Author: TNTP LAW

Future Real Estate is currently a popular investment channel chosen by many people. One of the advantages of this type of real estate is its relatively low value because it is still in the construction process or undergoing legal procedures. Many developers often attract buyers early on and require a deposit to purchase the land, with the price becoming more attractive when buyers act quickly to make a deposit. However, many developers often require buyers to make deposits for Future Real Estate, which contradicts legal requirements. In this article, TNTP’s lawyer will analyze and answer the question: “When is capital mobilized for Future Real Estate?”

1. What is Future Real Estate?

According to legal regulations, Future Real Estate specifically refers to houses and construction works that are being formed or are in the process of construction and have not been inspected and put into use.

Therefore, unlike existing or completed real estate, Future Real Estate has not been formed, constructed, or only exists within projects. Thus, in addition to being a potential investment channel, this type of real estate also carries inherent risks if buyers do not thoroughly examine the credibility of the project and the developer. Almost all profit scenarios from real estate projects formed in the future are based on data and have not been verified.

2. What is capital mobilization for Future Real Estate?

According to the provisions of Decree 99/2015/ND-CP guiding the detailed implementation of the Law on Housing regarding capital mobilization in commercial real estate development activities, there are two main forms: (i) Capital mobilization through capital contribution, investment cooperation, business cooperation, joint ventures, and partnerships of organizations, households, and individuals; and (ii) Capital mobilization through prepayment, lease, or lease-purchase of future-formed residential properties.

Capital mobilization must be ensured to serve the intended purpose and meet the conditions set by the developer for the sale of real estate. Additionally, the developer must use the mobilized capital for the construction of residential properties within the project as intended. It is strictly prohibited for the developer to mobilize an amount exceeding the prepayment or lease-purchase amount specified by the law. If the mobilized capital is misused or misappropriated, or if the developer exceeds the prepayment or lease-purchase amount, the developer must return the amount in violation of regulations, provide compensation (if causing damage), and be subject to administrative sanctions as stipulated by the law, and in some cases, even face criminal prosecution.

3. Conditions for capital mobilization for Future Real Estate

According to the provisions of the Law on Real Estate Business, the conditions for capital mobilization for Future Real Estate are as follows:

• The real estate must meet the conditions for sale, including having documents on land use rights, project files, approved construction designs, and construction permits (if required). For projects involving apartment buildings or mixed-use buildings intended for future occupancy, there must be a complete inspection report for the foundation of the building.
• There should be no disputes over land use rights, ownership of houses, or construction works attached to the land.
• The real estate must not be under a mortgage to secure enforcement of judgments.

Therefore, for a real estate project formed in the future to meet the conditions for sale, it must fulfill all the requirements specified by the law. In such cases, if a developer decides to sell a real estate project formed in the future, they must provide the necessary documentation, including documents related to land use rights, project files, approved construction designs, and construction permits (for specific cases). Selling a real estate project formed in the future without meeting these conditions is against the law, and the act of capital mobilization by the developer from buyers when the project does not meet the legal requirements is considered illegal capital mobilization.

4. Illegal capital mobilization 

In reality, many developers have engaged in an illegal capital mobilization when their projects do not meet the legal requirements for sales. However, these developers have found ways to “circumvent the law” using various tricks, greatly impacting the legitimate rights of buyers, especially through transactions conducted by third parties.

In such cases, developers do not directly engage with customers to sign contracts but instead go through third parties, often real estate brokers. The capital mobilization is carried out through civil transactions using the form of service fee collection for brokerage, disguising the concept of “deposit for purchasing real estate.” By transforming capital mobilization transactions into regular civil transactions, they conceal illegal capital mobilization in accordance with the laws on the real estate business.

These contracts usually tightly bind customers’ payment obligations and often do not allow buyers to receive the deposit until the service is completed or impose penalty clauses if buyers unilaterally terminate the contract. In situations where issues arise with the service contract, such as the real estate project not being completed as promised by the developer’s schedule or the project not being ready for sale within the specified time frame, buyers may want to terminate the service contract. However, at this point, buyers will face unfavorable terms of the service contract and find themselves in a difficult situation as they cannot withdraw the deposit due to contractual obligations. If they choose to wait, they do not know when the developer will meet the conditions for sales.

Therefore, buyers need to be cautious before deciding to sign a deposit contract or engage in transactions for Future Real Estate, as these developers often carry out illegal capital mobilization through enticing incentives.

The above are the insights from TNTP to answer the question: “When is capital mobilized for Future Real Estate?” We hope this article is helpful to readers in their work and investment endeavors.

Best regards,

Due to the pressure from insurance sales targets and high commissions, some bank employees and insurance agents are willing to resort to any means or methods to “entice” customers into signing insurance contracts. One of the tactics they use is “Concept swapping” to mislead and manipulate customers into misunderstanding and signing insurance contracts. So, what offences can be committed by employees who engage in these behaviours? Let’s find out through the following article.

1. What is the act of “Concept swapping”?

According to the Vietnamese Great Dictionary, Culture and Information Publishing House in 1999, “swapping is the act of subtly replacing one thing with another to gain benefits or achieve a certain purpose”. “Concept is a form of human thought that helps people understand the general and essential characteristics of objects and phenomena of objective reality. Therefore, “concept swapping” can be understood as the act of replacing one concept with another, causing people to misunderstand objects and phenomena of objective reality to achieve a purpose.

Based on the aforesaid analyses, “concept swapping” in insurance business activities refers to the actions of employees presenting alternative concepts/terms, sometimes even incorrect ones, that deviate from the essence of the transaction, leading customers to confusion or misunderstanding, ultimately resulting in customers signing insurance contracts.

Recently, the cases of bank employees and insurance salespeople intentionally giving wrong advice to customers to sell insurance become a topic that has a lot of people’s attention. Accordingly, when customers come to save money at the bank, instead of guiding and opening a passbook for customers, these employees advise customers to buy a product package linking the bank and the insurance company. There are various reasons why this incident happened, for example, these employees were forced to sell insurance by KPIs, these employees are entitled to commissions from insurance contracts, etc. These employees have consulted for customers that this is an investment savings package with a high-interest rate and comes with a life insurance package. Based on the provided information, customers understand that a life insurance package is a product offered with a savings deposit service. Due to the lack of knowledge regarding banking and insurance, the customer trusted the advice of the employees and agreed to sign the contract. However, when there is a need to withdraw their savings, customers realize that the contract they have signed has completely different from what they were advised they were advised on and contains a lot of unfavourable content concerning the customer. In reality, the money that customers thought was being deposited as savings is instead being used for insurance participation. Customers are obliged to pay regular insurance premiums, and if they terminate the contract or fail to continue paying the premiums, they will lose the entire amount. The period that customers must continue to participate in insurance can last from several years to several decades depending on the terms of the contract.

Therefore, in the aforementioned case, the bank employee intentionally provided false advice, presented information that does not align with the essence of the transaction, and swapped the concept from “participating in insurance” to “high-interest savings” causing customers to misunderstand and sign the contract. This is a violation of the law, affecting the benefits of customers, and can be subject to criminal liability as stipulated by the law.

2. What crime can an employee “swap the concept” to sign an insurance policy with?

According to the current law, employees who intentionally provide false information and engage in “concept swapping” so that customers trust to enter into insurance contracts to gain illicit profits may be prosecuted for criminal liability for the offence of “Obtaining property by fraud” by Article 174 of the Criminal Code 2015, amended and supplemented in 2017 (“the Criminal Code”).

To obtain customer property, these employees have provided false and untrue information to make customers believe it is real and voluntarily hand over the property to the offender. Due to being deceived, the customers agree to sign the insurance contract. Except for other cases prescribed by Article 174 of the Criminal Code, as long as the property obtained is valued at VND 2,000,000 or more, these employees may be prosecuted for criminal liability for the offence of obtaining property by fraud under Article 174 of the Criminal Code specifically as follows:

“Article 174. Obtaining property by fraud
1. A person who uses deception to obtain another person’s property which is assessed at from VND 2,000,000 to under VND 50,000,000 or property assessed at under VND 2,000,000 in any of the following circumstances shall face a penalty of up to 03 years’ community sentence or 06 – 36 months’ imprisonment:
a) The offender has incurred an administrative penalty for the appropriation of property;
b) The offender has an unspent conviction for theft of property or any of the criminal offences specified in Articles 168, 169, 170, 171, 172, 173, 175 and 290 hereof;
c) The offence hurts social safety, order and security;
d) The property illegally obtained is the primary means of livelihood of the victim and the victim’s family.
2. This offence committed in any of the following circumstances carries a penalty of 02 – 07 years imprisonment:
a) The offence is committed by an organized group;
b) The offence is committed professionally;
c) The property obtained is assessed at from VND 50,000,000 to under VND 200,000,000;
d) Dangerous recidivism;
dd) The offence involves abuse of the offender’s position or power or committed in the name of an agency or organization;
e) The offender employs deceitful methods to commit the offence;
3. This offence committed in any of the following circumstances carries a penalty of 07 – 15 years imprisonment:
a) The property obtained is assessed at from VND 200,000,000 to under VND 500,000,000;
b) The offender takes advantage of a natural disaster or epidemic to commit the offence.
4. This offence committed in any of the following circumstances carries a penalty of 12 – 20 years’ imprisonment or life imprisonment:
a) The property stolen is ≥ VND 500,000,000;
b) The offender takes advantage of a war or state of emergency to commit the offence.
5. The offender might also be liable to a fine of from VND 10.000.000 to VND 100,000,000, be prohibited from holding certain positions or doing certain works for 01 – 05 years or have all or part of his/her property confiscated”.

Thus, deliberately deceiving customers into signing insurance contracts by swapping concepts can be prosecuted for criminal liability for fraud and appropriation of property. Depending on the severity and nature of the violation, the offender may be sentenced to between six months of imprisonment and life imprisonment. In addition, the offender might also be liable to a fine of from VND 10.000.000 to VND 100,000,000, be prohibited from holding certain positions or doing certain works for 01 – 05 years or have all or part of his/her property confiscated. Therefore, bank employees and insurance employees need to pay special attention to the legal sanctions to strictly comply with the provisions of the law.

Above is the content of the article “What crimes can an employee commit by “swapping the concept” to get clients to sign insurance contracts?” that TNTP sends to readers. If you have any further questions, please contact TNTP for the best support.

Best regards,

Contract for “thue khoan” of property is a form of civil contract in general and a special form of the contract for the lease of property in particular. Therefore, this type of contract has both the general characteristics of a civil contract and the basic characteristics of the lease contract. Although it is a special type of lease contract, the contract for “thue khoan” of property differs from this one. In this article, TNTP will compare these two types of contracts, from which readers can consider choosing the type of contract that is suitable for your purposes.

1. Similarities

Firstly, both types of contracts are bilateral contracts. The bilateral contract is understood as a contract in which each party has obligations towards the other party. Accordingly, the lessor hands over the property and transfers the right to use and exploit such property to the lessee. Based on receiving the property from the lessor, the lessee is entitled to utilize the property upon agreement by the parties. The lessee should pay a fee and return the property to the lessor upon the expiration of the lease term.

Secondly, both types of contracts involve compensation. The lessee should pay the fee to the lessor agreed upon by the parties or by the methods of determining the price prescribed by law. The term of payment is determined by the agreement of the parties or the common leasing practices in the locality or as stipulated by the law.

Thirdly, both types of contracts only transfer the right to use the property. When the contract takes effect, the lessee is entitled to use the property for the agreed-upon purpose within a certain period. During this time, the lessee only has the right to exploit the benefits of the property, while the ownership rights still belong to the lessor. At the end of the lease term, the lessee is obliged to return the property to the lessor.

2. Differences

Firstly, regarding the subject matter of the contract.

The contract for the lease of the property has the subject matter as the property in general, comprising objects, money, valuable papers, and property rights. Meanwhile, the subject matter of the contract for “thue khoan” of the property has a narrower scope, including land, forests, water surfaces that have not been exploited, livestock, production and business facilities, and other production materials with the necessary equipment.

Secondly, regarding the purpose of the contract.

The purpose of executing the contract for the lease of property is broader compared to the contract for “thue khoan” of property. In the contract for the lease of property, the parties can aim for any purpose as long as it complies with the regulations of law and societal morality, including meeting living demands or business needs. On the other hand, in the contract for “thue khoan” of property, the parties aim to serve production and business needs. The lessee will enjoy the yield and income derived from such property.

Thirdly, regarding the term of the lease.

In the contract for the lease of property, the term of the lease shall be as agreed by the parties; If there is no agreement, the term of the lease shall be determined according to the purpose of the lease. In the contract for “thue khoan” of property, the term of a “thue khoan” shall be agreed upon by the parties. If the parties do not reach an agreement and reach an unclear agreement on the term of “thue khoan”, such period shall be determined according to the production or business cycle appropriate to the nature of the subject matter of the “thue khoan”. Thus, both types of contracts favour the parties’ agreement on the term of the lease. The difference in the term of the lease is only determined when the parties do not have an agreement or the agreement is unclear on the term of the lease.

Fourthly, regarding the rental price.

In the contract for the lease of property, rent for the lease of property shall be as agreed by the parties or determined by a third party at the request of the parties, unless otherwise prescribed by law. Where parties reach no agreement or reach an agreement with unclear terms about the rent, it shall be determined according to the market price at the time and place of entering into the contract. In the contract for “thue khoan” of property, rent in respect of a “thue khoan” shall be as agreed by the parties. If the “thue khoan” is awarded by tender, the rent in respect of such “thue khoan” shall be determined in the bidding process.

Fifthly, regarding the rent and payment methods:

In the contract for the lease of property, the Civil Code 2015 specifies the lessee’s obligation to pay rent without specific provisions regarding the forms of rent. In the contract for “thue khoan” of property, the Civil Code 2015 regulates that “Thue khoan” rent may be paid in kind or money, or by performance of acts. Where the “thue khoan” lessee must pay in kind according to the season or cycle in the exploitation of the utility of the “thue khoan” property, payment must be made at the end of such season or cycle, unless otherwise agreed. Where a “thue khoan” lessee is required to perform an act, the “thue khoan” lessee must perform that particular act. Although the Civil Code 2015 does not specifically regulate the forms of rent, the parties can agree that the rent may be paid in kind or money, or by performance of acts.

Regarding the term of payment, the Civil Code 2015 prioritizes the agreement of the parties in both types of contracts. However, in the case of no agreement on the term of payment, there are certain differences between these two types of contracts. In the lease of contract, if there is no agreement on the time for payment of rent, the time shall be determined in accordance with the customary practice at the place of payment. If it is not possible to determine the time of payment in accordance with such customary practice, the lessee must make payment. In the contract for “thue khoan” of property, if the parties have no agreement, the lessee has to pay on the last day of each month; in case the “thue khoan” follows the business cycle, the payment must be made at the end of the business cycle at the latest.

Thus, the characteristics of the contract for the lease of property always have a broader scope, covering the characteristics of the contract for “thue khoan” of property. However, such a contract also has specific features and is more concretized by the Civil Code 2015 than the contract for the lease of property.

Above is the content of the article “Compare contracts for the lease of property and contracts for “thue khoan” of property” that TNTP sent to readers. Hope the above sharing is useful for those who are interested in this issue.

Best regards,

In practice, many disputes related to land use rights transfer contracts have arisen because one of the parties provided misleading information for the other party to sign the contract. Some examples include the transferor not being the actual land user, the land plot having multiple users but the transferor concealing this fact, the land use rights being in dispute, or being encumbered for enforcement, etc. When these situations occur, the party receiving inaccurate information faces significant risks. To minimize these risks, the parties should specify the commitments of the parties when entering into the contract. The commitment provisions will serve as a basis for holding the breaching party accountable, including rectifying the breach, compensating for damages, facing penalties, contract termination, etc. In the following article, TNTP will present some content that the parties can refer to stipulating the commitment provisions of the parties in the transfer contract.

1. Commitment of the transferor

The transferee may require the transferor to commit to the following:

+ The information about personal identity and the land plot stated in the contract is true;

+ The land use right of this contract was not transferred to another person or prohibited from the transfer as prescribed by law;

+ The land plot falls within the scope of land use rights transfer as stipulated by the law;

+ The land use rights are not in dispute and not encumbered for enforcement;

+ The contract is entered into voluntarily, without deception or coercion;

+ The transferor must fulfil all the agreements in the contract.

2. Commitment of the transferee

The transferor may require the transferee to commit to the following:

+ The information about personal identity stated in the contract is true;

+ The transferee has been provided by the transferor with copies of necessary documents and information related to the land use right, the transferee has carefully read and understood the terms and conditions of this contract and Appendixes hereto. The transferee has investigated all issues that the transferee deems necessary to check the accuracy of such documents and information;

+ The transfer amount paid by the transferee to the transferor under this contract is legal without any dispute with the third party. The transferor shall not be liable for any dispute over the amount that the transferee has paid to the transferor under this contract. In the event of a dispute over the transfer amount of this land use right, this contract will still be valid for both parties;

+ The transferee must provide necessary documents when requested by the transferor by the law to carry out the procedures for granting the Certificate to the transferee;

+ The contract is entered into voluntarily, without deception or coercion;

+ The transferee must fulfil all the agreements in the contract.

The above is the method of drafting the commitment provisions of the parties in the land use rights transfer contract. In case of any issues that need to be discussed, please contact TNTP for timely support.

Sincerely,