Vietnam: Under the Law on Real Estate Business 2023, what are the responsibilities of investors of real estate projects?
Under the Law on Real Estate Business 2023, what are the responsibilities of investors of real estate projects in Vietnam?
Under the provisions of Article 17 of the Law on Real Estate Business 2023, investors of real estate projects in Vietnam have the following responsibilities:
- Carry out construction, management and operation of real estate projects in accordance with regulations of law; fulfill all obligations of a project investor, formulate, appraise, approve and implement projects in accordance with regulations of the Construction Law and relevant laws.
- Ensure financial sources for implementing projects according to approved schedule.
- Within 50 days from the date on which the housing is handed over to the buyer or tenant-buyer has fully paid the agreed-upon lease purchase price, the investor shall follow procedures with a competent authority for issuance of a certificate of LURs and ownership of property on land, as prescribed by the Land Law, to the buyer or tenant-buyer, unless the buyer or the tenant-buyer voluntarily completes such procedures.
- Project investors shall not authorize other organizations or individuals to enter into contracts for deposit, sale and purchase, transfer or lease purchase of housing, buildings or their floor areas, or rights to use land that already has infrastructure within real estate projects.
- Comply with regulations of law on investment, construction, land use and sale or lease purchase of housing, buildings or their floor areas in order to ensure that buyers or tenant-buyers will be issued by competent authorities with certificates of LURs and ownership of property on land in accordance with regulations of the Land Law in respect of housing, buildings or their floor areas they buy or obtain through lease purchase from project investors.
- Build housing, buildings and technical and social infrastructure facilities within projects according to approved detailed plannings/designs, building permits, or written approval of investment guidelines given by competent authorities; comply with national technical regulations for construction.
- Carry out handover of housing in accordance with regulations of the Housing Law.
- Complete external parts of the housing in case the project investor hands over roughhousing which is not apartments of an apartment building to buyers or tenant-buyers.
- Fulfill other responsibilities of the project investor as prescribed by law.
What are the eligibility requirements satisfied by organizations to engage in real estate business in Vietnam?
Under the provisions of Article 9 of the Law on Real Estate Business 2023, the eligibility requirements satisfied by organizations to engage in real estate business in Vietnam are specified as follows:
(1) Any organization or individual that wishes to engage in real estate business must establish an enterprise, or cooperative or cooperative union, in accordance with the Law on Enterprises or the Law on Cooperatives respectively, whose business lines include real estate business (hereinafter referred to as “real estate enterprise”), except the following case:
An organization or individual that sells housing, building or its floor area for non-commercial purposes or conducts sale, lease or lease purchase of housing, building or its floor area of an ultra-small scale shall not be subject to the provisions of this Law but must declare and pay taxes in accordance with regulations of law. The organization or individual that sells or offers lease purchase of housing, building or its floor area must also follow certification or notarization procedures as prescribed in clause 5 Article 44 of Law on Real Estate Business 2023.
- A real estate enterprise shall be required to meet the following requirements:
+ It is not subject to any court’s judgment or decision, or a competent authority’s decision, on prohibition or suspension of real estate business;
+ It must maintain safe ratios of outstanding credit balance and outstanding bonds to the owner's equity;
+ The real estate enterprise approving a real estate project must ensure that its owner's equity shall not be lower than 20% of total investment of that project, if the area of land used is less than 20 ha, or 15% of total investment of that project, if the area of land used is 20 ha or higher, and that it is capable of raising capital for implementing that project. If a real estate enterprise implements several real estate projects at the same time, its owner's equity must be sufficient to fund all of such projects at the abovementioned percentage.
What does the real estate business refer to?
Under the provisions of Clause 1, Article 3 of the Law on Real Estate Business 2023, “real estate business” refers to the practice of funding construction of housing or buildings or acquisition of rights to use land that already has infrastructure within real estate projects for sale or transfer; leasing, subleasing or offering lease purchase of housing or buildings; leasing or subleasing rights to use land that already has infrastructure within real estate projects; transfer real estate projects; and/or providing real estate business services for earning profits.
Law on Real Estate Business 2023 will come into force from January 1, 2025.
LawNet