Published — February 11, 2021
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
More on Realty Installment Buyer Act: WHAT IS REALTY INSTALLMENT BUYER ACT?
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In contracts involving the sale or financing of real estate, the notice of cancellation must be notarized
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For the actual cancellation of contract to take place, the seller must refund the cash surrender value, if applicable
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The buyer has the right to occupy the property and may still reinstate the contract by
May a seller, under any circumstance, cancel the contract involving the sale or financing of real estate?
In our previous article on Realty Installment Buyer Act, we mentioned that in all transactions or contracts involving the sale or financing of real estate on installment payments, the buyers are protected against oppressive conditions. We also mentioned that if the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments made on the property.
When is the contract involving the sale or financing of real estate on installment payments be considered canceled?
The law says:
In case of contracts involving the sale or financing of real estate on installment payments such as the sale of condominium units, the seller is allowed to rescind or cancel the contract in case the buyer defaults in his or her obligation to pay the purchase price.
However, the seller has to comply with requirements set by law. Under the law on Realty Installment Buyer Act, the seller may cancel the contract by reason of failure of the buyer to pay his or her obligation. But, the actual cancellation of the contract takes place only after thirty (30) days from receipt by the buyer of the notice of cancellation or the demand for the rescission of the contract by a notarial act and upon full payment of the cash surrender value, if applicable under the circumstances.
Thus, before the contract can be validly and effectively canceled, the seller has to comply with the requirement of sending a notarized notice of cancellation to the buyer. Furthermore, if the buyer has already made installment payments for a period of at least two (2) years, the seller must refund the cash surrender value which is guaranteed by law before the cancellation may be effected.
What if the seller failed to send the notarized notice of cancellation, or failed to refund the cash surrender value if applicable?
The law says:
In one case decided by the Supreme Court, failure of the seller to comply with the require notarized notice of cancellation, or to refund the cash surrender value would mean that the contract between the parties remains valid and subsisting. Clear enough, the buyer has the right and can continue to occupy the property and that he or she may still reinstate the contract by updating the account during the grace period and before the actual cancellation of the contract.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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Hi po. What if the seller delayed the construction of the house and lot (DP fully paid) and I decided to cancel. Is it valid that they are taking Reservation Fee + Commission + Admin Fee? Thank you
Good day!
Do you have a contract? If you do, does the contract have a clause stating that they can take the Reservation Fee + Commission + Admin Fee once the contract was cancelled?