What are procedures for guarantee of off-the-plan houses in Vietnam according to Circular 61/2024?

What are regulations on guarantee of off-the-plan houses in Vietnam according to Circular 61/2024?

On April 1, 2025, the Governor of the State Bank of Vietnam issued Circular 61/2024/TT-NHNN regulating bank guarantees, effective from April 1, 2025.

Clause 4, Article 3 of Circular 61/2024/TT-NHNN explains the terminology of guarantee of off-the-plan houses as follows:

Article 3. Explanation of Terminology

In this Circular, the following terms are understood as follows:

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4. Guarantee in sales, leasing purchases of off-the-plan houses (hereinafter referred to as guarantee of off-the-plan houses) is a bank guarantee, whereby the guarantor, a commercial bank, or a foreign bank branch, commits to the guarantee recipient, the buyer, lease buyer (hereinafter referred to as the buyer), that it will fulfill the financial obligations on behalf of the guaranteed party, the investor of the housing project to be formed in the future (hereinafter referred to as the investor) when the committed deadline for the delivery and receipt of the housing arrives but the investor fails to deliver the housing to the buyer and does not fulfill or fully fulfill the financial obligations according to the signed purchase or lease purchase contract; the investor must obligatorily take on the debt and repay the guarantor according to the agreement. In the case the commercial bank or foreign bank branch guarantees based on a counter-guarantee, the counter-guarantor commits to the commercial bank or foreign bank branch that they will fulfill the financial obligations to the commercial bank or foreign bank branch when it has to fulfill the financial obligations on behalf of the investor; the investor must obligatorily take on the debt and repay the counter-guarantor according to the agreement.

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Thus, according to the above regulation, a guarantee of off-the-plan house is a bank guarantee in which a commercial bank or a foreign bank branch commits to fulfilling financial obligations on behalf of the housing project investor if the investor fails to deliver the housing on time or does not fully perform financial obligations according to the purchase or lease purchase contract. The investor is responsible for the debt and repayment to the guarantor according to the agreement.

What are procedures for guarantee of off-the-plan houses in Vietnam according to Circular 61/2024?

According to the provisions of Article 13 of Circular 61/2024/TT-NHNN on procedures for guarantee of off-the-plan houses in Vietnam:

Article 13. Guarantee of off-the-plan houses

1. The commercial bank, foreign bank branch considers and decides to grant a guarantee to the investor when:

a) The investor meets all the requirements stipulated in Article 11 of this Circular (except for cases where the commercial bank, foreign bank branch guarantees the investor based on a counter-guarantee);

b) The investor has received a document from the provincial real estate business regulatory authority confirming that the housing is eligible for sale or lease purchase.

2. Procedure for implementing guarantee of off-the-plan houses:

a) Based on the proposal of the investor or the counter-guarantor, the commercial bank, foreign bank branch reviews, assesses, and decides to grant a guarantee to the investor;

b) The guarantor and the investor enter into a guarantee provision agreement in accordance with the provisions of Article 26 of the Real Estate Business Law and the provisions of Clause 12, Article 3, Article 15 of this Circular;

c) Based on the guarantee provision agreement, the guarantor issues a declaration of commitment and a guarantee letter to the investor for the investor to send a copy to the buyer when signing the purchase or lease purchase contract;

d) After signing the purchase or lease purchase contract, which includes the investor's financial obligations, the investor sends the purchase or lease purchase contract to the guarantor to request the issuance of a guarantee letter to the buyer;

e) The guarantor, based on the purchase or lease purchase contract, the guarantee provision agreement, and the declaration of commitment, issues a guarantee letter and sends it to the investor to provide the guarantee letter to the buyer.

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Thus, procedures for implementing guarantee of off-the-plan houses are as follows:

- The bank reviews and decides to grant a guarantee based on the investor's proposal;

- The guarantor and investor sign a guarantee provision agreement according to legal regulations;

- Issuance of a declaration of commitment and guarantee letter to the investor;

- Subsequently, based on the purchase or lease purchase contract, the bank issues a guarantee letter for the buyer.

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