Vietnam Business Law is a website managed by lawyers of Venture North Law Limited (VNLaw). Venture North Law Limited (VNLaw) is a Vietnamese commercial law firm. We won the Rising Law Firm of the Year Award at the Southeast Asia Law Awards for the years 2020 and 2021 held by The Legal 500. Very few Vietnamese law firms have achieved a similar regional recognition.
On 26 November 2019, the National Assembly of Vietnam adopted the new Law on Securities (Securities Law 2019) to replace the Securities Law 2006. The Securities Law 2019 will come into effect from 1 January 2021. Here (click to download) are some notable points of the Securities Law 2019. This post is written by Nguyen Bich Ngoc.
Below is some statistics about our blog performance in 2019.
Under Vietnamese law, a housing developer (Developer) is not allowed to sell apartments formed in the future (off-plan apartment) (căn hộ hình thành trong tương lai) before completing construction of foundation of the apartment building where such off-plan apartment located (Pre-Foundation Stage) (Article 55 of Law on Real Estate Business 2014). However, in practice, by engaging an independent entity to act as an agency/broker (Agency), it seems that many Developers have “overcome” this limitation. While there are certain legal risks (as discussed below), the transaction structure involving an Agency at the Pre-Foundation Stage may facilitate capital arrangements and customer acquisition of Developers for housing projects (Project).
This diagram and table (click here to download) demonstrate transaction structure currently employed by some Developers to “sell” off-plan apartments at Pre-Foundation Stage and discuss relevant pros and cons. This post is written by Nguyen Hoang Duong.
To protect buyers in a residential house project, the Law on Real Estate Business 2014 requires the developer to provide a buyer with a bank refund guarantee. If the developer fails to deliver the house within the agreed schedule, the buyer could get back its advance payment from the refund guarantee. However, there are several ways which a developer may use to water down the protection provided by law. For example,
· A developer may encourage a buyer to “waive” the right to be issued with a bank refund guarantee (e.g., by offering a discount on the sale price);
· A developer may only procure a refund guarantee for the obligations to return the advance payment made by the buyer but not the obligations to pay the penalty or interests accrued on such amount;
· For buyers of villas, the developer may only procure a refund guarantee for the value of the construction part of the villas (but not the value of the land); and
· A developer may put onerous documentary conditions for the buyer to be able to claim a repayment from the bank refund guarantee. This is because the law does not make clear whether the refund guarantee should be a demand guarantee.
This post is written by Nguyen Quang Vu.