Regulations about payment for off-the-plan real estate sale or lease purchase.

In January 2019, our family wanted to buy an apartment for living purposes. We wanted to buy an apartment in that location since it’s convenient for us to carry on our business. However, the house has not been built by the investors yet. We just wanted to pay a purchase amount as a deposit but the investor made me pay 50% of the contract’s value and the remaining 50% will be paid when the house is completed.

I would like to be advised if in my case, the payment mentioned above is reasonable. Will my benefit be affected if I perform the payment under the contract.

FDVN’s opinion:

Sincerely thank you for your concerning our legal consulting service. We are glad to give you our advice on your question. 

The procedure of payment for the contract of off-the-plan real estate sale:

Because the house you are transferred has not been existing in the present, it should be determined an off-the-plan real estate. At that time, the process of payment for the purchase and sale of this real estate is not in accordance with the agreement of the parties but comply with the law. Specifically, according to Clause 1 Article 57 of Law on Real Estate Trading 2014 has:

“Article 57. Payment for an off-the-plan real estate sale or lease purchase

1. The off-the-plan real estate sale or lease-purchase shall be paid by installments, the initial installment do not exceed 30% of the agreement value, the next installments shall be conformable with real estate construction progress provided that total installment does not exceed 70% of the agreement value if the building has been not transferred to clients; if the seller or the lessor is a foreign-invested enterprise, the total installment does not exceed 50% of the agreement value.

If the buyer or the lessee has been not granted the Certificate of land, ownership of land and property on land, the seller or the lessor shall not collect payment not exceeding 95% of the agreement value from the buyer or the lessee; the remaining value shall be paid when the buyer or the lessee is granted the Certificate of land, ownership of land and property on land by competent agencies.

2. The investor must use the option fee given by clients for proper purpose as committed.”

Thus, the investor has made an illegal re quirement according to law provisions leading to the risk in the case that transfer value has been paid but the investor fails to comply with the term in the contract.

Above are the advice of FDVN Limited Law Firm base on studying law provisions and theories. We hope that our opinions would be useful.

Legal Expert: Nguyen Thi Thao

FDVN Law Company