Lesson 4 · 6 min read
Less Than Two Years Paid: Basic Protections
Understand the rights of buyers who have paid less than two years of installments under RA 6552 Section 4. Learn about the 60-day grace period and the cancellation procedure.
The 60-Day Grace Period
“In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due.”
What This Means
Even buyers who have paid less than 2 years of installments get protection, a mandatory 60-day grace period from the date the installment became due. During these 60 days, the buyer can pay without the seller being able to cancel. The "not less than" language means 60 days is the minimum: the contract can provide a longer grace period, but never less. This gives new buyers at least 2 months of breathing room.
- Minimum 60-day grace period from the date the installment became due
- "Not less than" means 60 days is the floorcontracts can provide more
- Seller cannot cancel during the grace period
- No interest-free provision (unlike Section 3(a) for 2+ years)
- Applies to all buyers who have paid less than 2 years of installments
Real-World Scenario
Jose signed a Contract to Sell for a subdivision lot 8 months ago. He has been paying P18,000/month but missed his payment due on September 1. On September 10, the developer sends a notice of cancellation saying the contract is terminated.
Is the developer's cancellation valid?
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No. Under Section 4, Jose (who has paid less than 2 years) is entitled to a grace period of "not less than sixty days from the date the installment became due." The installment was due September 1, so the grace period runs until at least November 1 (60 days later). The developer cannot send a cancellation notice until after this grace period expires, and even then must follow the proper cancellation procedure.
Cancellation After Grace Period Expires
“If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.”
What This Means
If the buyer still hasn't paid after the 60-day grace period, the seller can proceed with cancellation, but not immediately. The seller must send a notice of cancellation (or demand for rescission) by notarial act, and wait 30 more days after the buyer receives it. So the total minimum timeline before cancellation is: due date + 60 days grace + delivery time + 30 days notice = at least 90+ days. Note: unlike Section 3(b), there is NO cash surrender value refund requirement for buyers with less than 2 years of payments.
- Seller can only cancel AFTER the 60-day grace period expires
- Must send a notice of cancellation by notarial act (notarized)
- Cancellation takes effect 30 days after buyer RECEIVES the notice
- Total minimum timeline60 days grace + 30 days notice = 90+ days
- Unlike Section 3(b), NO cash surrender value/refund is required
Real-World Scenario
A buyer who paid 10 months of installments defaults. The 60-day grace period expires on May 15. The developer sends a notarized notice of cancellation, which the buyer receives on May 20.
When is the earliest the contract can be validly cancelled?
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June 19 (30 days after the buyer received the notice on May 20). Under Section 4, cancellation takes effect "after thirty days from receipt by the buyer of the notice of cancellation." The key date is when the buyer RECEIVES the notice, not when it was sent. The developer cannot consider the contract cancelled before June 19, and the buyer can still pay during this 30-day window.
Section 3 vs Section 4: Key Differences
“In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.”
What This Means
The 2-year mark is the critical dividing line in the Maceda Law. Buyers with 2+ years get: proportional grace periods (1 month per year paid), interest-free catch-up payments, and mandatory cash surrender value refunds (50-90%). Buyers with less than 2 years get only: a fixed 60-day grace period, no interest-free guarantee, and no refund upon cancellation. This difference makes the 2-year threshold extremely important for both buyers and sellers to track.
- 2+ yearsproportional grace period (1 month/year) vs. fixed 60 days
- 2+ years"without additional interest" vs. no such guarantee
- 2+ years50-90% cash surrender value vs. NO refund
- 2+ yearsCSV must be paid before cancellation vs. no such requirement
- Both requirenotarial act notice + 30-day waiting period for cancellation
Real-World Scenario
Two buyers in the same condominium project both default. Buyer X paid for 1 year and 11 months (total: P380,000). Buyer Y paid for 2 years and 1 month (total: P420,000). Both contracts are being cancelled.
How do their rights differ?
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The difference is dramatic. Buyer X (1 year 11 months, less than 2 years, Section 4): gets only a 60-day grace period and, if they still can't pay, receives NO refund upon cancellation. Buyer Y (2 years 1 month, Section 3): gets a 2-month grace period with no additional interest, and if cancelled, must receive a Cash Surrender Value of 50% × P420,000 = P210,000 BEFORE cancellation takes effect. One extra month of payments gives Buyer Y P210,000 in refund rights that Buyer X doesn't have.
Frequently Asked Questions
Do I get a refund if my contract is cancelled and I paid less than 2 years?
No. Under Section 4 of RA 6552, buyers who paid less than 2 years of installments are NOT entitled to a cash surrender value refund upon cancellation. They only get the 60-day grace period and the 30-day notice requirement. The refund right under Section 3(b) only applies to buyers with 2+ years of payments.
Can the seller cancel my contract immediately if I miss one payment?
No. Even with less than 2 years paid, Section 4 gives you at least 60 days from the due date to pay. After that, the seller must send a notarized cancellation notice and wait 30 more days. Total minimum timeline before cancellation: 90+ days from the missed due date.
Can I cure my default during the 30-day cancellation notice period?
Yes. Section 5 provides that the buyer can "reinstate the contract by updating the account during the grace period and before actual cancellation of the contract." Since actual cancellation only takes effect after the 30-day notice period, you can still pay during those 30 days to reinstate.
Lesson 4 of 6