Some issues to note about contracts for residential house lease

Contract for residential house lease (“Contract“) is a popular type of contract for property lease, signed between the Lessee and the Lessor, whereby, the Lessor delivers the house to the Lessee for use for a certain period, the Lessee must pay rent (along with some other costs such as electricity, water fees, sanitary fee,… depending on the agreement of the parties. When entering into and performing the Contract, the parties should pay attention to several following issues.

1. Lease term, rent, form of rent payment, form of contract

According to the law, the lease term, rent and form of rent payment shall be agreed upon by the parties. 

• Regarding the lease term: The parties can agree on a specific term such as 01 year, 05 years or 10 years, depending on their needs; or an indefinite term. For indefinite-term contracts, when the Lessor wishes to terminate the contract, the Lessor must notify the Lessee at least 90 days before the time of termination.
• Regarding rent: Except for some special cases where the State provides for housing rent, the Lessor and the Lessee are free to negotiate the rent. To avoid disputes that may arise, the parties should clearly agree in the Contract whether the rental price includes costs such as electricity, water, sanitary fees, management fees, parking fees, etc. or not.
• Regarding the form of rent payment: The parties can agree on the form of paying rent periodically (monthly, quarterly, annually …) or pay once for the entire lease term.
• Form of contract: The contract must be made in writing and include the contents specified in Article 121 of the Law on Housing 2014. It is not required by Vietnamese laws to notarize and certify the Contract, therefore, parties do not have to carry out this procedure.

2. Termination of a contract for residential house lease

The Contract may be terminated in one of the following cases:

(i) The lease term specified in the Contract has expired. 

(ii) The two parties agree to terminate the Contract. 

(iii) The leased residential house ceases to exist.  

(iv) The Lessee dies or is declared missing by a court and there is no co-habitant living in the house. 

(v) The leased residential house has been seriously damaged, is in danger of collapse, or is within a zone subject to a decision on land resumption or residential housing clearance, or to a decision on demolition of a competent State agency; [or] the leased residential house is subject to a compulsory acquisition or requisition by the State for use for other purposes. 

(vi) The Lessor unilaterally terminates the Contract when one of the following cases occurs: 

• The Lessee fails to pay the agreed housing rent for 03 months or more without a legitimate reason. 

• The Lessee fails to use the residential house for the correct purpose agreed in the Contract. 

• The Lessee at its own will, carries out alteration, extension, renovation or demolition of the leased residential house. 

• The Lessee converts, lends or subleases the leased residential house without the consent of the Lessor. 

• The Lessee causes disturbance of order, or insanitation to the environment or serious interference with daily activities of people in the vicinity and when the Lessor, the head of the resident group in an urban area or the head of the village, hamlet, mountainous village or highland village has made minutes for the third time but the Lessee still fails to remedy the breach. 

• The Lessor renovates the house (with the consent of the Lessee), and then offers to increase the rent but the Lessee does not agree to the new rent. 

(vii) The Lessee unilaterally terminates the Contract when one of the following cases occurs: 

• The Lessor does not repair the residential house when there is severe damage. 

• The Lessor unreasonably increases the rent or increases the rent without notifying the Lessee in advance as agreed. 

• The right to use housing is restricted due to the interests of third persons.

3. Selling residential houses during the lease term

It is allowable by laws for the Lessor to sell the residential house while it is under the lease term under the Contract, but the Lessor must comply with certain conditions as follows:

• The Lessor shall notify the Lessee in writing of the sale and the conditions of the sale of the residential house. 

• The Lessee is entitled to priority purchase if the rent has been paid in full to the Lessor up to the time of notification of the sale of the residential house, except in the case of houses under common ownership. 

• Where the Lessee does not purchase within a time limit of thirty (30) days from the date of receipt of the notice, the owner may sell such residential house to other persons, unless the parties agree otherwise on the time limit.

• In case the Lessor sells the residential houses to another person before the expiry of the lease term, the Lessee may continue to lease the house until the expiry of the term of the contract; the new owner of the residential house shall be responsible for continuing to perform the signed contract for residentialhouse lease, unless otherwise agreed by the parties. 

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