Important considerations for future condotel under the new real estate business law

1. Definition   

The term “Condotel” is a blend of two English words: “condominium” and “hotel”. It refers to a condominium-style hotel. In Vietnam, Condotels are commonly known by various names, such as tourism apartments, tourism villas, or tourism real estate…  

Before the Law on Real Estate Business 2023 (“LREB 2023”) was enacted and took effect, no legal document had defined the term “Condotel”. Under Article 5.2 of the LREB 2023, a Condotel is defined as a construction work designed for tourism and accommodation purposes, or a mixed-use construction work. This includes two categories: Ready-built construction works and future construction works. Within the scope of this article, the author will address several key considerations for future Condotel. 

2. Entities entitled to purchase, lease, and lease-purchase future Condotel 

Under Article 23.2(b) and Article 15 of the LREB 2023, the following entities are entitled to purchase, lease-purchase, and lease future Condotel:  

• Domestic organizations and individuals; 

• Overseas Vietnamese (those who are not Vietnamese citizens may purchase, lease, and lease-purchase future Condotel for the designated purposes); 

• Foreign-invested economic organizations. 

Meanwhile, foreign organizations and individuals are not allowed to purchase, lease-purchase future Condotel but are only entitled to lease them. Although Condotel attracts significant attention from foreign investors, these entities cannot own Condotels but can only utilize them in accordance with their designated purpose through leasing or subleasing. Accordingly, if foreign investors wish to purchase or lease-purchase Condotel, they may do so by investing capital to establish a foreign-invested economic organization. 

3. Conditions for future Condotel business 

Under Article 24 of the LREB 2023, before being put for business, future Condotel must meet the following conditions: 

• Being commenced under the construction law.  

• Being accompanied by one of the following papers on land use rights: 

• • Decision on land allocation;  

• • Decision on land lease and contract on lease of land use rights under the land law; 

• • Decision on permit land repurposing;  

• • Certificate of land use rights;  

• • Certificate of land use rights and ownership of houses and other land attached assets;  

• • Other certificates concerning land use rights and ownership of land attached assets under the land law. 

• Being accompanied by the construction permit of construction works and dossier of application for the construction permit, in case the construction permit is required under the construction law;  

• Being accompanied by the Notice of construction commencement of construction works, and design documents of the construction works, in case the construction permit is not required under the construction law; 

• Being accompanied by documents on acceptance testing of the construction completion of technical infrastructure under the construction law corresponding to the project progress; documents on acceptance testing of the construction completion of the foundations under the construction law, for buildings used for multiple purposes. 

• Must belong to real estate projects that have been approved by competent state authorities and the approved projects must state the purpose of investment in the construction of construction works for sale or lease-purchase. 

• Not being involved in disputes over land use rights associated with construction works, or disputes over ownership of construction works put for business that are accepted for resolution by competent authorities; in case of a dispute, such dispute must have been resolved by a competent authority under a legally effective judgment, decision or ruling;  

• Not being subject to distraint for execution of a judgment;  

• Not falling into cases banned from transaction by law;  

• Not falling into cases of being suspended or temporarily suspended from transaction under the law; 

• The project must meet the requirements under in Article 11 of the LREB 2023; 

• The project owner must have fulfilled its land-related financial obligations toward the State, including land use levy, land rental and land-related taxes, charges and fees (if any) according to regulations for the land areas attached to construction works put for business; 

• Information about real estate and real estate projects to be put for business has been disclosed. 

Overall, the legal framework governing future real estate has become significantly more stringent compared to previous periods. This aims to safeguard buyers’ rights, thereby fostering a safer and more sustainable real estate market. 

4. Standard form contracts 

• For purchase or lease-purchase: the parties shall follow the template provided in Appendix III of Decree No. 96/2024/ND-CP. 

• For lease: the parties shall follow the template provided in Appendix IV of Decree No. 96/2024/ND-CP. 

See more:

1/ Official regulations on granting certificates of ownership in Condotel construction

2/ Scope of real estate business for foreign-invested companies

3/ Challenges in establishing foreign-invested real estate companies in Vietnam

4/ Conditions and procedures for establishing a real estate exchange

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