Homebuyers are often advised to save up for a home before purchasing a real estate property. This is because they are usually required to pay upfront costs – such as the down payment – in the beginning of their homebuying purchase.

Here are four things every smart homebuyers should know before putting a down payment for their dream home.

What is a down payment?

A down payment (or equity) forms part of the total selling price of the home you are buying. It is the amount that you pay upfront to acquire a real estate property and is usually combined with a housing loan to pay the entire contract price.

How much do you need to pay?

Your required down payment depends on the agreement between the seller (property developer or homeowner) and the homebuyer. The typical down payment is 20% of the total purchase price of the property.

For those who can’t afford to pay the spot cash down payment, you can negotiate for an agreeable payment terms. Many developers now allow homebuyers to purchase properties by spreading out the downpayment within a particular time frame, but you would need to pay the installments in Postdated Checks (PDCs).

Don’t have enough for a downpayment yet? Read these seven ways how overspenders save money.

When do you pay the downpayment?

A homebuyer will start paying the downpayment depending on when he or she has paid the reservation fee for the unit. After the reservation fee has been processed, you will be advised with the specific due dates for your succeeding monthly payments.

Can I get a refund on my preselling condo?

This question is perhaps among the most popular among homebuyers, especially with first-timers.

Although many Filipinos aspire, and ultimately get to purchase a condo or a house and lot for sale, there are some forces or situations beyond our control that could hinder one from fulfilling his dream or buying a home. This circumstance can either be failure of developer to complete building the project, your permanent lack of funds to pay your monthly amortizations, among other things.

However, it entirely depends on the terms of your contract to sell or any written instrument of agreement and existing laws whether you can qualify for a refund or not.

To illustrate, here are four situations when a homebuyer can qualify for a refund. Because not all real estate transactions are similar, it pays to consult with a lawyer for your next course of action if you do decide on cancelling your property purchase:

Scenario 1: You bought a real estate property and have been paying at least two years’ worth of down payment or more, but unforeseen circumstances prevent you with pushing through with the sale.

Why you qualify for a refund: Under the Maceda Law (Republic Act No. 6552) or the “Realty Installment Buyer Protection Act,” homebuyers who default on their payments are qualified for a 50% refund.

In the event that you have been paying for less than two years, you are qualified for a refund depending on your agreement with the seller. Otherwise, the best alternative is to sell your rights or assign the payment to another person so you can still get your money back.

Scenario 2: When a condominium or subdivision developer cannot deliver on promised time or fails to complete the project, homebuyers are entitled to a full refund if they decided not to push through with the purchase.

Why you are qualified for a refund: According to an interview with HLURB Commissioner Atty. Antonio Bernardo with a local news website, a homebuyer can demand to get their money back because as stated in Section 23 of the Presidential Decree 957 or the “Subdivision and Condominium Buyers protective Decree.”

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, desist 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 interest but excluding delinquency interest, with interest thereon at the legal rate.

Scenario 3: If the contract is voluntarily canceled by the seller, the law states that the seller should refund the cash surrender value of the payments made by the buyer on the property.

Why you qualify for a refund: The Section 3 of the Maceda Laaw (RA No. 6552), stresses that a homebuyer has a right for a refund so long as he or she has paid at least two years’ worth of down payment.

Section 3. (b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of installments, an additional five per cent every year but not to exceed ninety percent of the total payments made; provided, that the actual 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.

Scenario 4: A buyer who bought a lot from a subdivision developer, who sold lots without license to sell, is entitled for a refund.

Why you qualify for a refund: Although the sale is still valid, the owner is still accountable for unauthorized selling and must pay the penalties. Homebuyers can annul the contract and demand for a refund. If the developer failed to address this concern, the homebuyer may file a complaint with the Housing Land Use and Regulatory Board (HLURB).

Final Words of Advice

Before purchasing a condominium or house and lot, make sure you read and understood the provisions on your contract. Practicing due diligence is your best protection so that in the event of non completion of project by developer or failure on your part to continue payment, you know what you actions to take.

Ensuring that you and the developer are in the same page before you finalize a deal will help avoid problems (miscommunication, misunderstanding, etc.) in the future since everything is in black and white. Keep in mind that the seller is also entrusting with you their property and allowing you to purchase it in installment in good faith.

Have more questions about buying a home? Read on the Top 10 Common Questions Homebuyers ask about Philippine real estate laws.

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  • dsk71

    Can you tell me a name of a broker as well as the documents required to resell a unit in metro manila. If you are a licenced broker able to resell a unit in areas such as the fort and in baygarden, you can send me an official email to doriankhoury71@gmail.com
    thanks and regards,

    • Rizza Estoconing Sta Ana

      Hi @dsk71:disqus! I forwarded your email to our Sales team. They will contact you shortly. On the other hand, can you also send an email to them at sales@zipmatch.com. Good luck!

  • Tamer Lane

    Can you please cite the laws or jurisprudence upon which your reason why one is qualified for a refund under Scenario 4 is anchored on? Thank you.

    • Rizza Estoconing Sta Ana

      Hi @tamer_lane:disqus! I’m not sure what you mean, but this is under the Maceda Law or the Realty Installment Buyer Protection Act (Republic Act Number 6552). I don’t have any top-of-mind cases to back this, but feel free to ask or clarify your inquiry.

      Thanks! :D

  • Rizza Estoconing Sta Ana

    Hi @maryjanelacapagulto:disqus! I believe that the “equity” you are pertaining to is the downpayment that was spread between one year payment, right?

    Did you also mean that the developer cancelled the contract after the loan was denied? How did they try to contact you? Was there are postal notice about this?

  • Rizza Estoconing Sta Ana

    Hi Mary Jane Lacap Agulto. I’m sorry to hear about this. May batas naman pong magproprotekta sa mga homebuyers, but depende pa rin po sa details ng inyong situation kung pwede nyo pa rin po makuha yung downpayment na binayaran nyo sa developer. Meaning titignan pa rin ng batas kung anong nangyari after you made the downpayment up to the point na ibinigay na nila yung property sa panibagong buyer.

    Under the Maceda law po, inooverride ng batas ang any provisions, including the nonrefundable policy, na nakasaad sa contract (Section 7, Republic Act 6552). Ngayon po, yung batas only recognizes potential refund for installment payments made two years and above. Pag less than two years po, pwede naman tignan kung finollow po ba ni developer yung batas in terms of providing you 60 days grace period to settle the amortization payments due.

    Kung meron pong pagkukulang si developer in informing you about the contract cancellation, you can ask them to honor the contract without any increase in the contract price and find you a similar unit. Otherwise, you can raise this issue with the HLURB.

    Again po, let’s consider din po yung side ng developer. If they exhausted all means of contacting you based on the contact information you have provided, then our next best course po is to negotiate to reinstate the contract, or agree with the cancellation but following their policy regarding contract cancellation.

    Hope this helps po. Kung kayo po ay naguguluhan still, pwede naman po kayo sumangguni sa HLURB for advice:

    ADJUDICATION Head Atty. Marino Bernardo M. Torres (02) 926-1065 ncradjudication@hlurb.gov.ph

  • Lee

    Clarify ko lng po about sa refund na below 2 years ka pa lang nagbabayad ng installments it will depend na sa developer’s policy kung pwede pa ung refund or not. Pano kung no refund policy ung developer do I still have any chance of getting my money back? I have not reached the 2 years of payment yet and due to emergencies hindi ko n kayang bayaran ang monthly amortization and im hoping na pwede ko pa makuha pinaghirapan kong pera.

  • yoyo

    Hi! Just read your write-up. When is the buyer entitled to demand for a Contract to Sell? Buyer paid for the reservation and will issue post-dated checks for the downpayment within the month (like the illustration in “How much do you need to pay” part of the write-up). Thanks!

    • Hi yoyo! A Contract to Sell (CTS) is typically issued once the homebuyer has paid a cash deposit and has agreed to the terms and conditions of the sale. For more information on CTS, you can read this article http://www.zipmatch.com/blog/contract-to-sell-explanation Hope this helps!

      • yoyo

        Yup, it did, though I have a few more clarifications on it. Thanks Zip!

  • Joann

    Hi! Ask ko lang sana kung entitled pa rin ba sa refund under Maceda Law khit sinasabi ng developer na s CTS daw na pinirmahan namin eh nkalagay n pag ncancel ung contract inde kami entitled sa refund? 30 months n ung nhulog namin na downpayment

  • Sheryl

    Hi Zip, what about if no date of completion of the project is indicated on our CTS, but then I have paid 20%DP already in 24 months, and yet no building or construction of H&L is being done till present. Is this a valid enough to cancel to contract and demand full payment? Or it is only 50% really? Finally, the developer mentions they will pay me back the 50% in partial or until some buyer is available, can I demand for a one-time 50% payment? Hoping for enlightenment. Thanks

  • meg

    hi, I understand I can have a refund based on what ive read. Just want to make sure though :)
    We completed our down payment (2 years) last sept 2015 and the requirements they asked. So we are expecting a turn over of the house and lot last year or according to them right after we paid our dp. So imagine our disappointment when we visited the house last November 2015 and it is not finished yet. Ive been reaching them since last november first week. they said they will call me or text me again for my concern.. Now, its 2016 I called them again.. again they said they will call me back. :( Can this be a case for a full refund? I emailed them today that I am going to refund my dp since they didnt complete the said unit in time. What’s my next step? do i need an atty for this?

  • nica

    Hi good morning paano naman po ms joaane ang case ko. meron ako contract to purchase last april 2011 pa. actually pwd na kami mag move in during that time kaso di kami naka move in kasi wala pa elctrical at water but i already paid na. kaso di naman talaga namin in need lumipat kasi malayo sa cavite my house naman kami sa manila so d kami nag move in. Nagbabayad ako ng monthly kasi naka contract naman. kaso last year May 2016 di na bumalik ng trabaho asawa ko so wala kami binayad. So lumaki ang babayaran namin. My letter ako natanggap na icancel na at iwanan ang house although di nila alam na di kami naka move in. Sa ngayon gusto ko sana cancel nlang at kung pwd ma refund ang binayad ko is it possible? kesa sa magbayad ako at wala na din kami pangbayad dahil we are facing financial crisis. thanks po

  • Nora Piga Ford

    Ask ko lang why my agent ask me deposit sa account niya down payment ko.

  • Dennis Sangalang

    Hi came across this article on line. Would like to learn more about my case. I finished paying for my 22-month down payment for a h&l but developer is unable to finish project at the end of my equity (20%). Developer requires me to pay for the next 8 months while the property is being constructed. I have completed and submitted all the requirements for hdmf loan but snce the property is not yet done my application is put on hold. I have not paid for the 8 monthly payments yet. Pls enlghten.

  • Cris Niez

    Hi, ask ko lang po about my case. everything went well naman po sa payment for 7 months (up to date). Di pa po namin nalilipatan yung property although pwede naman kasi napalagyan ko na ng kisame, may tubig and kuryente na ako na pinakabit. However I and my wife just decided to voluntarily discontinue or cancel our housing loan (rent to own) in Tanza, Cavite since nakatira naman kami sa parents ko. Sino po ba dapat pupuntahan namin to cancel our housing loan, developer po ba or pagibig fund to cancel the contract? May refund po ba kaming makukuha if ever? Pwede ko po ba ipasa sa ibang pangalan yung contract?

  • Lotis Agravante

    Hi po. Please advice me namn po sa problema ko din sa house and lot sa camella homes po sa tanza, cavite. Fully paid na po ang downpayment ko sa knila ng 155k in cash payment po. Hindi po ako nag installment sa kanila though ang policy is 18mos to pay ang downpayment. Nagbayad po kami ng asawa ko ng cash in full po sa office nila sa starmall Alabang 2014. So ngaun po, medyo struggle na po kami sa work namin dito sa abroad at hindi na po namin kayang bayaran pa kaya we decided to quit na lang ang house loan. Please take note po, hindi pa rin po approve ang housing loan namin in any loan committee po like bank financing. 4 years past na po since na nabayaran namin ng cash ang downpayment na po na yun. So ngaun po gusto na lang po namin i-refund and binayad namin pero non refundable daw po sabi ng camella. So ang tanong ko po is ganito; entitled po ba kami sa refund although hindi kami nag installment? Binayaran po namin yun ng cash. Pinasok po nila sa system nila in installment basis kya naging 15months po ang payment namin which is less than 2 years. Pero ang sabi ko cash namin un binayaran. Please help me naman po sa advice. Thank you..

  • Pepz

    I just recently paid a full downpayment for the preselling house and lot last november 2018 and I have not yet sign any contract to sell then here comes january I bump into some kind of problem concerning my employment because I am a OFW and I just decided to cancel it fearing that I may not able to pay in the future. My question is, may I able to get my full downpayment back? Or even just 50% of it? Any advice ma’am/sir will do. Thank you so much! More power and God bless!