Attorney suggests banks step in to moderate real-estate market
Attorney suggests banks step in to moderate real-estate market
To protect home buyers' rights, an expert proposed that banks act as intermediaries through contracts signed between home buyers and project investors.
The proposal came from Truong Chi Cong, an attorney from the firm C&M.
Current law states that investors must fulfill specific conditions before they can take installment payment from customers for the unfinished project. However, many investors have ignored the conditions of their contracts.
Customers often also lack enough legal knowledge to know and protect their rights, and the contracts are written in a way to bring advantage to the investor and not the client.
One example is contracts that clearly state the customers obligations for payments, but neglect to mention any specific terms for the completion of construction.
This has become the cause of a number of disputes.
Thuan Thanh Real Estate Company took installment from customers, but has yet to begin construction. The results led to a confrontation of 200 angry customers demanding compensation.
Customers of Lilama Hanoi JSC also reported that the company collected 95% of the capital for the project, while it was only supposed to collect 70%. Despite the money collected, construction is still six months behind schedule.
"Buying a house is like gambling," one expert said. "It all depends on the investor. If you deal with investors with limited funds, you will lose. If you happen to find one that is financially sound, everything may go well."
Cong added that numerous individuals and organisations habitually take advantage of loopholes in the system to swindle consumers. He said that banks are needed as an intermediary to protect consumers.
He proposed two plans.
The first is that banks guarantee for investors. In this case, if investors violate the terms of their contracts, they will be terminated and the customers compensated.
The second of his options is that the customers' money be kept in escrow, and the investors only receive payment only after all terms of the contract have been met.
In the meantime, however, Cong suggested limiting the number of installments clients are obliged to make to five, 40% of the price of the home to be paid upon receipt of the land use rights papers, and when the clients can move in.
While much of the public seem to approve of these suggestions, many real-estate investment companies have a different view. The head of one large company said, "We agree with these proposals in theory, but the commitments on construction deadlines may not be feasible. Also, we must consider the fact that the capital earned from one project may be used to finance others that are under construction at the same time."
Dtinews
