What are procedures for issuance of off-plan housing guarantee in Vietnam?

What are procedures for issuance of off-plan housing guarantee in Vietnam?

Pursuant to Clause 4 Article 13 of the Circular 11/2022/TT-NHNN (takes effect from 01/04/2023) stipulating procedures for issuance of off-plan housing guarantee in Vietnam as follows:

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.

What are regulations on validity and contents of a contract for off-plan housing guarantee in Vietnam?

Pursuant to Clause 5 Article 13 of the Circular 11/2022/TT-NHNN (takes effect from 01/04/2023) stipulating validity and contents of a contract for off-plan housing guarantee in Vietnam as follows:

a) The contract for off-plan housing guarantee becomes effective from the day on which it is signed until all letters of guarantee given to the buyer cease to have effect as prescribed in Article 23 of this Circular and the investor has fulfilled all obligations to the commercial bank under the contract for off-plan housing guarantee;

b) In addition to the contents specified in Clause 2 Article 15 of this Circular (excluding the contents in Points h and i which are applied in case the guarantee is issued on the basis of a counter guarantee), the contract for off-plan housing guarantee shall also include the following contents:

(i) The commercial bank is obliged to issue the letter of guarantee to the buyer upon receipt of the purchase contract or lease-purchase contract from the investor before the agreed-upon house transfer date specified in the purchase contract or lease-purchase contract;

(ii) The commercial bank and the investor shall reach a specific agreement on the responsibility to send the letter of guarantee to the buyer after it is issued by the commercial bank;

(iii) The investor’s financial obligations;

(iv) Documents submitted to request the commercial bank to fulfill guarantee obligations must be accompanied by the letter of guarantee issued by the commercial bank to the buyer.

What are regulations on validity and contents of a letter of guarantee in Vietnam?

Pursuant to Clause 6 Article 13 of the Circular 11/2022/TT-NHNN (takes effect from 01/04/2023) stipulating validity and contents of a letter of guarantee in Vietnam as follows:

a) A letter of guarantee becomes effective from its date of issue until at least 30 days after the date of the house being transferred to the buyer as agreed upon in the purchase contract or lease-purchase contract, unless guarantee obligations are terminated as prescribed in Article 23 of this Circular. In case the commercial bank and the investor have agreed to terminate the contract for off-plan housing guarantee before its expiry date, the letters of guarantee issued to the buyer shall still remain valid until guarantee obligations are terminated;

b) In addition to the contents specified in Clause 1 Article 16 of this Circular, the letter of guarantee must also indicate the investor’s financial obligations which are guaranteed by the commercial bank.

Best regards!