THE LAW ON REAL ESTATE TRADING: REMARKABLE REGULATIONS
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People with capital of VND20 billion are allowed to trade real estate
1. People with capital of VND20 billion are allowed to trade real estate
The investors need more capital to ensure business and stable turnover when they invest in high value commodities such as real estate. In order to conduct real estate business, the investor must establish an enterprise or cooperative and have legal capital not smaller than VND 20 billion (as stipulated in Article 10 of the Law on Real Estate Business in 2014).
Any organizations, households and individuals who conduct small-scale or irregular transactions of real estate sale, transfer, lease-out, and lease purchase shall not be required to set up enterprises, but they shall make tax declaration as prescribed. The real estate investors do not set up businesses in accordance with regulations and can be fined with a fine of between VND 50 million and 60 million as stipulated in Article 57 of Decree 139/2017 / ND-CP.
2. Conditions for foreigners to buy houses in Vietnam
Paragraphs 2 and 3 of Article 14 of the Law on Real Estate Business stipulate: Overseas Vietnamese or foreign-invested companies may purchase, lease purchase buildings for use for offices or business facilities according to their proper utilities.However, the sale and transfer of houses and land as foreigners must meet certain conditions as prescribed by Vietnamese law. Specifically, Article 76 of Decree No. 99/2015 / ND-CP stipulates:
– Foreign organizations and individuals eligible to own houses in Vietnam shall only be allowed to buy or hire purchase houses of the investors
– Foreign organizations and individuals may own no more than 30% of the total number of apartments of an apartment building;In cases where there are many apartment buildings for sale or lease in one ward or equivalent administrative unit, foreign organizations or individuals may own no more than 30% of the apartments in each apartment building and no more than 30% of the total number of apartments of all apartment buildings.
3. People who have not been issued Red Books must pay a maximum of 95% of the purchase price
Clause 1, Article 57 of the Law on Real Estate Business stipulates that in cases where the purchaser has not yet been granted a certificate of land use right or ownership of houses and assets attached to land (the Red book), the seller over 95% of contract value. The remaining amount will be paid by the buyer when the Red Book issued by the authorized State agency.
On the other hand, Clause 4, Article 13 of the Law on Real Estate Business also stipulates that investors must carry out the procedures for Red book granting to purchasers, renters within 50 days from the handover of houses or buildings. Investors failing to carry out the procedures for Red Book granting to purchasers or purchasers or failing to supply relevant dossiers and papers shall be subject to a fine of between VND 250 million and 300 million (Point đ, Clause 3, Article 57 of the Decree 139/2017 / ND-CP).
4. Minimum social housing area is 25m2
Under Clause 2, Article 7 of the Law on Real Estate Business, the State always encourages and creates conditions for organizations and individuals to invest in the construction of social houses.Currently, regulations on social housing are specified by the Ministry of Construction in Circular 20/2016 / TT-BXD. Accordingly, social housing which is built by individuals or organizations for sale or lease, if apartment is the minimum area used must be 25m2, including the toilet; If the accommodation of social housing must meet some minimum standards as follows:- The used area for accommodation must not be smaller than 10m2;- The average used area is not less than 5m2 per person;- If social houses are built adjacent to low floors for sale or lease, each room must be built closed (with toilet). In case of renting, it is possible to use common toilets for many rooms, but separate toilets for men and women should be used.
5. Sale of off-the-plan houses must be guaranteed by banks
According to the provisions of Article 5 of the Law on Real Estate Business, off-the-plan buildings of organizations or individuals that are permitted by competent agencies. However, the transfer of contracts for purchase, sale or lease-purchase of off-the-plan houses must satisfy the conditions specified in Article 55 and Article 56 of the Law on Real Estate Business, specifically:
– Having papers on land use rights, project dossiers, construction drawing designs already approved by competent authorities, construction permits, papers on acceptance of completion of construction of technical infrastructure According to project progress …
– The investor has sent a notice to the provincial-level house management agency and received a written response from this agency that the house is eligible for sale or lease
– The investor must be fully capable of carrying out the financial obligation of the investor to the client when the investor does not hand over the house in accordance with the schedule committed to the client.In the case of sale or lease of off-the-plan commercial houses but not guaranteed by the bank in accordance with regulations, the investor may be fined ranging from 250 million to 300 million.
6. Conditions for practicing real estate brokerage
Organizations and individuals dealing in real estate brokerage services must set up enterprises and must have at least 02 persons possessing real estate brokerage practice certificates. If they are independent traders, they must have real estate brokerage practice certificates and register their tax identification numbers and pay taxes according to law provisions.
According to Article 58 of Decree 139/2017 / ND-CP, a fine ranging from VND 10,000,000 to VND 15,000,000 shall be imposed for one of the following violations: failure to obtain practicing certificate or using an expired practicing certificate to provide independent real estate brokerage services; erasing, falsifying, borrowing or lending practicing certificate in real estate brokerage.
In addition, a fine ranging from VND 30 million to 40 million shall be imposed for one of the following violations: failure to establish an enterprise to provide real estate services as regulated by law or failure to employ enough employees who have practicing certificates in real estate brokerage as regulated by law or employing persons whose practicing certificates have expired; failure to prepare contracts or failure to specify all required contents in contracts for provision of real estate services as regulated by law prescribed in Article 61 of the Law on Real Estate Business.
7. Do real estate brokerage contracts notarized?
Real estate brokerage activities with real estate consultants and real estate management are among the real estate services that have to sign contracts when the parties conduct transactions and exchange with each other. In the Law on Real Estate Business 2014, the contents related to real estate business is regulated in Chapter IV – Real estate business.
Accordingly, brokerage contracts as well as other real estate service contracts must be made in writing. The agreement’s notarization or authentication shall be agreed by contracting parties.. As such, real estate brokerage contracts are not necessarily notarized.
However, the real estate service providers need to pay attention to the establishment of a service contract, which must contain all the contents stipulated in Article 61 of the Law on Real Estate Business such as The names and addresses of contracting parties; Entities and content of the services; Requirements and results of the services; Service provision duration; Service fee, remuneration, and service commission;…
If brokerage or other real estate service contracts without preparing contracts or failure to specify all required contents in contracts for provision of real estate services as regulated by law, the subject may be fined ranging from VND 30 million to VND 40 million (Article 58 of Decree 139/2017 / ND-CP).
8. Investors fined up to 300 million if transferring house without a Red Book
Red Book is one of the conditions to carry out transfer procedures. Investors of real estate projects transferring houses without a Red Book can be fined up to 300 million. Specifically, Clause 4 of Article 57 of Decree No. 139/2017 / ND-CP stipulates that a fine ranging from VND 270,000,000 to VND 300,000,000 shall be imposed on the investor of a real estate project for one of the following violations:
– Failure to follow procedures for full or partial transfer of the project;
– Failure to satisfy all requirements or conditions for full or partial transfer of project;
– Penalties prescribed in the Government’s Decree on administrative penalties for violations against regulations on land shall be imposed for transfer cases where certificate of land use right is unavailable, or the land use right is in dispute or under seizure to enforce judgment, or where the transferee is not a real estate trading enterprise or is financially incapable as regulated;
– Transfer of houses and buildings to clients before they are finished according to the construction progress specified in the approved project, or they are not connected to the regional technical infrastructure system, or before external parts of rough-in buildings are not finished, or housing works or social infrastructure systems are not properly commissioned as regulated by law.
The above are some noteworthy features of the Law on Real Estate Business 2014