Under the Law on Real Estate 2014, a real estate developer must provide a bank guarantee to secure for the developer’s obligations to refund to a house buyer the advance payment that the developer has received from the buyer if the developer fails to deliver the house to the buyer on time (a developer refund guarantee). In June 2015, the State Bank of Vietnam issued Circular 7/2015 on bank guarantees which provides further guidance on a developer refund guarantee as follows:
- a commercial bank can only provide a developer refund guarantee if the house purchase agreement specifically requires the developer to refund advance payment to the buyer if the developer fails to deliver the house as committed with the buyer;
- a commercial bank which is licensed to provide guarantee service in general would be allowed to provide developer refund guarantees. The State Bank will make public the list of banks that can provide developer refund guarantees; and
- the developer refund guarantee must have an expiry date which is at least 30 days after the proposed delivery date in the purchase contract.