Some notable features for Law on Real Estate Trading

LEGAL UPDATES

Some notable features for Law on Real Estate Trading

Currently, to complete the draft Decree before submitting it to the Government for promulgation, the Ministry of Construction has requested businesses and organizations to contribute comments on the draft Decree stipulating some provisions of the Law on Real Estate Trading. If this draft is approved, this new Decree will have some important contents in the field of real estate business as follows: 

a. Conditions of organizations and individuals conducting real estate trading: 

Supplementary business conditions for organizations and individuals:

  • Must disclose information about the enterprise, including name, head office address, legal representative and contact phone number and information in the Portal of the enterprise’s website, the Portal of the housing authority’s web of the province where the enterprise registers its business and where the real estate is put into business; 
  • Only conducting real estate trading when fully meets the conditions specified in Article 9, Article 55 of the Law on Real Estate Trading. 

Supplementary business conditions for real estate project investors:

  • Owners’ capital is not less than 20% of the total investment capital for projects with a land-use scale of less than 20ha, and not less than 15% of the total investment capital for projects with a land-use scale of 20ha or more. 
  • The determination of owners’ capital is based on the results of the most recent audited financial statements or the results of the independent audit reports of the enterprise (made in the year of business investment or the previous year adjacent to the year participating in real estate investment and business). 

b. Supplementing conditions of organizations, households and individuals conducting real estate trading on a small scale, not regularly: 

Small-scale real estate business is defined as the sale, lease, lease-purchase of houses, construction works, transfer, lease or sublease of land use rights below the land area, area floors for construction of houses and construction works shall be prescribed by the provincial-level People’s Committees. 

Irregular real estate trading includes the following cases: 

  • Organize the sale of houses, construction works, transfer of land use rights due to bankruptcy, dissolution or division following the laws; 
  • Organize the sale, transfer, lease, lease-purchase of the state-owned real estate when permitted by competent state authorities under the laws; 
  • Credit institutions, foreign bank branches, asset management companies of the credit institutions (AMC), asset management companies of Vietnamese credit institutions (VAMC) to sell houses, construction works, transfer of land use rights, transfer of projects under guarantee or mortgage for debt recovery in accordance with the laws; 
  • Organizations, households and individuals selling houses, construction works, transferring land-use rights under decisions of the Courts or the competent state authorities when settling disputes, complaints and denunciations;

In (i) small-scale real estate business and (ii) irregular real estate trading, the general conditions are not required for real estate business but must declare and pay tax according to regulations under the laws. 

c. Some other regulations:

  • The contract in real estate trading must be made according to the prescribed form. Based on these forms, the parties may agree to add other contents to suit each case but must not be contrary to the terms, clauses, and contents already agreed upon in the form, contrary to social ethics and the provisions of the laws. 
  • Suppose the parties carry out the procedures for signing a contract for purchase and sale or lease-purchase of a house or construction work. However, by the effective date of this Decree, the parties have not yet signed the contract that they must sign according to the form as specified. Enterprises and cooperatives engaged in real estate trading are responsible for fully supplementing the conditions within 12 months from the effective date of this Decree. 
  • In case a Vietnamese citizen has been granted a citizen ID with a chip, a personal identification number according to the provisions of the Law on Citizen Identification and the national population database, investment registration database, business registration database is connected and operated. Therefore, they may use the database instead of documents related to personal identity (household registration, people’s identity card, passport, and other personal identification papers) when carrying out real estate trading and housing procedures following the Law on Real Estate Trading and the Law on Housing.

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This legal update is for general information only and is not a substitute for legal advice.