The recent situation of investors in projects formed in the future “herding chickens” has caused buyers to gradually lose confidence in this investment model. Many buyers are worried when their rights are not guaranteed. Therefore, it is necessary to have a mechanism to protect them, and at the same time, there must be sanctions strong enough to seriously handle the above situation.
1. Conditions of future real estate to be put into business
In principle, housing projects formed in the future must meet the conditions prescribed by law to be “open for sale” such as:
– Have documents on land use rights and project documents;
– Design of construction drawings approved by competent authorities;
– Having a construction permit (depending on the case);
– Complete construction of technical infrastructure according to the project schedule;
– In the case of an apartment building or a building intended for living, the foundation must be completed.
(Article 55, Law on Real Estate Business 2014)
2. The lack of a mechanism to protect the interests of real estate buyers will form in the future
The regulation is like that, but in case the real estate project is not eligible for “opening for sale”… The investor has “circled the law” to raise capital through the form of deposit and capital contribution, which is quite common.
In fact, the Hausbelo Housing Project at the end of 2018 has not been implemented yet… But the investor has organized to raise capital in the form of deposits and reservations. Accordingly, those who want to buy the project must deposit 10% of the apartment value in advance. In a short time, all 888 apartments have been ordered. Up to now, the project has not entered the construction phase for reasons such as the Covid-19 epidemic, many legal regulations have changed, etc. Recently, the Hausbelo project investor decided to terminate the whole project. deposit agreement. Buyer will be refunded all money and interest incurred (if any).
This project is just one of hundreds of “chicken” projects in reality. Because of the investor’s “circumvention of the law”, many homebuyers have been stuck with cash flow for many years but have not been handed over their houses.
The lack of a mechanism to regulate deposits in future projects has pushed risks on the side of project buyers.
3. Propose additional regulations to protect buyers
With the Hausbelo project, the investor proactively returns money and interest to the buyer. There are hundreds of other projects “holding stakes” from buyers but there is no movement. At this time, to get the deposit back, the buyer must go through a lengthy litigation period. Not to mention many “winning” cases, it is difficult to ensure enforcement of the judgment.
Confronted with the aforementioned situation, the draft Law on Real Estate Business is presently undergoing discussions. Moreover, numerous experts strongly advocate for the inclusion of explicit provisions regarding the acceptance of deposits in the housing business and future construction works directly within this Law. Therefore, it is crucial to carefully consider and address these recommendations. In addition, buyers also need to be advised and aware of complying with the law when participating in transactions.
(Reference: Investment Newspaper dated May 15, 2023)
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