The regulation requiring real estate transactions through the floor has appeared since the first amendment of the Law on Real Estate Business (Law on Real Estate Trading) in 2006. Then this regulation was removed when the Law on Real Estate Trading 2014 was promulgated… And Now, the Ministry of Construction has reintroduced it into the Draft Law on Real Estate Development. This “return journey” has attracted public attention and caused a lot of controversy.
1. Effectiveness of regulations Mandating real estate transactions through exchanges in 2006
When the 2006 Law on Real Estate Trading took effect, a series of real estate trading floors sprang up. During the period when the real estate market was heating up, many trading floors were manipulating the real estate market, raising virtual prices, etc. Many real estate trading floors were established to sell to investors, etc. Some floors were even legalized. mistakes made by investors in raising capital. Many of the violations investigated showed abetment through the operation of the exchange.
Faced with that situation, the Law on Real Estate Trading 2014 abolished the compulsory regulation of real estate transactions through the floor. Reality shows that the above regulations have not been effective, on the contrary, they have created “legal loopholes” for many violations.
2. The aim is to find a mechanism to control and prevent violations of commercial legal entities
Clause 2, Article 17, Law on Real Estate Business 2014 stipulates:
“Real estate business contracts must be made in writing and must be notarized in cases where the parties are households or individuals.”
Thus, only real estate transactions of households and individuals can undergo notarization procedures… Other subjects are not mentioned. This provision creates conditions for organizations to perform real estate business functions. Besides, it also reduces the cost of intermediaries, helping to reduce the cost of real estate transactions.
As a result, the number of real estate transactions between commercial legal entities and individuals increased greatly. At the same time, complaints and disputes between investors and investors are also proportional to the number of above transactions. Especially in transactions related to real estate formed in the future, more and more investors are being scammed.
Perhaps because the current situation is beyond control, the Ministry of Construction once again included regulations on mandatory real estate transactions through exchanges in the Draft. The main purpose is to create a mechanism to control transactions of commercial real estate legal entities.
3. Nature of Real Estate trading floor
In essence, a real estate trading floor is a business that provides real estate brokerage and intermediary services. The trading floor also operates in accordance with the law and market regulations. With that nature, the trading floor also provides services for profit purposes. Therefore, objectivity in the floor’s operations is not guaranteed.
That’s why the Draft is controversial when it once again brings back regulations that have been abolished. Many opinions believe that the real estate trading floors’ employees are not qualified enough to confirm the accuracy and validity of both the form and the content of the transaction. This draft will still have many open doors, but hopefully with the careful preparation of the Government, the Draft can do well the task of “stabilizing the real estate market” as set out.
(Refer to the Government Electronic Newspaper)
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
