In February 2020, the Ministry of Natural Resources and Environment (MONRE) issued a long-waited guideline regarding issuance Certificate of Land Use Rights, Ownership of Residential Houses and Assets attached to land (LURCs) for some new real estate products including condotel and resort villas. In particular, the MONRE confirms three important points below:

Condotel (condo-hotel) and resort villas are regarded as tourism residences (such as tourism appartment and tourism villas) under the Law on Tourism. Accordingly, the land used for the development of these facilities for service provision purposes is categorized as “commercial and services land”. The confirmation by MONRE is consistent with our earlier as discussed here.
The Land Law 2013 already provides legal grounds for the use of commercial land. Accordingly, organisations may lease land from the State for a term of up to 50 years or, in special cases, 70 years to develop projects with commercial and service purposes; and
LURCs for condotel and resort villas will be issued in accordance with the procedures on LURC issuance for non-residential construction works under the implementing regulations of the Land Law 2013. The provincial DONREs are responsible for reviewing the approved projects and issuing LURCs for land users and properties owners where they satisfy conditions to be issued with LURCs.
The above is not new but what important is that the MONRE, as the ministry in charge of national land administration, confirmed the nature of land used for condotel and resort villa development as the non-residential land. Some implications of this include:
Foreign individuals are not eligible to purchase, hire purchase, receive donation or inherit condotel/ resort villas because they are not residential houses which foreign foreigners are eligible to own in accordance with the residential housing law;
The land used for purpose of condotel or resort villas development should be used in the form of land leased (thuê đất), not land allocated (giao đất) by the State, except where the real estate developers have land allocated by the State before 1 July 2014;
It remains unclear whether condotel building will be not treated as apartment building under the Residential Housing Law;
Purchasers of condotel/ resort villas may only use the land for a definite duration, not on a stable and long-term basis as residential land.
In cases of condotel/ resort villas projects where the project owners signed sale and purchase contracts of condotel/ resort villas with clients being foreign individuals, they should convert the contracts into another form, for example, long-term leasing contracts; and
In practice, the provincial People’s Committee allows the real estate developer of some resort projects to convert the project land from “land leased by the State” to the “land allocated by the State”. It is not clear whether in light of the new guidance, the real estate developers in this case and any other similar cases must convert the land back to “land leased from the State” in order to obtain LURCs for the clients purchasing products of the projects.

This post is written by Nguyen Bich Ngoc and edited by Nguyen Quang Vu.

Vietnam Business Law