Can the off-plan property be used as security for performance of obligations in Vietnam?

According to the law in Vietnam, what is the off-plan property?

Pursuant to Article 108 of the Civil Code in 2019 stipulating existing property and off-plan property as follows:

Existing property and off-plan property

1. Existing property means a property which is formed and to which an entity has established his/her ownership rights and other rights before or at the time of transaction establishment.

2. Off-plan property includes:

a) Non-formed property;

b) Formed property that the entity has established his/her ownership rights after the time of transaction establishment.

As regulations above, off-plan property includes non-formed property or formed property that the entity has established his/her ownership rights after the time of transaction establishment.

Can the off-plan property be used as security for performance of obligations in Vietnam? - Image from Internet

Can the off-plan property be used as security for performance of obligations in Vietnam?

Pursuant to Article 292 of the Civil Code in 2019 stipulating types of security for performance of obligations as follows:

Types of security for performance of obligations

Types of security for the performance of obligations comprise the following:

1. Pledge of property;

2. Mortgage of property;

3. Deposit;

4. Security collateral;

5. Escrow deposit;

6. Title retention;

7. Guarantee;

8. Fidelity guarantees;

9. Lien on property.

Pursuant to Clause 1 Article 8 of the Decree 21/2021/ND-CP stipulating collateral for security for obligation fulfillment as follows:

Collateral for security for obligation fulfillment

Collateral for security for obligation fulfillment includes:

1. Current properties or off-plan properties, except for cases where the Civil Code or other relevant laws forbid sale, transfer or other change of ownership at the time of establishing security contracts, security measures;

2. Properties sold under property sale agreements with retention of ownership;

3. Properties considered as subjects of obligations under infringed bilateral contracts in case of lien measures;

4. Properties under general public’s ownership if prescribed by relevant laws.

Pursuant to Clause 4 Article 10 of the Decree 21/2021/ND-CP, security for obligation fulfillment in form of off-plan properties does not apply to land use right.

As regulations above, the off-plan property can be used as security for performance of obligations in Vietnam, except land use right.

Can the off-plan housing be included in real estate trading in Vietnam?

Pursuant to Article 5 of the Law on Real Estate Trading in 2014 stipulating types of real estate to be put on the market as follows:

Types of real estate to be put on the market

Types of real estate to be put on the market must meet all the requirements prescribed in this Law (hereinafter referred to as real estate):

1. Existing buildings of organizations or individuals;

2. Off-the-plan buildings of organizations or individuals;

3. Buildings which are public properties to be put on the market permitted by competent agencies;

4. Types of lands whose land-use rights are permitted to be transferred (hereinafter referred to as land), leased, sublet as prescribed in law on land.

As regulations above, the off-plan housing of individuals and organizations can be included in real estate trading in Vietnam.

In addition, other types of real estate to be put on the market are:

- Existing buildings of organizations or individuals;

- Off-the-plan buildings of organizations or individuals;

- Buildings which are public properties to be put on the market permitted by competent agencies;

- Types of lands whose land-use rights are permitted to be transferred (hereinafter referred to as land), leased, sublet as prescribed in law on land.

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