Home › Buyer Guides › Maceda Law Explained for Property Buyers in the Philippines
Who is covered
- Buyers of residential real estate, including house and lot, residential lots, and condominium units, on installment
- Purchases from developers and from private sellers
- Payments made directly to the seller, including equity installments in pre-selling
Not covered: industrial lots, commercial buildings, and sales to tenants under agrarian reform laws. Loans from banks and Pag-IBIG are mortgage loans, not installment sales, so defaults there are handled by foreclosure rules rather than the Maceda Law.
If you have paid at least two years of installments
- Grace period: one month for every year of installments paid, without interest, usable once every five years of the contract and its extensions.
- Refund on cancellation: the cash surrender value, at least 50% of total payments made. After five years of installments, add 5% per additional year, up to a maximum of 90%.
- Cancellation process: it takes effect 30 days after you receive a notice of cancellation or demand for rescission by notarial act, and only after the full refund is paid to you.
If you have paid less than two years
- A grace period of at least 60 days from the date the missed installment was due
- If you still don't pay, the seller may cancel 30 days after you receive a notarial notice
- There is no statutory refund. Check your contract, as some developers offer partial refunds.
Other rights under the law
- You may sell or assign your rights to another person, by notarial act, before cancellation.
- You may pay the full unpaid balance in advance at any time without interest, and have the full payment annotated on the title.
- Down payments, deposits, and options are counted in computing total payments made.
- Any contract clause that waives these rights is void.
Worked refund example
A buyer paid ₱8,000 a month for 7 years (84 months), a total of ₱672,000, then defaulted. The developer cancelled properly.
- Base refund: 50%
- Years beyond five: 7 − 5 = 2 years × 5% = 10%
- Refund rate: 60%
- Refund due: ₱672,000 × 60% = ₱403,200, payable before the cancellation takes effect
Grace period available: 7 months (one month per year paid).
Where the Maceda Law meets PD 957
PD 957, the law for subdivision and condominium buyers, adds another protection. If the developer fails to develop the project according to approved plans and timelines, a buyer who stops paying after due notice to the developer can't be charged forfeiture. The buyer may instead ask for a refund of total payments with legal interest. Complaints about developers go through DHSUD and its adjudication arm, the Human Settlements Adjudication Commission.
Practical steps if you're falling behind
- Write to the developer before missing a payment. Restructuring is often possible.
- Know your count: how many years of installments have you completed?
- Consider assigning your rights to a buyer you find, which often recovers more than the refund.
- Keep every receipt, statement of account, and notice.
- If cancellation is threatened without notarial notice or refund, seek legal advice or file a complaint with DHSUD.
Frequently asked questions
Does the Maceda Law apply to every property purchase?
No. It covers residential real estate bought on installment from a seller or developer. It doesn't cover commercial or industrial property, or bank and Pag-IBIG mortgage loans, which follow foreclosure rules.
How much refund do I get under the Maceda Law?
If you have paid at least two years of installments, at least 50% of total payments, plus 5% per year after the fifth year, up to 90%. Less than two years of payments carries no statutory refund.
Can a developer cancel my contract without notice?
No. Cancellation requires a notice by notarial act. It takes effect only 30 days after you receive it, and, if you have paid two or more years, only after the refund is paid.
Does the Maceda Law cover reservation fees?
Reservation fees on their own are generally governed by the reservation agreement. Once you are paying installments under a Contract to Sell, deposits and down payments count toward total payments for refund purposes.
Related buyer guides
- PD 957 Explained for Subdivision and Condominium Buyers
- Contract to Sell vs Deed of Absolute Sale in the Philippines
- Rent-to-Own Houses in the Philippines: How It Works, Pros, Cons, and Safer Alternatives
- Pre-Selling vs RFO Homes: Which Should You Buy?
Official sources and further reading
Reviewed for accuracy on October 4, 2026. Rates, fees, thresholds, and agency procedures change. Confirm transaction-specific details with the issuing agency, your lender, or a lawyer before you pay or sign.
Have a specific situation? Call or text 0976 302 6551 and I will run the numbers for your exact unit, budget, and financing route for free.
