Laws On Real Estate Buyers And Owners Should Keep In Mind

Understanding important pieces of legislation related to owning real estate in the Philippines

MANILA, JUNE 28, 2015: Due diligence goes a long way, especially in real estate. Homebuyers are always advised not to jump quickly into buying a property without giving the purchase due consideration. More importantly, they are advised to arm themselves with information, especially on pieces of legislation that not only protect their rights, but also stipulate their responsibilities as owners of real properties.

Global property portal Lamudi Philippines lists down four of the most important laws related to real estate, and their provisions that apply specifically to buyers and owners of properties.

Maceda Law

Also known as the Realty Installment Buyer Act enacted in 1972, this law stipulates that buyers who have already paid at least two years of installments for a residential property—but for any reason default in the payment of the succeeding installments—are still qualified to pay the unpaid installments, interest-free. However, the late payments must be made within the total grace period they have earned, which is one month for every year of installment made. Hence, if two years of installments have been made, two months of grace period have been earned. Buyers, however, can only exercise this right once in every five years within the whole life of the contract.

The Condominium Act

Also known as Republic Act 4726, one of the Condominium Act’s provisions concerns the lifespan of a condo property. According to the law, the condo corporation, which is composed of the owners of units in the said condo property, may decide to sell their condo (plus the land on which it sits) if the project is already 50 years and deemed obsolete.

The unit owners can then divide the proceeds appropriately among themselves, which is based on the size of their interest in condo. However, the condo owners may only decide to sell the property granted that more than 50 percent of them vote against restoring, renovating, or modernizing it.

The Real Property Tax Code

This code governs the appraisal and assessment of properties for the purpose of taxation by local government units (i.e., provinces, cities, and municipalities). This tax is called real property tax, or more commonly known as “amilyar” to Filipinos. To compute for this, the corresponding tax rate for the property is multiplied by the property’s taxable value (which is a portion of its assessed value).

For example, if your residential property is located in Metro Manila and has an assessed value of Php3 million, its tax rate is 2 percent and its taxable value is 40 percent of its assessed value. Therefore, its real property tax is 2 percent of Php1.2 million, which is Php24,000.

Lina Law

Formally known as the Urban Development and Housing Act of 1992, the Lina Law is perhaps one of the most misunderstood laws in the Philippines. Its main aim is the provision of a housing program for the urban poor.

Many mistakenly believe that, under the law, once a private property has been occupied by informal settlers, the owner of the said property must pay the settlers “disturbance compensation” if the owner wants to evict the settlers. This is not true. According to the author of the law himself, former senator Jose Lina Jr., private landowners are neither legally required to pay any compensation to the informal settlers, nor are they required to oversee the relocation. Relocation is in fact a job of the government.


Rodel Ambas

Head of Content and PR, Lamudi Philippines

Phone: +63 917 3015127


Pia Lorraine Yater-Dalmazo

Media Relations Officer

Phone: +63 905 2020882