Can commercial banks guarantee on off-the-plan building sale or lease purchase in Vietnam?
Can commercial banks guarantee on off-the-plan building sale or lease purchase in Vietnam? What are regulations on payment for off-the-plan real estate sale or lease purchase in Vietnam?
I bought a house, the other side informed me that it was only October to receive the house. I wonder if the investor does not hand over the house according to the schedule committed to me, will the commercial bank provide a guarantee? What are payment regulations? Please advise. Thank you.
1. Can commercial banks guarantee on off-the-plan building sale or lease purchase in Vietnam?
Pursuant to Article 56 of the Law on Real Estate Business 2014 stipulates guarantee on off-the-plan building sale or lease purchase as follows:
1. The investor’s financial obligations must be guaranteed by a competent commercial bank in case the investor fails to transfer the building on schedule as commitment to clients before the investor sell or lease purchase off-the-plan buildings.
The State bank of Vietnam shall issue the list of competent commercial banks which may give guarantee in the off-the-plan real estate trading.
2. The scope, requirements, content and guarantee fee shall be agreed by contracting parties and concluded in an agreement provided that responsibility of the guarantor must be ensured as prescribed in Clause 3 of this Article. The investor shall send the copy of guarantee agreement to the buyer or lessee when the agreement on sale or lease purchase is signed.
The guarantee agreement will stay unexpired until the building is transferred to the buyer or lessee.
3. If the investor fails to transfer the building on schedule as committed and at the request of the buyer or lessee, the guarantor shall make a refund of the option fee and other payments to clients under agreement on housing sale or lease purchase and signed guarantee agreement.
4. The guarantee on off-the-plan building sale or lease purchase shall be conformed to regulations of this Article and regulations of law on guarantee.
According to this Article, a commercial bank with sufficient capacity as announced by the State Bank of Vietnam as a competent commercial bank may guarantee investor’s financial obligations to its customers. Therefore, in case the investor does not hand over the house according to the schedule committed to you, the commercial bank will stand out to guarantee investor’s financial obligations.
2. What are regulations on payment for off-the-plan real estate sale or lease purchase in Vietnam?
In Clause 1, Article 57 of the Law on Real Estate Business 2014, payment for off-the-plan real estate sale or lease purchase is as follows:
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.
Best Regards!
