New real estate law to clean up conditions
New real estate law to clean up conditions
The new Real Estate Business Law, passed by the National Assembly in November and effective from 2025, could narrow the scope of regulation and tighten conditions for transferring real estate projects.
According to Nguyen Van Dinh, real estate legal expert, according to the new law, investors who want to transfer all or part of a real estate project need to fulfill their financial obligations related to project land and transfer.
“The new law stipulates that the transferor must fulfill its financial obligations to the state before transferring, not allowing the transferee to continue to fulfill their obligations as suggested by many experts previously,” Dinh said.
The new law also does not allow agencies and organisations to sell houses, construction works, or transfer land use rights due to bankruptcy, dissolution, division, or company separation.
In addition, credit institutions and debt management companies are not allowed to sell houses, construction projects, transfer land use rights, or transfer real estate projects as collateral for recovery debt.
“The transfer in this instance shall comply with the Law on Credit Institutions currently being amended, and the Law on Real Estate Business shall not apply for those cases. This provision ensures that the relevant transfer conditions are only applied in a single law and avoid overlap between laws,” Dinh said.
After a decision to allow the transfer is issued and the parties have signed the contract, land procedures will be carried out according to the provisions of the Land Law. The draft Land Law recommends that the transferee inherit the rights and obligations of the transferor without having to recover and deliver land or recalculate land use fees.
“This condition revised the disadvantage of the 2014 Real Estate Business Law, which stipulated that the transferor must return the land to the state, which can then allocate the land to the transferee,” Dinh added.
Phan Xuan Can, chairman of merger and acquisition consultants SohoVietnam, told VIR that one of the highlights in the new law was that projects can be transferred when its owners have transferees completed all necessary conditions but have not received a land use rights certificate, but meanwhile can continue to submit to competent bodies for issuance after the project is transferred.
“This is a step to save time for both sides because they have completed all necessary procedures already, before the transfer,” Can said.
In addition, for real estate projects that transfer part of the project, it is also necessary to ensure that the construction items or the use and business purposes of the construction works of the transferred project part should be independent to other parts in a real estate project.
Regarding the principle of transferring all or part of a real estate project, Can said that the new law stipulates that real estate project investors are allowed to transfer all or part of the project to another investor to continue to invest in construction and business while the project is being implemented and approved by a competent state agency.
When transferring all or part of a real estate project, related parties must ensure that the planning and objectives of the project will not be changed, ensuring the legitimate rights and interests of customers and related parties.
“At the same time, after completing the transfer of all or part of the real estate project, the transferee inherits the rights and obligations of the transferring investor and is the investor of the project and the part which were transferred,” Can explained.
The investor who receives the transfer of all or part of a real estate project does not have to redo the project documents, construction planning and construction permit of the project if there are no changes in the content of the project. If there are changes, the investor receiving the transfer shall make adjustments according to the provisions of law, Can added.
