FAQ

BASICS OF POWERS OF ATTORNEY

What is a POWER OF ATTORNEY?
A power of attorney is an authorization to act on someone else’s behalf in legal or business matter.

WHY NEED A POWER OF ATTORNEY?

  1. Absence of Person
  2. Inability to be present
  3. Don’t want to be present
  4. Physical Incapacity
  5. Minimize Persons/ Signatories
  6. Future Plans/ Circumstances
  7. Simply busy

Types of Powers of Attorney

  1. General Power of Attorney – authorizes your Agent to act on your behalf in a variety of different situations for administration and general supervision and management
  2. Special Power of Attorney – authorizes your Agent to act on your behalf in specific situations only, particularly acts of dominion or ownership in real estate.

MAIN LAW governing Powers of Attorney
New Civil Code [ Law on Agency ]
TITLE X, AGENCY, CHAPTER 1 [Articles No. 1868-1932]

  1. AGENCY – defined
  2. By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. [Art. 1868 NCC]

EXPRESS or IMPLIED

  1. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.
  2. Agency may be oral, unless the law requires a specific form. [ Art. 1869, NCC ]

Essential Requisites (Elements) of Contracts
(Art. 1318, Civil Code)

There is no contract unless the following requisites concur:

  1. Consent of the contracting parties;
  2. Object certain which is the subject matter of the contract;
  3. Cause of the obligation which is established

CONSENT
Definition  – it is the meeting of the minds between the parties on the subject matter and the cause of the contract, even if neither one has been delivered.

Effect of No Consent

  1. If there is absolutely no consent, there is no contract and may be considered VOID or non-existent (Example: when it was simply a JOKE between the parties who never intended to be bound by agreement)
  2. If there is consent but is vitiated such as error, fraud, or undue influence, etc., the contract is not VOID, but is merely VOIDABLE (valid until annulled)

Applicable Law on Consent – Art. 1319, Civil Code, provides:

Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.

Acceptance made by letter or telegram does not bind the offeror except from the time it came to his knowledge. The contract, in such a case is presumed to have been entered into the place where the offer was made.

REQUISITE FOR A PERSON TO CONTRACT IN THE NAME OF ANOTHER (AGENT, ATTORNEY-IN-FACT)

Under Art. 1317 of the Civil Code, it is provided that:
Art. 1317. No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him.

A contract entered into the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly, or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party.

IF a person wants to contract in the name of another

He must be duly authorized (expressly or impliedly
Or he must have by law a right to represent him (e.g. guardian, administrator)
Or he must be subsequently ratified (expressly, impliedly, by word or deed)

NOTE : IN CASE OF SALE OF PIECE OF LAND OR ANY INTEREST THEREIN THROUGH AN AGENT, the following must be followed:

Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.
AUTHORITY MUST BE IN WRITING
OR ELSE, THE SALE IS VOID

OFFER MADE THROUGH AN AGENT

Acceptance of an Offer Through an Agent

If both the offer and the acceptance are made through an AGENT (who is an extension of the personality of the principal) , then there is a valid ACCEPTANCE.

If made to an AGENT (but who had no authority to bind) but is merely a sort of messenger, then there is NO VALID acceptance

As provided under Article 1322 of the Civil Code:

Art. 1322. An offer made through an agent is accepted from the time acceptance is communicated to him.

WHEN SPECIAL POWERS OF ATTORNEY ARE NEEDED:
(Art. 1878, Civil Code)

GENERAL POWER OF ATTORNEY
VS.
SPECIAL POWER OF ATORNEY

What is controlling are the content of the power of attorney and not the heading or title of the document. It is best to look into the contents of the power and limitations in the document to determine whether it will be sufficient for the authority being delegated to the attorney-in-fact.

SPECIAL POWER OF ATTORNEY

In general, a special power of attorney is required for the following:

  1. Acts of strict dominion or ownership (as compared to acts of mere administration)
  2. Gratuitous contracts
  3. Contracts where personal trust and confidence is of the essence of the agreement.Or the following:
  1. To make such payments as are not usually considered as acts of administration.
  2. To effect novations which put an end to obligation already in existence at the time the agency was constituted
  3. To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgement, to waive objections to the venue of an action or to abandon a prescription already acquired.
  4. To waive any obligation gratuitously
  5. To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for valuable consideration
  6. To make gifts, except customary ones for charity or those made to employees in the business managed by the agent
  7. To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration
  8. To lease any real property to another person for more than one year
  9. To bind the principal to render some service without compensation
  10. To bind the principal in a contract of partnership
  11. To obligate the principal as a guarantor or surety
  12. To create or convey real rights over immovable property
  13. To accept or repudiate an inheritance
  14. To ratify or recognize obligations contracted before the agency
  15. Any other act of strict dominion

Substitution of Agent
In general, the agent may appoint a substitute if the principal has not prohibited him from doing so, as provided under Art. 1892 of the Civil Code:

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but shall be responsible for the acts of the substitute:

  • When he was not given the power to appoint one;
  • When he was not given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent.

All acts of the substitute appointed against the prohibition of the principal shall be void.

MODES OF EXTINGUISHING AGENCY [ EDWARD]

  1. Expiration of period
  2. Death of principal or agent
  3. Withdrawal of agent
  4. Accomplishment of purpose
  5. Revocation
  6. Dissolution of firm which granted or accepted agency

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DOCUMENTATION

It is the putting down in writing the terms and conditions and agreement of the parties to the transaction, in the appropriate legal form.

As to type of real estate transaction

General / Common Designations

Sale – Deed of Absolute Sale
Lease  – Contract of Lease
Mortgage  – Deed of Mortgagte
Loan – Loan Agreement / Promissory Note
Exchange – Deed of Exchange / Deed of Assignment
Payment  – Dation in Payment / Dacion en Pago
Reconveyance – Deed of Reconveyance

As to type of Instrument

1. Private Instrument – an agreement which is executed by the parties is binding and valid even though not duly notarized, except in cases prescribed by law

 2. Public Instrument – an agreement which has been notarized is considered a public instrument|

As to type based on parties executing the document

1. UNILATERAL Deed of Sale – an agreement where only the SELLER shall execute the deed of absolute sale and will not be signed by the buyer.

2. BILATERAL Deed of Sale – an agreement where both SELLER and BUYER shall sign the deed of absolute sale

 A. PARTIES to the transaction

1. Individual

(a) 1. Full Name – the full names of the parties is required in the document for the proper identification of the parties to the agreement

(b) 2. Legal Capacity – to be able to enter into a contract, the parties must be of legal age, or at least 18 years old and is stated in the document. (if a minor or is incapacitated to contract, then the person must be represented by the legal or authorized guardian)

(c) 3. Marital Status – It is also required that the parties must likewise be indicated, i.e., whether single, married and if married, the name of the spouse may be required for the transaction.

(d) 4. Citizenship – The citizenship of the parties must likewise be indicated as the general rule is that only Filipinos may acquire land unless authorized bt special laws. In case uf dual citizens who have availed of the Dual Citizenship Law, the party/ies may just indicate their Filipino citizenship.

(e) 5 Residence – Although not as essential as the others, the residence must also be indicated in the deed or the address of the party to the transaction. This will also serve a useful purpose in case of notices that will be required to be given to the parties.

2. JURIDICAL PERSONS

In case of juridical persons, such as corporation or partnerships, the document must contain in the following:

a. Capacity to buy land – The corporation or partnerships must have the capacity to own land in the Philippines in case it is transferee (60% capital must be Filipino-owned, or as allowed by law.
b. Athority to Buy/Sell – The sale or purchase is duly authorized by a board resolution of the Board of Directors of the corporation or all or the partners in ther partnership.
c. Authority to Sign – The person who shall be authorized to sign in behalf of the corporation or partnership must be duly stated.
Note : it does not follow that the president of other person may be duly authorized by the Board of Directors.
d. Principal Office – The principal office if the corporation or partnership or its address must likewise be indicated in the instrument.

Basis and Requirement under PD 1529

Section 55. Grantee’s name, nationality, etc., to be stated. Every deed or other voluntary instrument presented for registration shall contain or have endorsed upon it the full name, nationality, residence and postal address of the grantee or other erson acquiring or claiming an interest under such instrument, and every deed shall also state whether the grantee is married or unmarried, and if married, the name in full of the husband or wife. If the grantee is a corporation or association, the instrument must contain a recital to show that such corporation or association is legally qualified to acquire private lands. Any change in the residence or postal address of such erson shall be endorsed by the Register of Deeds on the or iginal copy of the orresponding certificate of title, upon receiving a sworn statement of such change. All names and addresses shall also be entered on all certificates. Notices and processed issued in relation to registered land in pursuance of this Decree may be served upon any person in interest by mailing the same to the addresses given, and shall be binding, whether such person resides within or without the Philippines, but the court may, in its discretion, require further or other notice to be given in any case, if in its opinion the interest of justice so requires.

B. OBJECT

The object of a real estate contract of sale is the property being sold and purchased. It is required that a definite description must be indicated to properly identify the object of the contract of agreement.

It is not really necessary to include the whole description in the original/transfer certificate of title so long as the property can be properly identified though it is better to indicate the certificate of title no. and the corresponding Registry of Deeds, when it comes to sale of titled properties

SAMPLE Technical Description in Deed of Sale

TRANSFER CERTIFICATE OF TITLE NO. 12345

“A parcel of land (Lot 2, of the cons.-subd. Plan Pcs-12-34567, being a portion of the cons. of Lots 1 & 2, Pasig Cadastre, Psc-14, L.R.C. Rec. No. 984), situated in the Brgy Alabang, Mun. of Munitinlupa, Metro Manila, Is. of Luzon. x x x x x x containing an area of SIX HUNDRED (600) SQ. METERS. xxxxxx.”

C. CONSIDERATION

The consideration in the real estate transaction is the purchase price or the price of the property agreed upon (unless payment is made in another form or there is an exchange of property)

NOTARIZATION

It is required under PD 1529, that the instrument be in the form of a public instrument, or must be duly notarized to be registered

ACKNOWLEDGMENT JURAT
Acknowledgment- “Acknowledgment” refers to an act in which an individual on a single occasion:

(a) appears in person before the notaty public and presents an integrally complete instrument or document;

(b) is attested to be personally known to the notary public or identified by the notary public through competent evedence of identity as defined by these Rules; and

(c) represents to the notary public that the signature on the instrument ir document was voluntarily affixed by him for the purposes stated in the instrument or document as his free and voluntary act and deed, and, if he acts in a particular representative capacity, that he has the authority to sign in that capacity.

Jurat – “Jurat” refers to an act in which individual on a single occasion:

(a) appears in person before the notary public and presents an instrument or document;

(b) is personnally known to the notary public or identified by the notary public through competent evidence of identity as defined by these Rules;

(c) signs the instrument or document in  the presence of the notary; and

(d) takes an oath or affirmation before the notary public as to such instrument or document.

COMPETENT EVIDENCE OF IDENTITY

For acknowledging documents, it is required that the parties present what is called, competent evidence for notarization, as follows”
Component Evidence of Identity. The phrase “competent evidence of identity” refers to the identification of an individual based on:

at least one current identification document issued by an official agency bearing the photograph and signature of the individual, such as but not limited to,

passport,
driver’s license,
Professional Regulations Commission ID,
National Bureau of Investigation clearance, police clearance,
postal ID,
voter’s ID,
Barangay certification,
Government Service and Insurance System (GSIS) e-card,
Others, such as, Social Security System (SSS) card, Philhealth card, senior citizen card, Overseas Workers Welfare Administration (OWWA) ID, OFW ID, seaman’s book, alien certificate of registration/immigrant certificate of registration, government office ID, certification from the National Council for the Welfare of Disable Persons (NCWDP), Department of Social Welfare and Development (DSWD) certification
Others

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How to Detect a Fake Transfer of Certificate of Title :

PLS TAKE NOTE THAT THE LAND REGISTRATION AUTHORITY HAS COME OUT WITH A NEW FORM AND PROCEDURE FOR BOTH TRANSFER CERTIFICATE OF TITLE ( TCT ) AND CONDOMINIUM CERTIFICATE OF TITLE ( CCT ) WHICH MAKES PRODUCTION OF FAKE TITLES MORE COMPLICATED THAT EVER BEFORE. THIS IS A GOOD SIGN THAT THE GOVERNMENT IS PROGRESSING ON THE RIGHT TRACK. A NEW ARTICLE ON HOW TO DETECT FAKE TITLE WILL BE OUT AS SOON AS WE’VE DONE OUR RESEARCH.

When buying pre-owned real estate property, be sure to double-check the Transfer Certificate of Title (TCT). Here are some things that you should check when you’re given a copy of the TCT:

1. On the upper right hand side of the title is the page number.  This number is the page in the registry’s books where the title is located. The last two digits of this page number should match the last two digits of the Transfer Certificate of Title number. For example, if the title shows a page number of 275 and the TCT no. is 12345, it’s a fake!

2. On the upper-left hand of the title, the month and year when the form was revised will be shown. For example, it could say “Judicial Form No. 109 (Revised January 2009)”. After you locate this information, check when the title was entered into the books of the registry. The title could say something like “Entered at City of Muntinlupa Philippines, on the 15th day of March in the year two thousand and five at 11:28 a.m.” Notice the discrepancy? The form was revised in 2009, but the title was entered in 2005! The entry date should come in the same year or after the form was revised. It’s a fake!

3. TCTs are printed using paper produced by the Central Bank of the Philippines. The paper should have fibers at the least. If not, it could be fake.

4. Each TCT must have a serial number located on the upper left hand of the title. Without a serial number, the title is a fake!

5. More recent TCTs have security features including a regular 2-D bar code and a 3-D barcode. If a title was entered in 2010, check for the presence of the bar codes. The 2-D barcode serial number should match the serial number shown on the upper left hand side of the title.

6. And finally, after you’ve verified the above information, go to the registry of deeds that is reflected in the title. Get a certified copy of the title to make sure that it does exist. More importantly, do compare the title you got from the seller and the title you got from the registry of deeds. If they are not a match, the seller might be taking you for a fool.

7. Verify the technical description of the property in the title against the physical location of the real estate property you are buying. Make sure you are really buying the correct property.

8. Check the section on encumbrances of the title you got from the registry of deeds. Ensure that it is indeed free and clear to save yourself from future legal problems.

9. There are more items to verify depending on the title. This includes: checking if the person who signed the title is indeed the signing authority at the time the title was issued; checking if the serial number of the TCT falls under the range of serial numbers assigned to the particular registry of deeds.

Since there are no escrow and title companies here in the Philippines to verify authenticity of title, you really have to do your own due diligence and more importantly, deal with a knowledgable LAWYER  or a  Licensed Real Estate Broker as required by the recent RESA LAW.

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THE UNILATERAL DEED OF SALE

(TO COME OR NOT TO COME …)

    In case of a sale of real property where the buyer is not available or in some cases, is abroad, do you have to request them to come to  the Philippines to sign the deed of absolute sale? Or, is it a must that the buyer sign the deed of absolute sale?
Of course, you could have the buyer execute a Special Power of Attorney in favor of somebody who is here in the country for him or her to sign in behalf of the buyer. But note that although it can be done, one must also consider that it does take time and cost and effort on the part of the buyer to execute and have special power of attorney authenticated and sent here to the Philippines.
One option you may take, instead of requesting the buyer ti fly home to the Philippines, or to come just to sign the Deed of Absolute Sale, is to execute instead a sale document referred to as a unilateral deed of sale:.
In this case, only one party will sign, more specially, the seller, and the buyer need not sign the said sale document referred to as a “unilateral deed of sale”
In this case, only one party will sign, more specifically, the seller, and the buyer need not sign the said sale document and it will have the same validity as if signed by the buyer.
There are certain considerations however that you must remember in having the sale documented through a unilateral deed of sale, such as:
1. If there are no conditions as far as the sale is concerned,
then a unilateral deed of sale would be most useful.
2. If however, there are conditions to be fulfilled, particularly
on the side of the buyer, then it is not recommended to
use a unilateral deed of sale but the standard deed of sale
where the buyer will have to sign, or through thir attorney-
in-fact, in as much as there are obligations that will have
to be agreed upon and to be undertaken by the
buyer.(e.g. restrictions)
So, you may proceed with the sale of the property you are selling even if your buyer is abroad, or if in the country, cannot physically come and sign the deed of sale.
               DEED OF ABSOLUTE SALE
KNOW ALL MEN BY THESE PRESENTS:
THAT I, __________________________, of legal age, Filipino, married to _______________ and with address at _________________________ am the absolute and registered owners of a vacant parcel of land with improvements thereon situated at ______________, containing an area of ______ SQUARE METERS (_____ SQM.) covered by Transfer Certificate of Title No. ______ of the Registry of Deeds for __________, and more particularly described as follows:
TRANSFER CERTIFICATE OF TITLE NO. __
“A parcel of land (Lot 1, of the cons.-subd. Plan
Pcs-13-00123, xxxxxxxxxxxxxx x x x x x x containing
an area of ____ (____) SQ. METERS. xxxxxx.”THAT for and in consideration of the sum of ____ PESOS ( P________) Philippine Currency, receipt of which in full is hereby acknowledged, I hereby SELL, TRANSFER AND CONVEY to ___________________, of legal age, single, Filipino and with address at _____________________, his heirs, successors and assigns, the abovedescribed real property free from all liens and encumbrances.
Capital gains tax and documentary stamp tax shall be for the account of the VENDOR, while transfer tax and registration fees and other expenses necessary for the transfer of the title to the VENDEE shall be for the account of the VENDEE. Real estate taxes up to _______shall be for the account of the VENDOR.
IN WITNESS WHEREOF, I have hereunto signed this Deed of Absolute Sale at _____________ this ____________._________________
VENDORWith my marital consent:_____________________SIGNED IN THE PRESENCE OF :____________________                  ___________________(ACKNOWLEDGMENT PAGE) 

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SALE OF REAL ESTATE PROPERTIES

A. DEFINITION : By the Contract of Sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent.(Art. 1456, NCC).

B. KINDS OF SALE (Art. 1458, NCC)

1. Absolute or Unconditional
2. Conditional

C. CAPACITY TO BUY OR SELL REAL ESTATE PROPERTIES

1. As a rule, all persons, natural or judicial, who are authorized by the Constitution to own lands(Art XIV) and by the New Civil Code to obligate (Art. 1469), may buy or sell real estate.
2. Only Filipino citizens or corporation at least sixty (60%) per centum of the capital of which is owned by
Filipino citizens can acquire land in the Philippines.
3. A Filipina married to a foreigner retains her Philippine citizenship and, thus, also retains the right to
acquire land in the Philippines.
4. A Filipino citizen, who acquires citizenship of another country, can retain ownership of land acquired by him
prior to his change of citizenship
5. The husband and the wife cannot sell property to each other, except (Art. 1390, NCC):

a. when a separation of property has been agreed upon in their marriage settlement; or
b. when there has been a judicial separation of the property under Art. 134 of the Family Code.

6. [ FIDUCIARY RELATIONSHIP ] – Persons who cannot acquire by purchase because of fiduciary relationship

The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or
through the mediation of another:

1. GUARDIAN – the property of the person or persons who may be under his guardianship
2. AGENTS – the property whose administration or sale may have been entrusted to them, unless the consent
of the principal  has been given.
3. EXECUTORS and ADMINISTRATORS – the property of the estate under adminstration
4. PUBLIC OFFICERS and EMPLOYEES – the property of the State or of any subdivision thereof, or of any
government owned controlled corporation or institution, the administration of which has been entrusted to
them; this provision shall apply to judges and government experts who, in any manner whatsoever take part
in the sale
5. JUSTICES,  JUDGES, PROSECUTING ATTORNEYS, CLERK OF SUPERIOR AND INFERIOR COURTS, AND OTHER
OFFICERS  and EMPLOYEES CONNECTED with the administration of justice – the property whose jurisdiction or
territory they exercise their respective functions
6. ANY OTHERS disqualified by law. (Art. 1491, NCC)

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RULE IN CASE AREA IS DIFFERENT FROM THAT STATED IN THE CONTRACT (Art. 1539, 1540 and 1542, NCC)

1. If the sale is for a lump sum, there shall be no increase or decrease of the price, although there be a greater or lesser area than that stated in the contract.
2. If the sale be made with a statement of its area at the rate of a certain price per square meter, the VENDEE may:

a. If the area is bigger, choose to:

1. accept the area included in the contract and reject the excess; or
2. accept the whole area, but must pay for the excess area at the contract rate.

b. that he would not have bought the land had he known of its smaller area.

RULE ON WHO HAS BETTER RIGHT TO OWNERSHIP OF PROPERTY SOLD TO TWO OR MORE BUYERS (Art. 1544,NCC)

1. The buyer in good faith who first recorded sale in the Registry of Property
2. Should there be no inscription, then the buyer in good faith who was first in possession.
3. Should there be neither inscription nor possession, then the buyer in good faith who can present the oldest title.

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LAWS ON INSTALLMENT PAYMENTS AND THE MACEDA LAW

I. APPPLICABLE LAWS:

1. Republic Acts No. 6552
Realty Installment Buyer’s Protection Act
“MACEDA LAW”
Approved: August 26, 1972

2. Presidential Degree No. 957
Subdivision and Condominium Buyers Protective Degree
Approved : July 12, 1976

II. RIGHTS OF BUYER UNDER R.A. NO. 6552
(Otherwise known as Realty Installment Buyer’s Protection Act or MACEDA LAW)

REPUBLIC ACT NO. 6552
AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS. (Rep. Act No. 6552)

Section 1. This Act shall be known as the “Realty Installment Buyer Act.”

Section 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.

Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided,That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place 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 and upon full payment of the cash surrender value to the buyer.Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

 Section 4. 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.Section

5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.Section

6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price anytime without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.

Section 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void.

Section 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall be affected thereby.

Section 9. This Act shall take effect upon its approval.Approved: August 26, 1972

Approved August 26, 1972.

Cash Surrender Value (Refund) = Total Payments x Percentage (%age) Refund

II. PERTINENT PROVISIONS OF PD 957 ON INSTALLMENT PAYMENTS

SECTION 23. Non-Forfeiture of Payments.

– No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.

SECTION 24. Failure to pay installments

– The rights of the buyer in the event of this failure to pay the installments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552.

Where the transaction or contract was entered into prior to the effectivity of Republic Act. No. 6552 on August 26, 1972, the defaulting buyer shall entitled to the corresponding refund based on the installments paid after the effectivity of the law in the absence of any provision in the contract to the contrary.

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REAL ESTATE FINANCING & ECONOMICS

Real estate economics is the application of economic techniques to real estate markets. It tries to describe, explain, and predict patterns of prices, supply, and demand.

MULTIPLIER EFFECT OF REAL ESTATE

Multiplier effect simply means the effect of one aspect of the economy with the other economic activities.

An effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent. For example, if a corporation builds a factory, it will employ construction workers and their suppliers as well as those who work in the factory,. Indirectly, the new factory will stimulate employment in laundries, restaurants, and service industries in the factory vicinity. [dictionary.reference.com]

Real estate has been said to be one section with a big multiplier effect on the Philippine economy. It is said that for every Php 1 million invested in housing it is translated to Php 16.6 million of economic housing activity in the country. [ HUDCC ]

The housing or real sector provides and sets of a domino effect on other economic activities which can be referred to the “multiplier effect of the real estate”, such as, but not limited to the following:

  • Employment opportunities
  • Construction
  • Architecture
  • Cement
  • Steel
  • Wood
  • Paint
  • Financing
  • Furniture
  • Others

PRINCIPLE OF SUPPLY AND DEMAND VS. PRICE

Price is basically a result of the interplay of supply and demand of a certain product, such as real estate housing.

SELLER MARKET

In the case where there are more buyers than sellers, then it is considered a seller’s market as there are fewer real properties available vis-a-vis a higher demand for it. In this case, the movement of prices will tend to go up because of the hogher demand.

BUYERS MARKET

In a buyers’ market, there are many real properties avaoilable or more sellers than there would be a demand from buyers and is normally referred to as a “BUYERS MARKET” where the price of real estate has a tendency to go down in view of the excess in supply vs. the actual demand of the market.

REAL ESTATE FINANCING

Another element which effects the movement of real estate is the availability financing, both for the production side or the developers, and the demand side which is the buyer market. Real estate financing involves generally the acquisition of property through loan financing source, which may be sourced from the following :

  1. Borrowed Funds from Relatives/Friends
  2. Bank Financing
  3. Lending Companies
  4. Assumption of Loan/Mortgages
  5. Government Financing
  6. Other Sources [ In-house Financing, etc. ]

BASIC COMPUTATION

A very important formula for the computation involving real estate financing is :

Monthly Amortization = Principal to be Financed x Amortization Factor

where,

Amortization Factor = Factor based on the no. of years payment and interest rate

or,

MA = P x Factor

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