Comments on New Law on Real Estate Business – Part 1

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After a quite lengthy debate and discussion, on 28 November 2023, the National Assembly officially adopted a new law on real estate business (Real Estate Business Law 2023). The Real Estate Business Law 2023 is expected to enhance the real estate business environment and resolve some long-standing legal issues. However, the new Real Estate Business Law 2023 will have to wait until 1 January 2025 to take effect. The deferred effectiveness of the Real Estate Business Law 2023 is probably intended to give the National Assembly more time to promulgate the new land law, which to some extent could be considered as the “foundation” for formulating the Real Estate Business Law 2023.

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Written by Nguyen Quang Vu On In

Are representations and warranties considered as obligations under Vietnamese law?

Representations and warranties constitute an important building block in a contract. Unfortunately, Vietnamese contract law does not have a separate regime on representations and warranties. Accordingly, this gives rise to various questions concerning representations and warranties under Vietnamese law. The first question would be whether representations and warranties are considered as obligations of the person giving it.

In a book on Vietnam contract law, the author, a well-known business lawyer, considers that representations and warranties are statements of facts and are not undertaking to perform or not perform a specific task. Therefore, representations and warranties are not obligations under Vietnamese law. We have a different view on this.

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Written by Nguyen Quang Vu On In ,

Possibility to apply term deposit interest to security deposit (ký quỹ)

At law, enterprises engaging in certain special business lines (e.g. labour outsourcing service, employment services, etc.) (Security Deposit Enterprise) are required to place a security deposit at a licensed bank in Vietnam (Custodian Bank) before conducting the relevant businesses (Security Deposit). The Security Deposit is subject to strict control regulations (e.g. it can only be withdrawn or released in specific cases upon being approved by a competent authority). While the term of the Security Deposit could be long (e.g. more than one year), it is not entirely clear from the law whether the Custodian Bank can establish the Security Deposit as a term deposit and apply the respective interest rate.

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Written by Lawyers VNLaw On In

Some issues relating to management of apartment buildings in Vietnam

Owners of apartments in an apartment building in Vietnam must set aside 2% of the purchase price for contribution into the apartment building’s maintenance fund (Quỹ bảo trì) and pay monthly contribution into the apartment building’s operation fund (Quỹ vận hành). The management of an apartment buildings including the maintenance fund and the operation fund will be handled by (1) “the meeting of [owners of] the apartment building”(hội nghị nhà chung cư) (building owner meeting) (2) a building management board selected by the building owner meeting, and (3) a management company selected by the meeting of owners of the apartment building.

Vietnamese law provides for a relatively detailed framework on management of an apartment building. However, several important issues, which are discussed below, are still not adequately addressed:

  • The residential housing regulations seem to require an apartment building to be managed by a single management company. However, an apartment building usually includes certain commercial components such as office or shopping mall which are managed and operated very differently (e.g., the lifts serving commercial section will be used more extensively that those used for residential section). Accordingly, the combination of management of both residential section and commercial section in one single mechanism could cause conflicts between the apartment owners and the owners of the commercial section.

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Written by Nguyen Quang Vu On In