When is it permitted to sell future-formed residential property?

Surely, one of the most daunting issues for real estate investors is a project that has been completed but lacks interested buyers. A typical example is the Thuan Kieu apartment complex, which was built nearly 20 years ago, comprising three buildings with 648 apartments, but to date, only a few dozen people reside there. The existence of uninhabited apartment complexes causes severe economic damage: investors cannot recover their capital, and a significant amount of opportunity cost is lost as other potential projects cannot be implemented due to a lack of land. Hence, allowing the sale of houses formed in the future aims to minimize the risk for investors.

However, this regulation reduces investor risk but increases risk for home buyers. In reality, among the total number of real estate businesses, about 15-20% lack capital, professionalism, and legal knowledge, causing instability in the market. Some investors, after collecting money from home buyers, either do not complete the project on time, do not hand over the houses, or do not construct according to the approved design, causing harm to home buyers.

Recently, the Viva Riverside project was advertised on the official websites of Vietconreal and many other brokerage platforms without having fulfilled financial obligations regarding land use rights in accordance with the law.

To advertise future real estate, the law stipulates that the investor must ensure certain specific conditions. This content is regulated by the 2014 Real Estate Business Law as follows:

- Have documents on land use rights, project files, and construction design drawings approved by competent authorities;- Construction permits in cases where a construction permit is required;- Documents on the acceptance of the completion of the technical infrastructure corresponding to the project progress. For example, for apartment complexes located far from the main road, the investor must build the access road from the main road to the apartment complex first.- For apartment complexes and mixed-use buildings for residential purposes formed in the future, a minutes of acceptance of the completed foundation must be available.

Additionally, to ensure capital recovery if the investor does not complete the project on schedule or does not hand over the houses as committed, the real estate project investor must be guaranteed by a competent commercial bank regarding the financial obligations to the customers before selling, leasing, or buying houses formed in the future. The list of competent commercial banks capable of providing guarantees is published by the State Bank of Vietnam.

Payment for the sale, lease, or purchase of future real estate must be made in installments. The first installment should not exceed 30% of the contract value, subsequent installments must match the project progress, and the total should not exceed 70% of the contract value before handing over the house or construction work to the customer; in case the seller, lessor, or buyer is a foreign-invested enterprise, the total should not exceed 50% of the contract value.

Notice, if the Certificate of Land Use Rights, Ownership of Housing and Assets attached to the land has not been granted to the customer, the investor is not allowed to collect more than 95% of the contract value; the remaining balance is paid after the Certificate has been issued.

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