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.

Vietnam Business Law