1) What the “Maceda Law” is—and why it matters in pre-selling condos

The Maceda Law (Republic Act No. 6552, the Realty Installment Buyer Protection Act) is a special law that protects buyers of real property who buy on installment and later default. In the condominium “pre-selling” context, it most commonly applies when you are paying the developer in installments under a Contract to Sell (or similar installment arrangement), especially during the downpayment / equity period before loan “takeout.”

Its central purpose is to stop harsh outcomes like automatic cancellation and total forfeiture of what the buyer already paid, without fair grace periods and proper notice—by giving qualifying buyers (1) mandatory grace periods and (2) mandatory refunds (cash surrender value) when cancellation happens after substantial payment history.

2) When Maceda protections apply to a pre-selling condominium purchase

A. Covered transactions

Maceda generally covers the sale or financing of real estate on installment payments, including residential condominium units sold on installment.

In practice, a pre-selling condo purchase is often structured like this:

Reservation fee (to hold a unit)
Contract to Sell with a schedule (e.g., 24–60 months) of downpayment/equity installments
Later: bank financing takeout (buyer takes a bank loan; bank pays developer; buyer pays bank)

Maceda most clearly governs the period where you are paying installments to the seller/developer under the installment contract.

B. Typical pre-selling situations where Maceda is invoked

You paid monthly downpayment installments for months/years and then missed payments.
The developer threatens cancellation and forfeiture.
You want to know if you have a grace period, right to reinstate, and/or right to refund.

C. Common situations where Maceda may not be the right tool (or is only part of the analysis)

Maceda is about installment buyers vis-à-vis the seller. If your arrangement shifts away from “installment with the seller,” other rules often dominate:

Bank loan phase If the developer has already been paid through bank takeout and your obligation is now primarily to the bank, Maceda typically does not govern your default with the bank (that’s usually governed by loan documents, banking rules, and mortgage/foreclosure law). That said, Maceda may still matter for the portion you paid the developer before takeout, depending on the dispute.
Cash purchase (not on installment) If the purchase is not actually on installment (e.g., full cash paid quickly, or not an installment arrangement), Maceda may not apply.
Non-residential / commercial characterization Maceda’s strongest textual coverage for condos is for residential condominium apartments. If the transaction is clearly and purely commercial, the legal analysis can change.

Practical note: Many “condo” projects are marketed as residential but can be used as offices. Whether Maceda applies can depend on the contract’s nature and the unit’s characterization.

3) The two big protection tracks: “Less than 2 years paid” vs “At least 2 years paid”

Maceda draws a bright line based on how long you’ve paid installments.

Track 1: You have paid LESS THAN 2 years of installments

If you default after paying less than 2 years, you are entitled to:

1) A minimum 60-day grace period

The grace period is at least 60 days from the date your installment became due.
During this period, you should be allowed to pay the missed installment(s) and avoid cancellation.

2) Mandatory notice requirements before cancellation (notarial act)

If you still don’t pay after the grace period, the seller can cancel—but only by following the statutory process:

The seller must send a notice of cancellation or a demand for rescission by a notarial act, and
Cancellation takes effect only after 30 days from your receipt of that notarial notice.

3) Refunds in this track

For less than 2 years paid, Maceda does not automatically require the seller to refund a cash surrender value the way it does in the 2+ years track (though you may have other refund rights under other laws/contract terms depending on facts, developer fault, or specific contract provisions).

Track 2: You have paid AT LEAST 2 years of installments

If you default after paying at least 2 years, you get stronger rights:

1) A grace period of 1 month per year paid

You get one month grace period for every one year of installment payments made.
This is designed to give long-paying buyers time to catch up.

Important limitation: This right can typically be used only once every 5 years of the life of the contract (including extensions). So it’s a real protection, but not an unlimited “reset button.”

2) Right to reinstate the contract

During the grace period, you may pay the unpaid installments and reinstate the contract (i.e., prevent cancellation), subject to the contract and lawful charges.

3) If cancellation happens: the right to a cash surrender value (refund)

If the seller cancels after 2+ years of payments, the buyer is entitled to a refund called the cash surrender value, which is:

50% of the total payments made, plus
After 5 years of installments, an additional 5% per year of payments made,
But capped at 90% of total payments made.

Example computations (illustrative):

If total payments made = ₱1,200,000 and you paid for 3 years
- Cash surrender value = 50% = ₱600,000
If total payments made = ₱1,200,000 and you paid for 7 years
- Base 50% = ₱600,000
- Additional: years beyond 5 = 2 years × 5% = 10%
- Total = 60% of ₱1,200,000 = ₱720,000
Maximum refund cannot exceed 90% of total payments.

4) Mandatory notarial cancellation + 30 days + refund-first rule

Even after the grace period ends, the seller cannot just cancel informally. Maceda requires:

A notarial act notice of cancellation/demand for rescission, and
Cancellation effective only after 30 days from receipt, and
For 2+ years buyers, cancellation should not be effective unless the seller has paid the cash surrender value (the refund) to the buyer.

This is one of the most powerful practical levers in Maceda: cancellation is not meant to be “instant,” and for 2+ years, the seller must refund in order to finalize cancellation properly.

4) What counts as “total payments made”?

Maceda speaks in terms of total payments made under the installment purchase. In condo pre-selling, disputes often arise about whether certain amounts are included, such as:

Downpayment/equity installments (usually included)
Monthly amortizations paid to the developer (included when paid to seller under installment)
Reservation fee (sometimes disputed)

Whether a reservation fee counts often depends on how it is treated in documents and practice:

If the reservation fee is applied to the purchase price/downpayment and receipted as part of the sale, it is more likely to be treated as part of “payments made.”
If it is structured as a separate “option/reservation” amount and is not applied, sellers often argue it is excluded—though buyers may contest this depending on the surrounding facts and documents.

5) The seller’s “automatic forfeiture” clauses vs Maceda’s mandatory rules

Many Contracts to Sell contain provisions like:

“Failure to pay results in automatic cancellation,” or
“All payments are forfeited as liquidated damages,” or
“No refund under any circumstances.”

Maceda is a protective statute. If a contract clause defeats the minimum protections Maceda grants (grace periods, notarial notice, cash surrender value for 2+ years), that clause is vulnerable to being treated as ineffective to the extent it contradicts the law.

6) The legally required cancellation timeline (practical step-by-step)

Below is a simplified timeline you can use to evaluate threats of cancellation.

If you paid < 2 years

Missed due date
You must be given ≥60 days grace
If unpaid, seller sends notarial notice (cancellation/demand rescission)
Cancellation effective only 30 days after receipt of notarial notice

If you paid ≥ 2 years

Missed due date
Grace period = 1 month per year paid (subject to “once every 5 years” rule)
If unpaid after grace, seller sends notarial notice
Cancellation effective only 30 days after receipt
Seller should pay cash surrender value as part of proper cancellation implementation

7) Rights related to advance payment and assignment (common condo realities)

Maceda also supports practical buyer flexibility:

A. Right to pay in advance (prepay)

Buyers are generally protected in their ability to pay installments in advance or pay off balances earlier without being penalized by interest for the unexpired period, subject to lawful contract terms and proper accounting.

B. Right to assign/transfer rights (sale of “rights”)

In the pre-selling market, buyers often want to “pasalo” (assign) their rights to another buyer. Maceda policy supports the idea that a buyer’s rights should not be unreasonably blocked—though in practice developers typically require:

A Deed of Assignment
Payment of transfer/assignment fees
Submission of buyer qualifications/KYC documents
Settlement of arrears

The key point: assignment practices must still respect statutory buyer protections; a seller shouldn’t use assignment restrictions as a backdoor to strip Maceda rights.

8) How Maceda interacts with other Philippine condo buyer protection laws

For condominium pre-selling, Maceda is important—but it’s not alone. Two other frameworks often matter:

A. PD 957 (Subdivision and Condominium Buyers’ Protective Decree)

PD 957 is the major consumer-protection law for subdivision and condominium project sales, especially pre-selling. It covers areas like:

Requirements to register projects and secure a License to Sell
Standards on advertisements, contracts, and disclosures
Protections against certain abusive developer practices

When issues involve project compliance, delivery delays, non-completion, or licensing violations, PD 957 (and implementing rules) may provide remedies that are separate from (and sometimes stronger than) Maceda—depending on the facts.

B. Condominium Act (RA 4726) and related regulations

This shapes condominium concepts like the condominium corporation, master deed, and unit ownership framework. It’s often relevant for post-turnover governance, common areas, and condo corporation matters, rather than Maceda-style installment default.

Key takeaway:

Maceda is most directly about default/cancellation/refund mechanics for installment buyers.
PD 957 is often about developer regulatory compliance and project delivery—and can become central when the developer is the one at fault.

9) Common buyer questions (and practical answers)

“Can the developer immediately cancel and forfeit everything?”

Not if Maceda applies. Minimum grace periods and notarial notice + 30 days are mandatory, and 2+ years buyers have mandatory cash surrender value rights.

“I’ve paid for years. Do I automatically get 50% back if I walk away?”

Maceda’s refund is triggered in the context of cancellation/rescission due to default and the legal process for it. If you want to exit, it’s often best to document the basis (default vs mutual cancellation vs assignment) because labels and paperwork can affect outcomes.

“Does Maceda apply to my bank loan?”

Usually, no—Maceda primarily regulates the seller-buyer installment relationship, not bank loan default remedies. But Maceda may apply to what happened before takeout.

“Can the developer require me to sign a waiver of Maceda rights?”

Waivers that defeat minimum statutory protections are highly risky and may not be enforceable to the extent they contradict protective law and public policy.

10) Evidence and documents buyers should keep (this is often decisive)

If a dispute arises, outcomes frequently depend on paperwork. Keep:

The Reservation Agreement, Contract to Sell, side letters, and official schedules
Official receipts, proofs of payment, remittance confirmations
The developer’s statements of account and demand letters
Copies (and proof of receipt) of any notarial notices
Records showing how the reservation fee was treated (applied to price or not)

11) Enforcement and dispute forums (where buyers usually go)

Condo buyer disputes in the pre-selling stage are commonly brought before housing/real estate adjudication bodies (depending on current institutional setup and jurisdiction) and/or regular courts—especially when urgent relief, damages, or complex contractual issues are involved.

Because forum choice can affect timelines, available remedies, and procedure, buyers typically benefit from getting local legal guidance before filing.

12) Practical, lawful moves for buyers facing cancellation

If you’re in trouble on payments and want to preserve rights:

Determine your “years paid” status (under 2 years vs 2+ years).
Demand a written computation and an updated statement of account.
If you qualify, invoke the grace period in writing and propose a catch-up plan.
If cancellation is threatened, check whether the developer complied with:
- required grace period, and
- notarial notice + 30-day rule, and
- for 2+ years, cash surrender value requirements
Consider assignment (“pasalo”) if you want out but want to recover more than the minimum refund outcome.
Avoid “informal surrender” documents that silently waive refunds or re-characterize payments unless you fully understand the effect.

13) A final note on using this information

This is a general legal article for Philippine context and is not individualized legal advice. Real outcomes can turn on details like how your documents define “payments,” whether the unit is characterized as residential, whether the developer followed notarial notice requirements correctly, and whether other laws (especially PD 957) create additional remedies. If you share the relevant clauses (redacting personal details), you can get a tighter issue-spotting analysis.