Can You Get Your Down Payment Back On A House?

A lot of Filipinos are buying real estate properties in the Philippines, like condos, townhouses or residential homes, as vacation houses or for investment purposes.

Most of these purchases are financed either by a bank or the seller, and the buyer pays on an installment basis for a period of 10 to 30 years, depending on the value of the property and the terms of the loan.

Sometimes, however, there are unavoidable situations where the buyer is unable to continue making the monthly payments on the loan. In such case, the seller or lender can cancel the sale contract or foreclose the mortgage on the property.

Luckily for the buyer, there is a Philippine law that protects him or her in case of default in making installment payments. Under the Realty Installment Buyer Act (Republic Act No. 6552) or the Maceda Law, a buyer of real estate property on an installment basis has the following rights:

1. Right to a grace period to pay the installments due. If the buyer has paid at least two years of installment, the buyer has a grace period of 30 days for every year of installment payments made; if only less than two years installment payments have been made, the buyer has 60 days from the date the installment became due.

2. Right to a 30-day notice of cancellation. If the buyer is unable to pay the installment due within the grace period, the sale contract will only be canceled after 30 days from receipt by the buyer of a written notice of cancellation or a notarized demand for rescission of the contract.

3. Right to refund of payments made. Under Section 3(b) of the law, if the contract is canceled or rescinded, the buyer is entitled to a fifty per cent refund of payments made, if buyer has already paid at least two years of installment. The refund percentage is increased to five percent for every year after five years of installment payments made, up to a maximum of ninety per cent. The down payment, deposit or option payment on the contract are included in the computation of the total installment payments made.

It is common practice among sellers to impose penalties, charges or other fees if the contract is canceled or rescinded and to deduct these from the refund amount, thereby leaving the buyer with a smaller refund.

This practice is of doubtful legality because the law expressly states that any stipulation in a contract that is contrary to the foregoing rights shall be void. Since the deductions would reduce the refund amount to less than fifty or more per cent (depending on the length of payments) of the installment payments made, this would contravene Section 3(b).

The realty installment buyer can also sell or assign his or her right under the contract before it is cancelled. And if he or she pays the whole balance in advance, no interest shall accrue on such unpaid balance.

What is Foreclosure?

Foreclosure is the remedy available to the mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation, to secure that for which the mortgage was given. It may mean the usual methods including the sale of the goods at a public auction. The right to foreclose a mortgage prescribes in ten (10) years.

What are the kinds of foreclosure?

1. ORDINARY- an ordinary execution sale is governed by the pertinent provisions of Rule 39 of the Rules of Court

2. JUDICIAL – ordinary action for foreclosure under Rule 68 of the Rules of Court.

3. EXTRAJUDICIAL- when mortgagee is given a special power of attorney to sell the mortgaged property by public auction, under Act No. 3135

What is Act No. 3135 on Extrajudicial Foreclosure of Real Property all about?

The law covers only real estate mortgages. It is intended merely to regulate the extrajudicial sale of the property mortgaged. The authority to sell is not extinguished by the death of the mortgagor/mortgagee as it is an essential and inseparable part of a bilateral agreement. No sale can be legally made outside the province in which the property sold is situated; and in case the place within said province in which the sale is to be made is the subject of stipulation, such sale shall be made in the said place in the municipality building of the municipality in which the property or part thereof is situated

What is the procedure for Extrajudicial Foreclosure of both real estate mortgage under Act No. 3135 and Chattel Mortgage under Act No. 1508?

1. Filing of application before the Executive Judge through the Clerk of Court;

2. Clerk of Court will examine whether the requirement of the law have been complied with. That is, whether the notice of sale has been posted for not less than 20 days in at least three (3) public places of the municipality or city where the property is situated, and where the same is worth more than PHP400.00, that such notice has been published once a week for at least three (3) consecutive weeks in a newspaper of general circulation in the city or municipality;

3. The certificate of sale must be approved by the Executive Judge;

4. In extrajudicial foreclosure of real mortgages in different locations covering one indebtedness, only one filing fee corresponding to such debt shall be collected;

5. The Clerk of Court shall issue certificate of payment indicating the amount of indebtedness, the filing fees collected, the mortgages sought to be foreclosed, the description of the real estates and their respective locations;

6. The notice of sale shall be published in a newspaper of general circulation pursuant to Section 1, PD No. 1079;

7. The application shall be raffled among all sheriffs;

8. After the redemption period has expired, the Clerk of Court shall archive the records;

9. No auction sale shall be held unless there are at least two (2) participating bidders, otherwise the sale shall be postponed to another date. If on the new date there shall not be at least two (2) bidders, the sale shall then proceed. The names of the bidders shall be reported to the Sheriff or the Notary Public, who conducted the sale to the Clerk of Court before the issuance of the certificate of sale.

Source: Realestatelawyer.com.ph

63% of 2020 US Homebuyers Made an Offer Sight Unseen

Nearly two thirds (63%) of people who bought a home last year made an offer on a property that they hadn’t seen in person, the highest share since at least 2015, according to a Redfin-commissioned survey in November and December of more than 1,900 homebuyers across 32 major US markets. That’s up from 32% a year earlier, and 45% in July, which was previously the high point.

“The virtual home tour is here to stay,” said Redfin chief economist Daryl Fairweather in her housing market predictions for 2021. “Homebuyers who are searching for a home out of town and don’t have the time or ability to view the home in person will use virtual tours as their primary means of viewing a home. The increased use of this technology, coupled with more people relocating, mean the sight-unseen trend will continue, and the majority of homebuyers will make offers sight unseen during their search for a home in 2021.”

Red: No exact figures are available for the Philippines at this time, even though a similar but more modest trend is expected post-pandemic.

Source: Redfin