A contract is an agreement between parties about the establishment, change, or termination of civil rights and obligations. To guarantee the biggest legal rights and interests of the Buyer in case of arising dispute, the contents of this Contract must comply with the provisions of law. In addition, the Contract must not include provisions that are unfavorable for the Buyer. In the previous article, TNTP mentioned the conditions for off-the-plan real estate to be allowed to offer to sale. In this section, we mention about 04 risks when signing off-the-plan real estate sale Contracts.
1. The real estate Sale Contract will be invalid
The Subject can sign an off-the-plan real estate sale contract with the Buyer who can only be:
- Investor of Project; or
- Person/organization authorized by the Investor to conduct real estate business at the Project.
In case the real estate Seller is not the subject having the right to sign the contract, the contract will be invalid even when it has been signed. Then the legal rights and interests of the Buyer will not be guaranteed.
Thus, the Buyer needs to know the accurate information about the certificate of land use rights, ownership of houses and other land-attached assets (hereinafter referred to as CLUR), project files, design of construction drawing approved by the competent authority to determine that the Seller in the contract is the person who has the right to the project that the Buyer is planning to buy.
2. The Buyers give up their own rights when there are unfavorable terms in the Real Estate Sale Contract
Essential goods and services must be registered for a form-based contract, general transaction conditions are stipulated in Decision No 02/2012/QD-TT and Decision No 35/2015/QD-TT. Accordingly, in case of buying and selling apartments, they will have to register a contract according to the form. In case of this Contract, there is a clause of liability exemption for the Owner or increases the liability, removes the justifiable interests of the Buyer, this provision will not be effective.
Thus, if the signed Real Estate Purchase and Sale Contract contains the terms mentioned above, the legal rights and interests of the Buyer are still protected. If a dispute arises, the Buyers have the right to claim their rights being fully guaranteed according to the provisions of the Civil Code and the Law on Protection of Consumer Rights.
In fact, if the Contract has unfavorable terms as we mentioned above, the Buyers still have the right to request the Investor to guarantee their inherent rights. In case the Investor cannot guarantee the interests, the Buyers have the right to request a competent agency such as the Consumer Rights Association, the Court, etc. to settle the dispute between the Buyer and the Investor.
3. The CLUR is not issued after signing the Real Estate Sale Contract
Firstly, checking whether the project is subject to a decision on land recovery, a notice of house clearance, or demolition issued by competent agencies, which is one of the factors to minimize risks for the Buyers. Determining whether the Investor has fulfilled the obligation to pay land use levy and land-related taxes is also an important matter. Currently, many people are not issued CLUR because the Investor still owes financial obligations to the Government.
In this case, the Buyers need to check the legal status of the real estate they intend to buy. In addition to being able to determine whether this property is eligible for purchase or sale, the Buyers can also be sure of the possibility of being issued the CLUR upon the termination of the Contract.
4. The disadvantage in price when buying and selling real estate
With the fact that the price of real estate changes every day and in some places the land price can increase 2-3 times in a short time, determining the land price when signing a Real Estate Sale Contract will help the Buyers ensure their maximum benefits during the transaction.
Regarding the purchase and sale price, currently, the law requires the parties to agree on the price at the time of signing the Contract and the Customer is entitled to the house purchase price at the time of signing the Contract, unless otherwise agreed by the parties. Thus, the parties must agree on the terms of the purchase and sale price at the time of signing the Contract. The time will be calculated, depending on the parties agreed. However, if the Customer chooses the price according to the time of signing the Contract, the Seller must comply with the will of the Buyer.
To ensure their interests, the Buyer should ask the Investor to fix the purchase and sale price at the time of signing the Contract. Thus, in case the land price changes, the amount of money that the Buyer has to spend to buy the property still remains unchanged in any case.
The establishment of a Real Estate Sale Contract is an important legal act that can settle as a basis when a dispute arises. The conclusion of the Contract without accurately determining the matters that need to be clarified as mentioned above will directly affect the legal interests of the Buyer under the law.
Above are the legal shares about 04 risks when signing a Sale and Purchase Contract of Real Estate formed in the future. Hope this article is useful to you.
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TNTP and Associates International Law Firm