How much is the guarantee sum for an off-plan housing project in Vietnam? What are the procedures for issuing off-plan housing guarantee in Vietnam?
What is an off-plan housing guarantee in Vietnam?
Off-the-plan house means any house which is under construction and has not been permitted to put into operation according to the provisions of Clause 19, Article 3 of the 2014 Law on Housing of Vietnam.
Pursuant to the provisions of Clause 4, Article 3 of Circular No. 11/2022/TT-NHNN stipulating the definition of “off-plan housing guarantee” as follows:
Definitions
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4. “guarantee for sale or lease-purchase of off-plan housing” (hereinafter referred to as “off-plan housing guarantee”) means a type of bank guarantee whereby the guarantor that is a commercial bank undertakes to act on behalf of the obligor that is the investor to fulfill their financial obligations to the obligee that is the buyer or the tenant-buyer (hereinafter referred to as the buyer) in the event the investor fails to transfer the house to the buyer on the agreed-upon schedule and fails to fulfill or insufficiently fulfills their financial obligations under the signed purchase contract or lease-purchase contract; the investor shall have the obligation to repay the debt to the guarantor under the signed agreement. In case the commercial bank enters into a counter-guarantee, the counter-guarantor shall fulfill financial obligations to the commercial bank when it is obliged to fulfill financial obligations on behalf of the investor; the investor shall have the obligation to repay the debt to the counter-guarantor under the signed agreement.
Clause 13, Article 3 of Circular No. 11/2022/TT-NHNN also defines that “contract for off-plan housing guarantee" means a guarantee issuance agreement made between a commercial bank and an investor as well as other related parties (if any) to state that the commercial bank agrees to act as the guarantor of the investor during the investor’s selling or lease purchase of off-plan housing.
Thus, based on the above provisions, the investor is the obligor of the credit institution.
How much is the guarantee sum for an off-plan housing project in Vietnam? What are the procedures for issuing off-plan housing guarantee in Vietnam? (Image from the Internet)
How much is the guarantee sum for an off-plan housing project?
According to the provisions of Clause 7 Article 13 of Circular No. 11/2022/TT-NHNN on off-plan housing guarantee as follows:
Off-plan housing guarantee
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7. The maximum guarantee sum for an off-plan housing project shall not exceed the sum of amounts which the investor is allowed to receive in advance from the buyer in accordance with regulations in Article 57 of the Law on Real Estate Business and any other amounts paid under the purchase contract or lease-purchase contract.
Thus, the sum that the investor is allowed to receive in advance is specified in Clause 1, Article 57 of the 2014 Law on Real Estate Trading of Vietnam as follows:
Payment for off-the-plan real estate sale or lease purchase
1. The off-the-plan real estate sale or lease purchase shall be paid by installments, the initial installment do not exceed 30% of the agreement value, the next installments shall be conformable with real estate construction progress provided that total installment does not exceed 70% of the agreement value if the building has been not transferred to clients; if the seller or the lessor is a foreign-invested enterprise, the total installment does not exceed 50% of the agreement value.
If the buyer or the lessee has been not granted the Certificate of land, ownership of land and property on land, the seller or the lessor shall not collect payment not exceeding 95% of the agreement value from the buyer or the lessee; the remaining value shall be paid when the buyer or the lessee is granted the Certificate of land, ownership of land and property on land by competent agencies.
2. The investor must use the option fee given by clients for proper purpose as committed.
What are the procedures for issuing off-plan housing guarantee in Vietnam?
Pursuant to the provisions of Clause 4, Article 13 of Circular No. 11/2022/TT-NHNN on the procedures for issuing off-plan housing guarantee as follows:
Off-plan housing guarantee
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4. Procedures for issuing off-plan housing guarantee:
a) Based on the request of the investor or the counter-guarantor, the commercial bank shall consider, appraise and decide to issue guarantee to the investor;
b) The commercial bank and the investor shall conclude a contract for off-plan housing guarantee in accordance with the provisions of Article 56 of the Law on Real Estate Business and Clause 13 Article 3, Article 15 of this Circular;
c) The investor shall send the signed purchase contract or lease-purchase contract in which the investor's financial obligations are specified to the commercial bank and request it to issue the letter of guarantee to the buyer;
d) The commercial bank shall, based on the received purchase contract or lease-purchase contract and the contract for off-plan housing guarantee, issue the letter of guarantee and send it to each buyer or to the investor that shall then provide it for the buyer as agreed.
Circular No. 11/2022/TT-NHNN, issued by the State Bank of Vietnam, takes effect from April 1, 2023.
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