What are regulations on guarantees for off-the-plan houses from December 10, 2024 in Vietnam?

What are regulations on guarantees for off-the-plan houses from December 10, 2024 in Vietnam? (Image from the internet)

On October 25, 2024, the Governor of the State Bank of Vietnam issued Circular 49/2024/TT-NHNN amending and supplementing certain articles of Circular 11/2022/TT-NHNN dated September 30, 2022, by the Governor of the State Bank of Vietnam regarding bank guarantees.

What are regulations on guarantees for off-the-plan houses from December 10, 2024 in Vietnam?

Clause 3, Article 1 of Circular 49/2024/TT-NHNN has amended and supplemented Article 13 of Circular 11/2022/TT-NHNN regarding guarantees for off-the-plan houses as follows:

(1) Commercial banks and branches of foreign banks may consider and decide to provide guarantees for investors when:

- The investor meets all requirements stipulated in Article 11 of Circular 11/2022/TT-NHNN (except in cases where commercial banks or branches of foreign banks provide guarantees for investors based on counter-guarantees);

- The investor has received a document from the provincial real estate business management agency stating that the housing is eligible for sale or lease purchase.

(2) Procedure for implementation of guarantees for off-the-plan houses:

- Based on the investor's request or the counter-guarantee party, commercial banks or branches of foreign banks shall consider, appraise, and decide to grant guarantees for the investor;

- The guarantor and the investor shall sign an agreement to provide guarantees pursuant to Article 26 of Real Estate Business Law 2023 and provisions in Clause 12, Article 3, Article 15 of Circular 11/2022/TT-NHNN;

- Based on the signed guarantee agreement, the guarantor issues a declaration of commitment to issue a guarantee letter for the investor to send a copy to the buyer when signing the house purchase or lease purchase agreement;

- After signing the house purchase or lease purchase agreement, which includes the investor's financial obligations, the investor sends the house purchase or lease purchase agreement to the guarantor to request issuance of a guarantee letter for the buyer;

- The guarantor, based on the house purchase or lease purchase agreement, the guarantee agreement, and declaration of commitment, issues a guarantee letter and sends it to the investor for provision to the buyer.

(3) Validity and content of the guarantee agreement:

- The guarantee agreement is effective from the signing date until the guarantee obligations of all guarantee letters to buyers terminate pursuant to Article 23 of Circular 11/2022/TT-NHNN and all the investor’s obligations to the guarantor under the guarantee agreement have been fulfilled; unless the parties agree to terminate the guarantee agreement prematurely;

- Besides the content prescribed in Clause 2, Article 15 of Circular 11/2022/TT-NHNN (excluding contents in points h and i in cases of guarantees based on counter-guarantees), the guarantee agreement must include provisions that require the guarantor to issue a guarantee letter to the buyer before the delivery and receipt deadline as committed in the house purchase or lease purchase agreement upon receiving the house purchase or lease purchase contract sent by the investor and deliver the guarantee letter to the investor to provide to the buyer.

(4) Validity and content of the declaration of commitment issuing guarantee letters:

- The commitment document to issue guarantee letters shall be effective from the signing date until the completion of the issuance of guarantee letters before the delivery and receipt deadline as committed in the house purchase or lease purchase contract, or upon the expiry of the guarantee agreement (whichever occurs first);

- The commitment document for issuing guarantees must include the following contents:

(i) Information about the guarantor and the investor;

(ii) Validity of the document;

(iii) Information on the guaranteed project or part of the project (if only part of the project is guaranteed);

(iv) The guarantor's commitment to issue guarantee letters for all buyers choosing to have a guarantee in projects approved for guarantees to the investor by the guarantor;

(v) The investor's financial obligation towards the buyer guaranteed by commercial banks or branches of foreign banks is the amount the investor is obliged to pay the buyer if the investor fails to deliver the housing as committed in the signed house purchase or lease purchase agreement, including: The amount the investor has received in advance from the buyer after the buyer receives the guarantee letter from the guarantor and other amounts (if any) the investor is obliged to pay the buyer per the signed house purchase or lease purchase agreement;

(vi) The buyer’s file sent to the guarantor requesting performance of guarantee obligations must be accompanied by the guarantee letter issued by a commercial bank or branch of a foreign bank to the buyer.

(5) Validity period and content of the guarantee letter:

- The guarantee letter is effective from the issuance date until at least 30 days after the investor must fulfill financial obligations to the buyer when the investor fails to deliver the housing according to the commitments in the house purchase or lease purchase contract, unless the guarantee obligations terminate as stipulated in Article 23 of Circular 11/2022/TT-NHNN. In cases where the guarantor and investor terminate the guarantee agreement prematurely, issued guarantee letters to previous buyers remain effective until the guarantee obligations end;

- Besides the contents stipulated in Clause 1, Article 16 of Circular 11/2022/TT-NHNN, the guarantee letter must also include content specifying the investor's guaranteed financial obligations.

(6) The maximum guarantee amount for each buyer shall be equivalent to the total amount the investor can receive in advance from the buyer as stipulated under Article 25 of Real Estate Business Law 2023 and other amounts (if any) per the house purchase or lease purchase agreement.

(7) Guarantee balance in guarantees for off-the-plan houses:

- The guarantee balance for the investor or counter-guarantee entity is determined by the investor’s financial obligations. The guarantee balance decreases as the guarantee obligation to each buyer ends as stipulated in Article 23 of Circular 11/2022/TT-NHNN;

- The time of recording the guarantee balance is when the investor notifies the guarantor of the advance amounts received from buyers per the provisions below and other amounts (if any) under the purchase, lease purchase agreement;

- The guarantor and the investor shall agree on the timing of notification and updating of advance amounts received from buyers in the month but no later than the last working day of the month to establish the guarantee balance. The investor is responsible before the law for accurate notification of the amounts and timing received in advance from buyers to the guarantor.

(8) The guarantor has the following rights and obligations:

- The guarantor has the right to:

(i) Refuse to issue a guarantee letter to the buyer if the house purchase or lease purchase agreement does not comply with relevant legal regulations or after terminating the guarantee agreement;

(ii) Refuse to fulfill guarantee obligations for amounts not belonging to the investor’s financial obligations or amounts paid by the buyer exceeding the ratio specified under Article 25 of Real Estate Business Law 2023 or if the buyer cannot present the guarantee letter issued for them by the guarantor.

- The guarantor is obligated to:

(i) Issue a guarantee letter before the delivery and receipt deadline specified in the house purchase or lease purchase contract upon receiving a valid house purchase or lease purchase agreement and send it to the investor;

(ii) In the event the guarantor and investor terminate the guarantee agreement prematurely, at the latest by the next working day, the guarantor must publicly announce on the guarantor’s official website and formally notify the provincial-level housing management agency in the area with the investor’s housing project, specifying that the guarantor will no longer issue guarantee letters to buyers signing housing purchase or lease purchase agreements with the investor after the guarantor terminates the guarantee agreement with the investor. Concerning guarantee letters issued to buyers prior, the guarantor continues to honor commitments until the guarantee obligations terminate;

(iii) Fulfill guarantee obligations for the amount payable that corresponds to the investor’s financial obligations determined based on the request file for guarantee obligations provided by the buyer, complying with conditions stipulated in the guarantee letter.

(9) The investor has the following rights and obligations:

- The investor has the right to:

Request the guarantor to issue guarantee letters for all buyers opting for a guarantee in projects covered under off-the-plan houses guarantees within the declaration of commitment validity period.

- The investor is obligated to:

(i) Send the guarantee letter issued by the guarantor to the buyer once received from the guarantor as prescribed under Clause 6, Article 26 of Real Estate Business Law 2023;

(ii) If the guarantor and investor terminate the guarantee agreement prematurely, no later than the next working day, the investor must publicly announce on the investor’s official website (if applicable) and formally notify the provincial-level housing management agency in the area with the investor's housing project about the guarantor’s termination of guarantees to the investor. The investor must cease providing buyers with expired declarations of commitment to issue guarantee letters when the guarantee agreement between the investor and the guarantor expires;

(iii) Notify the guarantor accurately of received advance payments from each buyer and other amounts (if any) as scheduled per point c, Clause 7, Article 13 of Circular 11/2022/TT-NHNN.

(10) The buyer has the right to:

- Receive the guarantee letter from the investor issued by the guarantor;

- Request the guarantor to fulfill financial obligations of the investor based on producing the guarantee letter with the appropriate file as per the guarantee letter.

(11) Besides the above-stated provisions, other issues related to guarantees for off-the-plan houses shall comply with corresponding regulations under Circular 11/2022/TT-NHNN.

Circular 49/2024/TT-NHNN is effective from December 10, 2024.

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