if the developer fails to develop per approved plans.
Licensing/advertising controls, escrow/permits, turnover obligations, etc.
Maceda rights co-exist for residential installment buyers; when both apply, buyers often enjoy the more protective remedy.

3) After partial payment—what the buyer can insist on

Specific performance: If the sale is perfected and buyer is not in breach, demand delivery/title per contract; if it’s a contract to sell, demand fulfillment upon satisfying conditions (e.g., full payment, taxes/fees, turnover date).
Possession & protection:
- Annotate your contract (or a lis pendens in a pending suit) to protect against double sale.
- Consider an adverse claim annotation to flag your interest on the title (procedural limits apply; it’s a stop-gap).
Rescission + restitution (Art. 1191): If seller breaches (e.g., refuses to deliver, won’t execute deed after you’ve complied), you may rescind and recover what you paid with damages—or seek fulfillment plus damages.
Maceda/PD 957 remedies:
- If residential installments: invoke grace periods, CSV, and notice requirements (Maceda).
- If developer fails to develop/turn over as promised: suspend payments or cancel + refund under P.D. 957.
Article 1592 leverage: In sales of immovables, if you’re late, you may still tender payment until you receive a notarial rescission demand from the seller.
Interest & damages: For delayed delivery of title/keys where you’ve complied, seek legal interest on sums due and damages for consequential loss (e.g., rent you had to pay elsewhere).

4) After partial payment—what the seller can insist on

Payment as a condition to transfer: In a contract to sell, no title transfer until full payment or agreed milestones. In a deed of sale with assumption of mortgage, insist on buyer’s take-out or compliance with bank conditions.
Cancellation for buyer default:
- Civil Code (Art. 1191): rescind for substantial breach; courts may require judicial action unless the contract authorizes extrajudicial rescission (still subject to judicial review if contested).
- Maceda: Follow grace periods and notarial cancellation; compute CSV if applicable.
- P.D. 957 setting: If your buyer is in default but your project compliance is in question, expect the buyer to suspend payments or demand refund.
Forfeiture of payments/penalties: Enforce only if contractually stipulated and consistent with Maceda/PD 957 and fairness. Blanket forfeitures in residential installment cases often fail when they clash with Maceda CSV.
Rents/mesne profits: If the buyer occupied the property without completing payment, a seller who rescinds may claim reasonable compensation for use, subject to equity and contract.

5) Special situations

A) Reservation fees & down payments

Reservation is typically earnest (part of price) in developer sales unless expressly labeled as non-refundable option for a separate option contract.
In Maceda contexts, “total payments made” is generally read to include down payments and installments (penalties excluded). Check the fine print.

B) Bank-financed takeouts

If the contract makes the bank takeout a condition, failure to obtain it may allow cancellation; allocate which party bears takeout risk (buyer’s document delays vs developer’s title issues).
Many developers set a deadline to complete loan processing; buyers should keep proof of timely compliance.

C) Turnover & hidden defects

After acceptance, buyers can still pursue warranty claims for hidden defects within civil code periods; document punch lists at turnover.

D) Taxes & fees

Contracts allocate CGT/CWT/Doc Stamps/Transfer Taxes/Reg. Fees/HOA dues. If seller delays delivery of clean title due to unpaid capital gains or liens, buyer may suspend final payment or seek rescission/damages.

E) Death or incapacity

If buyer/seller dies mid-installment, the estate/executor may continue or rescind subject to the contract and statutory rights.

6) Evidence that wins (both sides)

Payments: Official receipts, bank proofs, ledger from developer/seller.
Contract set: Offer sheet/reservation agreement, CTS/Deed of Sale, amendments, house rules.
Regulatory papers (if developer): License to Sell, permits, completion certificates.
Communications: Emails, letters, Viber/WhatsApp threads (exported in full), delivery/turnover notices.
Notarial acts: Demands, cancellations, deeds—notarized and with proof of receipt (for cancellation timelines).
Possession records: Key-turnover forms, inspection reports, photos.

7) Typical remedies & timelines

Demand letters: Start the grace or cure clocks; for Maceda cancellation, a notarial notice to the buyer and the 30-day waiting period are key.
Mediation/Arbitration: Many CTS/DOAS have ADR clauses—comply before suing.
Court actions:
- Specific performance (deliver title/accept payment).
- Rescission (with mutual restitution + damages).
- Injunction/lis pendens to stop double sales.
Regulatory complaints (developer cases): Housing regulator for P.D. 957 issues (e.g., non-development, turnover delays).

8) Checklists

For buyers after partial payment

Confirm which law applies (pure Civil Code vs Maceda + P.D. 957).
Track due dates, compute grace period (Maceda), and keep all ORs.
If seller defaults, send demand (delivery/title); consider lis pendens if you must sue.
If you defaulted, check Art. 1592 leverage and Maceda grace/CSV before agreeing to forfeiture.
For pre-sell: verify licenses/permits; use P.D. 957 if development lags.

For sellers/developers

Use clear notices: statement of arrears; notarial cancellation under Maceda; proof of receipt.
Avoid automatic forfeiture clauses that ignore Maceda/PD 957.
Keep title clean (taxes, liens) to avoid giving buyers rescission leverage.
If rescinding, prepare mutual restitution (netting use/occupancy where equitable).

9) Common pitfalls

Confusing earnest with option money: Leads to wrongful forfeiture/refund fights.
Cancelling without notarial notice (Maceda): Makes cancellation ineffective.
Relying on oral terms: For immovables, get it in writing; annotate to protect against double sale.
Developer delays: Buyers forget P.D. 957 rights (suspend/cancel/refund) when development lags.
Assuming Recto Law applies: It doesn’t—this is real property.

10) Mini-templates (short starters)

A) Buyer demand for title/delivery

We have paid ₱[amount] under our [CTS/DOAS] dated [date]. Kindly deliver [unit/lot] and execute the [deed/title transfer] within [10] days; otherwise we will seek specific performance and damages.

B) Seller notarial demand (Art. 1592 / cancellation)

You are in arrears of ₱[amount]. Under our contract and applicable law, you have until [date] to cure. Failing which, consider this NOTARIAL DEMAND to rescind/cancel effective 30 days from receipt (for Maceda cases), without prejudice to damages and lawful deductions.

C) Buyer Maceda CSV request

I have paid [x] years of installments totaling ₱[total]. I elect cancellation with Cash Surrender Value under R.A. 6552. Kindly compute and remit within [15] days from receipt.

11) FAQs

Q: I paid a down payment but changed my mind. Can I get it back? Depends on the contract and law. In Maceda residential installment cases, a CSV scheme applies upon valid cancellation. Outside Maceda, refunds depend on Art. 1191 rescission and agreed forfeiture/penalty clauses (which courts can temper).

Q: The seller refuses to accept my late payment. In sales of immovables, Art. 1592 lets you pay until a notarial rescission demand is served. After that, courts won’t usually grant a new term—unless special laws (Maceda) give you a grace window.

Q: Can the seller keep everything I paid after years of installments? In many residential installment cases, no—Maceda requires CSV and proper notice before cancellation.

Q: I partially paid a pre-selling condo; the project is delayed. Under P.D. 957, you can suspend payments and, for substantial failures, cancel and seek refund, apart from damages.

12) Bottom line

After partial payment, your rights depend on what you bought (residential vs. not), how you pay (installments vs. lump sum), and which framework applies (Civil Code, Maceda, P.D. 957).
Buyers: secure your interest (annotations), know your grace/CSV rights, and document everything.
Sellers: enforce through proper notices, honor Maceda/PD 957, and keep the title clean.
When in doubt, act early—grace periods, notarial demands, and paper trails decide most disputes.

If you share your exact setup (developer sale vs private, years paid, arrears/delays, possession status), I can map a tailored step-by-step plan and compute a sample CSV/grace timeline.