Continuing from the beginning of the article, TNTP shares its perspective on the question: “Can the deposit be recovered when purchasing a real estate project?” In this article, TNTP will continue to analyze the contents of the purchase contracts for real estate projects in Vietnam, focusing on contracts for future real estate projects, which are the type of real estate purchase contracts that many investors are interested in.
1. Future-formed real estate
According to legal regulations, “future-formed assets” include assets formed from loans; assets in the process of formation or being legally established at the time of entering into the secured transaction; assets that have been formed and fall within the scope of ownership registration requirements, but are registered after the secured transaction is entered into in accordance with the law. Therefore, according to this provision, future-formed assets do not include land use rights but only include residential houses and construction works.
Therefore, the subject matter of the purchase contract for future-formed real estate will be residential houses and transferred ownership of apartments. Investors will only see the desired project on design drawings, models, and simulations. These projects are mostly incomplete, and in many cases, they have not been constructed and only exist “on paper.” However, compared to complete real estate projects, future-formed real estate projects have attractive prices and higher profit potential because they are not widely known yet. Moreover, during this stage, investors are highly interested as they can choose prime locations and achieve the highest value.
2. Purchase Contracts for Future-Formed Real Estate
a) Key contents of the contract
Similar to purchase contracts for formed real estate, purchase contracts for future-formed real estate still include mandatory contents such as:
(i) Names and addresses of the parties; (ii) Information about the real estate; (iii) Purchase price, rental price, lease-purchase price; (iv) Payment method and deadline; (v) Deadline for delivery, receipt of the real estate, and accompanying documents; (vi) Warranty; (vii) Rights and obligations of the parties; (viii) Liability for contract breach; (ix) Penalties for contract violations; (x) Termination, cancellation of the contract, and measures for resolution; (xi) Dispute resolution; (xii) Effective date of the contract.
It can be seen that the required contents in purchase contracts for future-formed real estate are not different from those in contracts for formed real estate. However, investors need to be cautious before making a deposit or paying any amount to the developer. They must ensure that the future-formed real estate is ready for sale. Otherwise, investors may bear risks that directly affect their interests.
b) Conditions for the Sale of Future-Formed Real Estate
Specifically, according to the regulations, to be able to sell future-formed real estate, the project must meet the following conditions:
(i) Have documents regarding land use rights, project files, approved construction design drawings issued by competent authorities, construction permits (if required), and documents on the acceptance of completed technical infrastructure corresponding to the project progress. In the case of future-formed residential buildings or mixed-use buildings, there must be an acceptance record for the completion of the foundation of the building.
(ii) Before selling or leasing-purchasing the future-formed residential properties, the developer must provide written notice to the provincial housing management agency informing them that the residential properties meet the conditions for sale or leasing-purchase.
If the future-formed real estate does not meet the conditions for sale, the developer is not allowed to mobilize capital from customers in any form. Therefore, if the developer requests investors to make payments when the future-formed real estate is not yet qualified for sale, it would be an unauthorized mobilization of funds.
3. Is it possible to reclaim the deposit when purchasing a future-formed real estate project?
It can be seen that in the case where the future-formed real estate is not qualified for sale, the act of mobilizing funds from investors by the developer is a violation of the law. However, in reality, many developers are aware that such unauthorized fund mobilization is illegal but have taken various measures to transform it into civil transactions that do not violate the law. These measures include contracts and service agreements. According to these contracts and service agreements, the developer commits to providing customer support services until the real estate is qualified for sale, and the developer and investor may enter into a contract for the purchase of the future-formed real estate. Afterward, the developer will request the customer to pay a “service fee” for this work based on the contract and service agreement, and typically, this service fee will not be refundable to the investor under any circumstances.
It can be seen that in essence, many developers have engaged in unauthorized fund mobilization through another civil transaction. However, it is difficult for competent authorities to take action against such violations and protect the interests of investors because these civil transactions do not violate the basic principles of the law, and investors have voluntarily entered into disadvantageous transactions with themselves, making it difficult for them to protect their rights once they have signed the agreement.
However, in cases where investors have sufficient evidence to determine that the developer has engaged in unauthorized fund mobilization when the future-formed real estate is not qualified for sale, they can seek assistance from law firms to file complaints or initiate legal proceedings against the developer to relevant dispute resolution agencies. With their experience and legal knowledge, law firms will be able to identify any violations committed by the developer (if any) and assist investors in reclaiming the deposit for the purchase of the future-formed real estate project.
The above is an article written by a lawyer responding to the question: “Is it possible to reclaim the deposit when purchasing a real estate project?” The viewpoints presented are based on practical experience in cases that the lawyer has handled. We hope that this article is helpful to readers.