New Draft Real Estate Business Law: Potential Changes to Project Transfer Regulations
Vietnam’s National Assembly is currently considering a new Law on Real Estate Business to replace the Law on Real Estate Business 2023. One of the notable features of the draft law on real estate business (the Draft) is new regulations on the transfer of real estate projects.
This post discusses four key changes under the Draft and relevant implications.
1. Mortgaged projects can be transferred without a prior discharge
The Draft allows a mortgaged project to be transferred without first releasing the mortgage if the involved parties can reach an agreement. The Draft opens two routes for a mortgaged project to be transferred:
The lender and the buyer agree that the security stays in place through the transfer; or
The buyer steps into the shoes of the seller, so the lender keeps its security over the same asset with a new mortgagor (i.e., the buyer).
This is a significant change as compared to the current law. Under the Law on Real Estate Business 2023, a developer that has pledged its project to a bank must repay or refinance the loan before it can sell. In practice this forces a bridge loan or an escrow-and-release sequence, often funded by the buyer, before the transfer can even be approved.
If adopted, this new rule would help banks deal with real estate projects held as collateral. A bank could support the transfer of a troubled project to a new developer, with its security remaining in place, instead of having to enforce the mortgage first. For buyers, it could also shorten the deal timeline and reduce upfront funding.
2. Project transfer approval moves to the provinces and towards the Investment Law
Under the Draft, most project transfers would be approved through the investment procedure under the Investment Law. For the remaining projects, which still need approval under the real estate law, the provincial People’s Committee where the project is located would approve the transfer, including for projects whose investment policy was originally approved by the Prime Minister. Under the current law, the provincial People’s Committee can approve the transfer of such projects only where the Prime Minister has delegated that power to it.
3. A dedicated rules for projects on BT land funds
Under a build-transfer (BT) contract, an investor builds public infrastructure and is paid with a land fund rather than cash. A real estate project is then developed on that land. Before a real estate project, or part of it, can be transferred, the developer must have “completed its land financial obligations” (i.e., land use fees, land rent). For a project built on BT land, however, the current law does not make clear when this condition is met. The Draft fills this gap with a dedicated test: for real estate on BT land, the condition is met where the land financial obligations have been fulfilled either under the general rules or under regulations on BT contracts. Under the current regulations on BT contracts (Decree 257/2025), the land fund is paid to the BT investor when the State issues its decision to allocate or lease the land. The land price is also determined at that time, and once determined, the value of the land fund does not change. For allocated land, that value is the land use fee for the area concerned; for leased land, it is the one-off rent for the whole lease term.
It is therefore arguable that, under the BT rules, a real estate project on BT land should be treated as having completed its land financial obligations when the land allocation or land lease decision for that project is issued. At that point, the land fund is paid in exchange for the BT works and its value is fixed. This reading is straightforward where no difference is payable, i.e., where the estimated value of the BT works equals or exceeds the value of the land fund.s
However, where the land is worth more, the investor must also pay the difference, plus a surcharge equal to a percentage of that difference, as agreed in the BT contract, to the State budget. Depending on the payment method agreed in the BT contract, Decree 257/2025 stipulates that the difference is paid either at each land payment or after the final settlement of the BT works. Where the difference is paid at each land payment, it may still be recalculated at final settlement, and the BT investor may have to pay more. Accordingly, the land financial obligation is arguably completed only once the difference has been settled in full. However, neither the Draft nor Decree 257/2025 makes clear how the BT investor can be confirmed as having completed its land financial obligations before the BT works are finally settled.
4. A new duty of the project transferer
The Draft adds a new duty on the transferor to hand over customer files and the related funds when it transfers a project. In particular, the transferor must, among others, hand over the full legal and project files, customer files, “the financial amounts” and all rights and obligations towards customers. “The financial amounts” is undefined in the Draft. It is not clear whether this means all customer payments received, only unspent balances, or deposits held in escrow. For a buyer, the answer should go straight to the purchase price.
This post is written by Nguyen Hoang Duong.