What if the buyer becomes delinquent in his installments, can the seller forfeit everything?
The answer is NO. The seller or developer cannot forfeit everything if the buyer has been paying for at least 2 years.
A seller or developer may have the buyer sign into a contract of forfeiture of payments in case the buyer may fail to pay over a specified period which is usually 3 months consecutive monthly installments. Even though the buyer have signed such contract stipulating agreement to forfeiture upon certain period of delinquency, it may not be legal or binding if there exists a higher law that contradicts the contract or agreement between parties. The higher law shall always prevail over agreement or contract between parties which will render the agreement unenforceable.This higher law is ….
MACEDA LAW (R.A. 6552) When the buyer is delinquent in his payment
Objective: To protect installment buyers of real estate against onerous and oppressive conditions.
Applicability – Applies to sale or financing of residential estate on installment payment covered by contract to sell and not sale with mortgage, but excluding industrial lots, commercial building, and sales to tenants under R.A. 3844.
Rights of buyer who has paid two years or more of installments:
a) To pay, without additional interest, any installment due within the grace period which is equivalent to one month for every year of installment, provided that such right can only be availed of once every five years.
b) To receive a thirty-day notarial notice of cancellation before his contract can be cancelled for delinquency.
c) To receive the cash surrender value of his total payments before his contract can be cancelled due to delinquency. The refund is equivalent to fifty percent (50%) of total payments and, after the fifth year, an additional five percent (5%) per year of installment payment, but not to exceed ninety percent of total payments.
d) To transfer or assign his right to the contract e) To register or annotate his contract on the title f) To pay, without additional interest, the full principal balance of the price before the term of the contract.
