RIGHTS OF THE BUYER IN PURCHASE AND SALE OF RESIDENTIAL HOUSE TO BE FORMED IN THE FUTURE

MINISTRY OF EDUCATION AND TRAINING
HO CHI MINH CITY UNIVERSITY OF LAW
-----------***-----------MANAGING BOARD OF
SPECIAL TRAINING PROGRAMS

TRIEU MY KIM YEN

RIGHTS OF THE BUYER
IN PURCHASE AND SALE OF RESIDENTIAL HOUSE
TO BE FORMED IN THE FUTURE

BACHELOR OF LAW – GRADUATION THESIS
Faculty: Commercial Law
Academic year: 2013 - 2017

HO CHI MINH CITY
2017


MINISTRY OF EDUCATION AND TRAINING
HO CHI MINH CITY UNIVERSITY OF LAW
-----------***-----------MANAGING BOARD OF
SPECIAL TRAINING PROGRAMS

TRIEU MY KIM YEN

RIGHTS OF THE BUYER
IN PURCHASE AND SALE OF
RESIDENTIAL HOUSE
TO BE FORMED IN THE FUTURE

BACHELOR OF LAW – GRADUATION THESIS
Faculty: Commercial Law
Academic year: 2013 - 2017

Supervisor: Dr. DANG ANH QUAN
Author: TRIEU MY KIM YEN
Student ID: 1353801011328
Class: CLC38B

HO CHI MINH CITY
2017


DECLARATION
I hereinafter declare that this thesis is definitely attributed to my own research and
implemented under the supervisory guidance of Dr. Dang Anh Quan. I faithfully
comply with regulations on citation and reference used in this thesis. I am
completely responsible for this guarantee.


LIST OF ABBREVIATIONS
ABBREVIATIONS

MEANING
Certificate of land use rights, ownership of

Certificate

residential house and other assets attached to the
land

Circular 07/2015/TT-NHNN by the State Bank of

Circular 07/2015/TT-NHNN

Civil Code 2005

Vietnam dated June 25, 2015 regulating the bank
guarantees
Civil Code (Code No. 33/2005/QH11) dated June
14, 2005

Civil Code 2015

Civil Code (Code No. 91/2015/QH13) dated
November 24, 2015

Construction Law 2014

Construction Law (Law No. 50/2014/QH13) dated
June 18, 2014

Contract A

Purchase and sale contract between No Va Real
Estate Investment Corporation Joint Stock
Company and the buyer (in Appendix attached the
thesis)

Decree No. 76/2015/ND-CP

Decree No. 76/2015/ND-CP of the Government
dated September 10, 2015 stipulating detailed
regulations for the implementation of a number of
articles of Real Estate Business Law

Decree No. 99/2015/ND-CP

Decree No. 99/2015/ND-CP of the Government
dated October 20, 2015 providing detailed
regulations and guidelines for implementation of
Residential Housing Law

Enterprise Law 2014

Enterprise Law (Law No. 68/2014/QH13) dated
November 26, 2014

Law on protection of
consumers’ rights 2010

Law on protection of consumers’ rights (Law No.
59/2010/QH12) dated November 17, 2010

Purchase and sale contract

Contract for purchase and sale of residential house
to be formed in the future

Real estate business
enterprise

Enterprise or cooperative conducting real estate
business

Real Estate Business Law

Real Estate Business Law (Law No.

2006

63/2006/QH11) dated June 29, 2006


Real Estate Business Law

Real Estate Business Law (Law No.

2014

66/2014/QH13) dated November 25, 2014

Residential Housing Law

Residential Housing Law (Law No. 56/2005/QH11)

2005

dated November 29, 2005

Residential Housing Law

2014

Residential Housing Law (Law No. 65/2014/QH13)
dated November 25, 2014


TABLE OF CONTENTS
INTRODUCTION .....................................................................................................1
CHAPTER 1. GENERAL MATTERS ABOUT PURCHASE AND SALE OF
RESIDENTIAL HOUSE TO BE FORMED IN THE FUTURE ..........................6
1.1. Definition and characteristics of residential house to be formed in the future .... 6
1.1.1. Residential house ....................................................................................... 6
1.1.2. Residential house to be formed in the future ............................................. 7
1.2. Advantages of purchase and sale of residential house to be formed in the
future ................................................................................................................... 11
1.3. Summary on the development of laws on purchase and sale of residential
house to be formed in the future ......................................................................... 13
1.4. Subjects in purchase and sale relationship of residential house to be formed
in the future ......................................................................................................... 15
1.4.1. The investor ............................................................................................. 15
1.4.2. The buyer ................................................................................................. 17
1.5. Object in purchase and sale relationship of residential house to be formed in
the future ............................................................................................................. 18
1.6. Contract for purchase and sale of residential house to be formed in the
future ................................................................................................................... 20
1.6.1. Definition ................................................................................................. 20
1.6.2. Form and content of contract for purchase and sale of residential
house to be formed in the future ......................................................................... 20
1.6.3. Standard form contract ............................................................................ 21
SUBCONCLUSION OF CHAPTER 1 ..................................................................... 23

CHAPTER 2. PRACTICAL STATUS OF REGULATIONS ON RIGHTS OF
THE BUYER IN PURCHASE AND SALE OF RESIDENTIAL HOUSE TO
BE FORMED IN THE FUTURE AND RECOMMENDATIONS .....................24
2.1. Legal necessity to protect rights of the buyer in purchase and sale of
residential house to be formed in the future ....................................................... 24
2.2. Rights of the buyer need to be protected in purchase and sale of residential
house to be formed in the future ......................................................................... 26
2.2.1. Right to be provided with information .................................................... 26
2.2.2. Right to be guaranteed amounts paid to the investor .............................. 31
2.2.3. Right to negotiate with the investor about provisions of the contract ..... 37
2.2.4. Right to be handed over residential house to be formed in the future ..... 41


2.2.5. Right to receive the Certificate of land use rights, ownership of
residential house and other assets attached to the land ...................................... 45
2.3. Recommendations .............................................................................................. 46
SUBCONCLUSION OF CHAPTER 2 ..................................................................... 49
CONCLUSION ........................................................................................................50
REFERENCE


INTRODUCTION
1.
Reasons for conducting the thesis
Real estate business is a crucial and indispensable industry in the economy.
Besides solving housing demand for people and supporting the national budget, it
also plays an important role in promoting development of other industries, such as
building materials, banking and financial services, construction industry, etc., and
solves the issue of employment for a large number of people1. In recent years, real
estate business has a lot of positive changes and attracts investment from both

domestic and foreign investors. In the first quarter of 2017, real estate business
increased 3.72% in gross domestic product (GDP) growth, rose by 55% in newly
established registered enterprises and 31.1% in registered capital over the same
period of 2016. In addition, foreign direct investment into real estate business
reached 343.7 million USD, up 30.23% compared with the same period of 20162. It
shows that real estate business in 2017 continues stability and is even stronger than
the one in 2016.
Purchase and sale of residential house to be formed in the future becomes
attractive and lively in recent years. The first reason is that it is an effective capital
raising source for investors who often have difficulties in finance due to the great
value of real estate and prolonged construction process. The second one is that it
can solve the current housing demand of people in Vietnam that is at a high level3
and help buyers to acquire residential houses with cheaper price. Whereas, because
of the element of profit between the parties and characteristics of purchase and sale
of residential house to be formed in the future, a lot of risks occur and adversely
affect the rights of the parties, especially the rights of the buyer. In practice,
situations such as infringement of contract, investors’ occupation of payments paid

1

Hoai Nam, ““Hệ sinh thái” kinh tế xoay quanh bất động sản” [TRANS: ““Ecosystem” of economy around
real
estate”],
reviewed on May 10, 2017; “Thép, xi măng, v.v. đang hưởng lợi từ bất động sản” [TRANS:
“Steel, cement, etc. are taking advantages from real estate” ], reviewed on May 10, 2017
2
General Statistics Office of Vietnam, “Tình hình kinh tế xã hội quý I năm 2017” [TRANS: “Socio –
economic
situation
in

the
first
quarter
of
2017”],
reviewed on May 10, 2017
3
According to the report named “Affordable housing in Vietnam – The way ahead” by World Bank and the
ministries of the Government of Vietnam in 2015, average per year within the next 05 years, the urban areas
in Vietnam are expected to add 374 000 households to meet requirements of population growth. For more
information: Vân Ly, “WB: Mỗi năm đô thị Việt Nam cần 374000 căn nhà mới” [TRANS: “WB: Vietnamese
urban areas need 374000 new houses each year”], reviewed on May 16, 2017

1


by buyers, late handover or handover not as agreed in the contract and prescribed by
law regularly occur4.
Current law on real estate business though has lots of positive changes for
protecting the buyer in purchase and sale of residential house to be formed in the
future, it contains some inappropriate and unclear regulations from which
shortcomings arise in practice.
While real estate business in general and purchase and sale of residential
house to be formed in the future in particular are holding a greatly significant
position in economy and being in the stage of vibrant development, arising risks and
shortcomings unfavorably impact on rights of the buyer in purchase and sale of
residential house to be formed in the future. For this reason, the author conducts the
Bachelor thesis named as “Rights of the buyer in purchase and sale of
residential house to be formed in the future”.
2.

Literature review
Real estate market has a great influence on economy and is also a complicated
and rich field. Thus, in practice, there are a lot of works which research on various
issues relating to real estate business, such as Le Thi Ngoc Hieu (2011), Pháp luật
về mua bán nhà ở trong kinh doanh bất động sản [TRANS: Legislation on purchase
and sale residential house in real estate business], Bachelor thesis, Ho Chi Minh
City University of Law; Huynh Van Vinh (2010), Pháp luật về các hình thức giao
dịch nhà, cơng trình xây dựng trong kinh doanh bất động sản [TRANS: Legislation
on forms of transaction in connection with houses and other construction works in
real estate business], Master thesis, Ho Chi Minh City University of Law; Mai Chi
Tin (2014), Mua bán nhà, cơng trình xây dựng theo pháp luật kinh doanh bất động
sản [TRANS: Purchase and sale of house and construction work under legislation
on real estate business], Bachelor thesis, Ho Chi Minh City University of Law; etc.
There are also many journals which research on real estate business with
different aspects such as Phan Huy Hong, Bui Thi Thanh Thao (2014), “Bàn về đổi
mới quy định pháp luật về điều kiện kinh doanh bất động sản” [TRANS:
“Discussing innovation of legal regulations on conditions applicable to real estate
business”], Legal sciences journal, No. 01 (80)/2014; Le Minh Hung (2014), “Sửa
đổi các quy định về hợp đồng kinh doanh bất động sản trong Luật Kinh doanh bất
động sản” [TRANS: “Amendment of regulations on real estate business contract
4

Dieu Thuy, “Mua nhà hình thành trong tương lai: Người mua nhà hãy học cách tự cứu mình” [TRANS:
“Purchase residential house to be formed in the future: Buyers should save themselves”],
reviewed on May 18, 2017

2


under Real estate business law”], Legal sciences journal, No. 02 (81)/2014; Tran

Huynh Thanh Nghi (2016), “Những điểm mới và thách thức trong thi hành Luật
kinh doanh bất động sản năm 2014” [TRANS: “The new contents and the
challenges in the enforcement of the Law on real estate business in 2014”],
Legislation research journal, No. 04 (308) T2/2016; Vu Thi Hong Yen (2017),
“Thế chấp bất động sản hình thành trong tương lai – Bất cập và giải pháp hoàn thiện
pháp luật” [TRANS: “Mortgage of property to be formed in the future –
Inadequacies and solutions for legal improvement”], Jurisprudence journal, No.
3/2017; etc.
In terms of purchase and sale of residential house to be formed in the future,
there are still not many theses and journals researching this topic: Le Chi Cuong
(2011), Pháp luật về hợp đồng mua bán nhà ở hình thành trong tương lai [TRANS:
Legislation on contract for purchase and sale of residential house to be formed in
the future], Master thesis, Ho Chi Minh City University of Law; Le Thi Hien
(2014), Pháp luật về mua bán nhà ở hình thành trong tương lai [TRANS:
Legislation on purchase and sale of residential house to be formed in the future],
Bachelor thesis, Ho Chi Minh City University of Law; Nguyen Thi Kim Lien
(2014), Pháp luật về mua bán nhà, cơng trình xây dựng hình thành trong tương lai
[TRANS: Legislation on purchase and sale of house, construction work to be
formed in the future], Master thesis, Ho Chi Minh City University of Law. These
authors of theses generally presented reasoning on purchase and sale of residential
house to be formed in the future, analyzed subjects, object and contract in purchase
and sale of residential house to be formed in the future, bring out potential risks for
both investor and buyer and gave proposals in order to ensure rights and interests of
parties. The same feature of three theses is that they were conducted when legal
regulations of laws such as Real Estate Business Law (Law No. 63/2006/QH11)
dated June 29, 2006, Residential Housing Law (Law No. 56/2005/QH11) dated
November 29, 2005 and their implementing were enforcing and were yet replaced.
Within the scope of study by the author, there is yet any thesis researching on
purchase and sale of residential house to be formed in the future since current Real
Estate Business Law and Residential Housing Law took effect from July 1, 2017.

Moreover, there is not any thesis studying officially about rights of the buyer in
purchase and sale of residential house to be formed in the future.
Besides, there are some journals researching on rights of the buyer in purchase
and sale of residential house to be formed in the future: Bui Duc Giang (2016),
“Pháp luật về bảo lãnh trong bán, cho thuê mua nhà ở hình thành trong tương lai”

3


[TRANS: “Regulations on guarantee for sale or hire purchase of residential house to
be formed in the future”], State and law review, No. 2(334)/2016; Luu Quoc Thai
(2016), “Các biện pháp bảo đảm quyền lợi ích hợp pháp của khách hàng mua nhà
hình thành trong tương lai” [TRANS: “Means for ensuring legitimate interests of
buyers when buying houses to be formed in the future”], Legal sciences journal,
No. 6 (100)/2016; etc.
Many articles on websites studied regulations about rights of the buyer in
practice and risks happening for the buyer in purchase and sale of residential house
to be formed in the future such as Duy Bach, “Minh bạch thông tin thị trường bất
động sản: Bất lực trước các báo cáo kỳ lạ?” [TRANS: “Transparency of information
about
real
estate
market:
Impotence
by
strange
reports?”],
Xuan Hinh, “Dự án Golden Silk: Khơng an tồn
vẫn bàn giao nhà” [TRANS: “Golden Silk project: No safety but still handover”],
Anh Xuan, “Chủ đầu tư thất hứa, khách hàng dài cổ chờ nhận nhà

chung cư” [TRANS: “The investor broke the promise, buyers were waiting a long
time for receipt of apartments”], Luong Thien,
“Rủi ro mua nhà hình thành trong tương lai, người mua phải biết tự bảo vệ”
[TRANS: “Risks of purchase of residential house to be formed in the future, buyers
should protect themselves”], etc.
Most of researches mentioned above conducted on the basis of replaced legal
regulations and yet delved into solving legal issues relating to rights of the buyer in
purchase and sale of residential house to be formed in the future, though, all of them
are extremely precious reference materials which assist the author in precisely
making statements and scientific analyses during process of conducting the thesis.
3.
Purpose of research
The study and analysis about existing legal regulations relating to rights of the
buyer in purchase and sale of residential house to be formed in the future are
conducted under reasoning and practice. On that basis, the thesis presents
shortcomings of those existing legal regulations, simultaneously gives
recommendations with the aim of protecting more effectively rights of the buyer in
purchase and sale of residential house to be formed in the future, contributing to the
completion of real estate business legislation in particular and Vietnamese

4


legislation in general, and promoting the formation of a transparent, dynamic and
developing real estate market.
4.
Object and scope of research
The object of research is legal regulations on real estate business stipulating
rights of the buyer in purchase and sale of residential house to be formed in the
future. However, not all the rights of the buyer are mentioned in the thesis. The

author concentrates on researching and analyzing rights which are often infringed
by the investor in purchase and sale of residential house to be formed in the future.
In addition, law on real estate business studied in this thesis is mainly current Real
Estate Business Law, Residential Housing Law and their implementing. With the
aim to clarify the research object of the thesis, the author also mentions relative
legal issues about purchase and sale of residential house to be formed in the future
such as subjects, object and contract.
The author conducts the thesis under existing legal regulations of Vietnamese
real estate business legislation relating to rights of the buyer in purchase and sale of
residential house to be formed in the future with the investor is real estate business
enterprise or cooperative.
5.
Research methods
Thesis is the result from researching both reasoning and practice. During the
process of research, the author properly combines research methods comprising
analytical and synthetic method, comparative method, and historical method. The
analytical and synthetic method provides the coherent understanding as well as the
full general picture of researching issues. The comparative method offers the
comparison and contrast of aspects of particular issues whose similarities and
differences lead to thorough knowledge and further information. Through historical
methods, the historical progress of research issues is examined and changes are
pointed out to clarify such issues.
6.
Structure of the thesis
Besides Declaration, List of abbreviations, Table of contents, Introduction,
Conclusion, Reference and Appendix, the structure of the thesis includes two
chapters, in particular:
Chapter 1: General matters about purchase and sale of residential house to be
formed in the future
Chapter 2: Practical status of regulations on rights of the buyer in purchase

and sale of residential house to be formed in the future and recommendations

5


CHAPTER 1. GENERAL MATTERS ABOUT PURCHASE AND SALE OF
RESIDENTIAL HOUSE TO BE FORMED IN THE FUTURE
1.1. Definition and characteristics of residential house to be formed in the
future
1.1.1. Residential house
Definition
Residential house is an indispensable need during the existence and
development of human society. Depending on historical periods and geographic
areas, opinions about house and housing forms are different from each other.
However, the need for residential house is consistently a fundamental human need
besides the other ones which are food and clothes. Residential house is a cultural
and educational environment, a cozy place for family, an element of national human
resources development, and a measure for prosperity and social progress as well.
Thus, it is one of the issues concerned by all states to complete human life in
particular and the states in general. Our state, accordingly, expressed interest to this
issue through Constitution of the Socialist Republic of Vietnam dated November 28,
2013: “The State has policies to develop residential house and creates favorable
conditions for everyone to have a place of residence”5. Decision No. 2127/QD-TTg
of the Prime Minister dated November 30, 2011 approving national Strategy for
residential housing development until 2020 with a vision towards 2030 also pointed
out the important role of residential house:
Having an appropriate and secure home is one of the fundamental rights and
crucial conditions for the comprehensive development of humans and,
concurrently, a decisive factor in the development of human resources for
national development. Residential housing development is the responsibility

of the State, the society and people.
Encyclopedic Dictionary of Vietnam defines “residential house” as “house
with main function to stay, the most common type of houses in the residential urban
and rural areas, including a lot of categories: low-rise, multi-story, detached house
(villa), duplex, row house (along the street), apartment building with many
apartments (hostel)”6. Under legal field, clause 1 Article 3 Residential Housing Law
(Law No. 65/2014/QH13) dated November 25, 2014 (Residential Housing Law
2014), which is inherited the previous definition of Residential Housing Law (Law
No. 56/2005/QH11) dated November 29, 2005 (Residential Housing Law 2005)
5

Clause 3 Article 59 Constitution of the Socialist Republic of Vietnam dated November 28, 2013
Editorial Board, National Council (2003), Từ điển bách khoa Việt Nam tập 3 [TRANS: Encyclopedic
Dictionary of Vietnam volume 3], Encyclopedic Dictionary Publishing House, p. 218
6

6


interprets the term “residential house” as “construction work for residential
purposes and for living requirements of households and individuals”.
In conclusion, the same point of above definitions of residential house is the
determination of the primarily residential purpose of residential house. Besides,
residential house is also a construction work, particularly a category of civil works7.
Classification
Residential house can be classified into the following categories depending on
the different criteria.
On the basis of the structure, residential house includes individual residential
house8, and, apartment building9 which is extremely popular at present with various
categories and also effectively qualifies for the huge residential house demands.

Residential house can be classified depending on purpose of construction.
Accordingly, it consists of four categories: commercial residential house, official
residential house, residential house for resettlement and social residential house.
With the purpose to manage efficiently the operation of construction,
residential house is also classified according to construction classes10. Residential
house accordingly comprises special class, class I, class II, class III and class IV
based on classification criteria as height, number of stories, total floor area, etc.
Based on the progress of conducting project, residential house includes
available residential house and residential house to be formed in the future. This
classification takes advantages for legislation in order to appropriately adjust legal
issues relating to these two categories of residential house.
1.1.2. Residential house to be formed in the future
1.1.2.1. Definition
Property to be formed in the future
The term “property to be formed in the future” was first specified under clause
7 Article 2 Decree No. 165/1999/ND-CP dated November 19, 1999 on security

7

Clause 1 Section 1 Appendix I on classification of construction works enclosed with Decree No.
46/2015/ND-CP of the Government dated May 12, 2015
8
Clause 2 Article 3 Residential Housing Law 2014, clause 29 Article 3 Construction Law (Law No.
50/2014/QH13) dated June 18, 2014 defines individual residential house as “a residential house constructed
on a separate parcel of residential land under the legal ownership of an organization, family household or
individual, and comprises villas, row houses and detached houses”
9
Clause 3 Article 3 Residential Housing Law 2014: “Apartment building means a residential house of two or
more storeys with many apartments, common passages and stairs, with parts under private ownership and
parts under common ownership, and a system of infrastructure works for common use by family households,

individuals and organizations, and comprises apartment buildings constructed for residential purposes and
apartments buildings constructed for complex purposes being both residential and business”
10
Table 2 Annex 2 enclosed with Circular No. 03/2016/TT-BXD of the Ministry of Construction dated
March 10, 2016 providing regulations on classification of construction works and instructions on application
to construction management

7


transactions. In particular, property to be formed in the future was construed as
“moveable, immoveable property which is formed after the signing of a security
transaction and which will be under the ownership rights of the securing party, such
as benefits, income or property funded by loans, works under construction, and
other assets to which the securing party is entitled”. Property to be formed in the
future according to this regulation was only an object of a security transaction. In
addition, Civil Code (Code No. 33/2005/QH11) dated June 14, 2005 (Civil Code
2005) showed a definition regarding to property to be formed in the future: “Object
to be formed in the future means moveable, immoveable property under the
ownership rights of the securing party after the time when the obligation is created
or the security transaction is entered into”11. Such regulation was narrower than the
one under clause 7 Article 2 Decree No. 165/1999/ND-CP due to “object” which
was just one of the categories of property under Article 163 of this Code and
definition was only stipulated under the scope of security transaction.
Current Civil Code (Code No. 91/2015/QH13) dated November 24, 2015
(Civil Code 2015) lists two cases in which a property is construed as property to be
formed in the future under clause 2 Article 108 without limitation as above
regulations. Particularly, property to be formed in the future comprises: (a) Property
which has not yet been formed; and (b) Property which has been formed, but to
which ownership is recognized after the time of transaction establishment.

Residential house to be formed in the future
Residential Housing Law 2005 had no regulation to interpret clearly
“residential house to be formed in the future”. In spite of that, regulation under
clause 1 Article 39 of this Law expressed partly the spirit which allowed the
existence of residential house to be formed in the future under capital raising by the
form of advance payments by person who purchases or leases residential house
which has not been completed. In particular,
(…) An investor may only raise capital by way of payments made in advance
by the person who has demand on purchasing or leasing residential house in
the case where the design of residential house has been approved and the
construction of the foundation has been completed. The total amount of
money raised before transfer of residential house to demanding person shall
not exceed 70% of the value of the residential house specified in the contract.
Whereas, clause 8 Article 4 Real Estate Business Law (Law No.
63/2006/QH11) dated June 29, 2006 (Real Estate Business Law 2006) did not
11

Clause 2 Article 320 Civil Code 2005

8


specified “residential house to be formed in the future” but defined “purchase and
sale of house, construction work to be formed in the future” as “the purchase and
sale of house, construction work which at the signing date of the contract has not
been formed or is being formed in accordance with a specific project dossier, design
drawings of building execution and a schedule”.
The term “residential house to be formed in the future” was officially recorded
as mortgaged property under clause 1 Article 3 Joint Circular No. 01/2014/TTLTNHNN-BXD-BTP-BTNMT of the State Bank, Ministry of Construction, Ministry
of Justice and Ministry of Natural resources and environment dated April 25, 2014

providing guidelines on procedures for mortgage of residential house to be formed
in the future under regulations specified in Decree No. 71/2010/ND-CP 12 . This
article specified two cases where residential house to be formed in the future was
used as a mortgaged property. Firstly, at the time of establishing the contract of
mortgaging residential house, such a house was under construction according to the
approved design dossier and construction permit (if required). Basically, residential
house to be formed in the future in this case could be construed as residential house
which has not yet been formed as the spirit of Residential Housing Law 2005 and
Real Estate Business Law 2006. Secondly, residential house has been formed but
yet to receive Certificate of land use rights, ownership of residential house and other
assets attached to the land (Certificate). The term “residential house to be formed
in the future”, however, was only defined as an object in security transaction.
Not until the Residential Housing Law 2014 (took effect as of July 01, 2015)
replacing Residential Housing Law 2005 could the term “residential house to be
formed in the future” officially be defined. Clause 19 Article 3 Residential Housing
Law 2014 regulates that “residential house to be formed in the future means
residential house which is being in the process of investment in construction and has
not yet had acceptance in order to be brought into use”. This interpretation is
compatible with the definition of “house, construction work to be formed in the
future” under clause 4 Article 3 Real Estate Business Law (Law No.
66/2014/QH13) dated November 25, 2014 (Real Estate Business Law 2014)13. By

12

“Residential house to be formed in the future used as mortgaged property means residential house that
organization or individual buys from the real estate business enterprise in investment project of constructing
residential house, at the time of establishing the contract of mortgaging residential house, is under
construction according to the approved design dossier and construction permit (if required) or has been
completely constructed as prescribed by the construction laws but has yet to receive the Certificate of land
use rights, ownership of residential house and other assets attached to the land”

13
Luu Quoc Thai (2016), “Các biện pháp đảm bảo quyền lợi hợp pháp của khách hàng mua nhà hình thành
trong tương lai” [TRANS: “Means for ensuring legitimate interests of buyers when buying houses to be
formed in the future“], Legal sciences journal, No. 6 (100)/2016, pp. 23-24

9


that means, “residential house to be formed in the future” under Residential
Housing Law 2014 and “house, construction work to be formed in the future” under
Real Estate Business Law 2014 are defined based on physical factor of property14
and only consistent with “property has not yet been formed” under point a clause 2
Article 108 Civil Code 2015.
In addition, real estate is a property which may be available property or
property to be formed in the future, including: land; houses and construction work
attached to land; other assets attached to land, houses and construction works; and
other assets as prescribed by law15. Residential house to be formed in the future
hence is a category of real estate.
1.1.2.2. Characteristics
Residential house to be formed in the future is a category of residential house
and hence has common characteristics of residential house which is mentioned in
the scope of residential house attached to the land. The common characteristics of
residential house comprise: fixedness of location, individuality but mutual control,
scarcity, firmness with great economic value but low liquidity, and sensibility and
effect by many factors. (i) Fixedness of location. This characteristic of residential
house which is affected by the fixedness of location of the land creates determined
value for residential house. (ii) Individuality but also mutual control. Residential
house is a construction work with diverse features. Based on size and scale,
residential houses can be constructed as detached house, duplex house, apartment
building, or villa. Other features that create the individuality for residential houses

can be the direction, location and landscape of such residential houses, creative
ideas of architects and interior designers, etc. Despite difference from each other,
residential houses affect mutually. The formation of a residential house may result
in the appearance or disappearance, or, the increase or decrease in value of other
residential houses. (iii) Scarcity. Land is a natural resource on which there are space
limitations. Residential house, thus, becomes finite and scarce. This characteristic
results in limitation of the supply of residential houses. (iv) Firmness with great
economic value but low liquidity. Residential houses are made from high strength
building materials in order to meet the demand on stable and prolonged life of
people. In addition, land is also a natural resource that cannot be ruined except
natural disasters and landslides. Residential house consequently has a solid and firm
14

Vu Thi Hong Yen (2017), “Thế chấp bất động sản hình thành trong tương lai – Bất cập và giải pháp hoàn
thiện pháp luật” [TRANS: “Mortgage of property to be formed in the future – Inadequacies and solutions for
legal improvement”], Jurisprudence journal, No. 3/2017, p. 93
15
Clause 2 Article 105, Article 107 Civil Code 2015

10


structure. Besides, it is inevitable for the investors to incur great expense such as
payment from transferring land use rights, expense for construction, building
materials, etc. in order to build residential houses. And due to the scarcity of
residential house, residential house is always in great price in comparison with other
kinds of products. Moreover, it also has the characteristic of low liquidity. With its
high price, buyers often need a reasonable time to consider and evaluate the house
before deciding to execute a contract for purchase and sale of residential house to be
formed in the future (Purchase and sale contract). There are also a lot of

requirements and procedures to legally complete a transaction of purchase and sale
of residential house, which causes time–consuming. (v) Sensibility and effect by
many factors. Factors that have an influence on residential house, especially on
housing price, include economy, social security, environment, infrastructure, etc.
Besides common characteristics of a residential house, residential house to be
formed in the future also has specific characteristics. At the time of establishing the
contract, the residential house has not yet been physically formed. Residential house
to be formed in the future, hence, is unable to be observed or examined directly by
normal eyes. All issues relating to the quality, form of the construction work, etc.
are only considered through technical specifications in the contract, documents
licensed by competent authority or model provided by the investor. The advantage
of this characteristic is that residential house to be formed in the future has more
affordable and favorable price than available residential house does. In contrast, the
buyer may suffer lots of risks through purchase and sale transaction of residential
house to be formed in the future.
1.2.

Advantages of purchase and sale of residential house to be formed in
the future
The current law has no interpretation of purchase and sale of residential house
to be formed in the future. On the basis of the definition of residential house to be
formed in the future under Residential Housing Law 2014 and specific
characteristic of it mentioned above, “purchase and sale of residential house to be
formed in the future” can be construed as “purchase and sale of residential house
which at the time of establishing the contract is being in process of investment in
construction and has not yet had acceptance in order to be brought into use”.
Purchase and sale of residential house to be formed in the future is taking place
dynamically in recent years, of which one of reasons is that purchase and sale of
residential house to be formed in the future takes lots of advantages for the investors,
the buyers and the economy.

11


For the investors
Because of the great economic value of residential house as mentioned and
time-consuming process of project completion, investors certainly need to maintain
a huge capital for plenty of years. In addition, investors often carry out at least two
projects at the same time. It is thus common for the shortage of capital during the
process of performing the project, which requires investors to raise capital from
various sources16. And advance payments for purchase of residential house under
contracts for purchase and sale of residential house to be formed in the future are an
extremely effective source. By this way, investors can raise capital more
straightforwardly than other ways. The most important thing is that they do not have
to heavily suffer interest as loans from credit institution and financial institutions. In
addition, this way of capital raising also contributes to meet the output of residential
house because of a number of buyers entering into purchase and sale contracts.
Purchase and sale of residential house to be formed in the future consequently
becomes popular and attractive capital raising way for investors.
For the buyers
Purchase and sale of residential house to be formed in the future is an efficient
solution for urgent demand on residential houses in Vietnam. Such demand came
from elements including the rapid urbanization, the decrease of family households
scale and the young population. Vigorous development of Vietnam market economy
results in steady improvement of urbanization and considerable movements of
population from rural areas to urban areas. Also, the results of the survey of
population and residential house in the period of general census in 2009 by General
Statistics office 17 specified that Vietnam has been a young population nation,
particularly 34.5% population at group aged 20 – 39 which has strong demand on
their own residential houses. In addition, 18.4% population at group aged 40 – 59

with stable careers often makes changes in accommodations to improve living
conditions. Besides, stagnant projects can be reduced for the reason that the
investors can raise the capital to continue and complete projects then start to invest
in other projects. Another advantage of purchase and sale of residential house to be
formed in the future for the buyers is the reduction of financial pressure. The buyers
can make payments in instalments depending on the construction progress, and the
price of residential house to be formed in the future is more affordable than the one
of available residential house.
16

Article 67, clause 1 Article 68 Residential Housing Law 2014
General Statistics Office of Vietnam (2011), Tổng điều tra dân số và nhà ở Việt Nam năm 2009 [TRANS:
General survey of population and residential house in Vietnam in 2009], Hanoi, p. 31
17

12


For the economy
Purchase and sale of residential house to be formed in the future creates lively
and energetic environment for real estate market in particular and the economy in
general. It makes more and more enterprises invest in residential housing projects
with purpose to get huge profit. Other relating industries accordingly improve such
as building materials, interior furniture, design, etc., thereby, finding the solution for
the issue of employment. The economy consequently makes remarkable progress.
Along with advantages, purchase and sale of residential house to be formed in
the future also contains many potential risks, especially for buyers, which shall be
stipulated by law in order to enhance advantages, minimize risks and ensure rights
between parties, mostly the buyer.
1.3.

Summary on the development of laws on purchase and sale of

residential house to be formed in the future
The term “purchase and sale of residential house” was specified under Article
3 Decree No. 61-CP of the Government dated July 05, 1994 on purchase and sale
and business of residential house. In particular, “purchase and sale of residential
house is the transfer of ownership of residential house and land use rights from the
investor to the buyer through a written contract signed by the buyer and the investor
in accordance with the regulations of law”. The legal issues in respect of purchase
and sale of residential house such as procedures, form of contract, rights and
obligations between parties were stipulated under Subsection II Section 1 Chapter II
Civil Code (Code No. 44-L/C TN) dated October 28, 1995 (took effect as of July 1,
1996), and afterwards under Subsection II Section 1 Chapter XVIII Civil Code 2005
(took effect as of January 01, 2006). Purchase and sale of residential house to be
formed in the future had not recorded under legal field for such period of time.
Residential Housing Law 2005 (took effect as of July 01, 2006) was
promulgated to concretely adjust the issues regarding residential house, though,
there are no specific regulations about purchase and sale of residential house to be
formed in the future. Article 39 of this Law only showed that investors have the
right to raise capital by advance payment from people who want to buy commercial
residential house. Decree No. 90/2006/ND-CP of the Government dated September
06, 2006 detailing and guiding the implementation of Residential Housing Law
accordingly stipulated this form of capital raising.
A large number of transactions between real estate business enterprises and
buyers through the investment contracts under capital contribution and division of
residential house existed in fact, of which the purpose is ultimately to purchase and

13

sale of residential house to be formed in the future. These transactions took place
even when there were no adjustments under legal field. Not until Real Estate
Business Law 2006 took effect from July 01, 2007 were the regulations on purchase
and sale of residential house to be formed in the future officially specified. This
Law and Decree No. 153/2007/ND-CP of the Government dated October 15, 2007
providing detailed regulations and guidelines for the implementation of Real Estate
Business Law stipulated only at fundamental level, though, were an important
movement of Vietnamese law and development of real estate market. A lot of legal
documents were afterwards promulgated with more concrete regulations such as
Decree No. 71/2010/ND-CP of the Government dated June 23, 2010 detailing and
guiding the implementation of Residential Housing Law (replaced Decree No.
90/2006/ND-CP), Circular No. 16/2010/TT-BXD of the Ministry of Construction
dated September 01, 2010 on guidelines on Decree No. 71/2010/ND-CP, and
Circular No. 03/2014/TT-BXD of the Ministry of Construction dated February 20,
2014 amending Article 21 under Circular No. 16/2010/TT-BXD.
Due to variety of purchase and sale relationships of residential house to be
formed in the future, shortcomings coming from above legal documents happened
in practical application, and the security of purchase and sale of residential house to
be formed in the future was not ensured yet. For such reasons, Real Estate Business
Law 2014 and Residential Housing Law 2014 were promulgated and replaced Real
Estate Business Law 2006 and Residential Housing Law 2005. Besides succession
to some regulations under Real Estate Business Law 2006, Real Estate Business
Law 2014 also added regulations that became more compatible with the
development of real estate market and more efficient to assure the rights of buyers18
in purchase and sale of residential house to be formed in the future, such as specific
rate of payment based on the project construction schedule, obligation of the
investor to provide information about the construction progress, etc.; and
regulations on guarantee for purchase and sale of residential house to be formed in
the future under Article 56 is the most typical one. Implementing of Real Estate

Business Law 2014 and Residential Housing Law 2014 were put into effect
afterwards: Decree No. 76/2015/ND-CP of the Government dated September 10,
2015 stipulating detailed regulations for the implementation of a number of articles
of Real Estate Business Law (Decree 76/2015/ND-CP), Decree No. 99/2015/NDCP of the Government dated October 20, 2015 providing detailed regulations and
18

Tran Huynh Thanh Nghi (2014), “Những điểm mới và thách thức trong thi hành Luật kinh doanh bất động
sản năm 2014” [TRANS: “The new contents and the challenges in the enforcement of the Law on real estate
business in 2014”], Legislation research journal, No. 04(308) T2/2016, p. 42

14


guidelines for implementation of Residential Housing Law (Decree No.
99/2015/ND-CP), Circular No. 19/2016/TT-BXD of the Ministry of Construction
dated September 01, 2010 guidelines for implementation of some content of the
Residential Housing Law and the Government's Decree No. 99/2015/ND-CP, etc.
Current law on purchase and sale of residential house to be formed in the future,
however, still has inconsistent points and difficulties on the implement in fact.
In conclusion, purchase and sale of residential house to be formed in the future
is only codified recently and still contains lots of inadequacies but on which the law
gets a rapid growth and more complete in fact.
1.4.

Subjects in purchase and sale relationship of residential house to be

formed in the future
There may be a lot of subjects entering into a Contract such as: the investor,
the buyer, the broker, etc. In the scope of the thesis, the author only concentrates on
clarifying two subjects comprising the investor and the buyer.

1.4.1. The investor
The investor developing residential housing project is also the seller in
purchase and sale relationship of residential house to be formed in the future.
Authorization which was performed by the investor to the parties participating in an
investment co-operation, a joint venture, association, business cooperation or capital
contribution in order to sign contracts for purchase and sale of real estate is
prohibited by law 19 . The investor shall be real estate business enterprise or
cooperative, have the statutory financial capacity and provide an escrow deposit.
Establishment of enterprise or cooperative conducting real estate business
“In order to conduct real estate business, an organization or individual shall
establish an enterprise in accordance with the law on enterprises or a cooperative in
accordance with the law on cooperative”20. In terms of establishing an enterprise,
that organization or individual must not be in the cases that they do not have the
right to establish enterprises in Vietnam. Such cases are listed under clause 2 Article
18 Enterprise Law (Law No. 68/2014/QH13) dated November 26, 2014
(Enterprise Law 2014). In addition, forms of enterprises which an organization or
individual can set up are sole proprietorship, partnership, limited liability company
and joint stock company. Depending on demand and scale, the organization or
individual may select one compatible form of enterprise, qualifies the equivalent
requirements and carries out procedures to establish an enterprise in accordance
with regulations under Enterprise Law 2014. Moreover, real estate business is also
19
20

Clause 5 Article 13 Real Estate Business 2014, clause 8 Article 6 Residential Housing Law 2014
Clause 1 Article 3 Decree No. 76/2015/ND-CP

15

one of conditional business lines 21 . Enterprises thus must entirely meet the
following conditions to conduct real estate business.
Financial capacity
To ensure transactions with investors, financial capacity became a compulsory
condition for conducting real estate business, including legal capital and financial
capacity on project. In terms of legal capital, the current legal capital is amended to
be higher in comparison with the previous legal capital 06 billion dong 22 . The
organizations or individuals conducting real estate business shall have legal capital
not be less than 20 billion dong23. Regulation on legal capital is a regulation of risk
prevention and partly restricts negative circumstances that may occur in real estate
market. Enterprise or cooperative conducting real estate business (real estate
business enterprise) does not have to carry out procedures for registering the
certification of legal capital as prescribed by former laws24. Determination of legal
capital now is based on the charter capital of real estate business enterprise
according to law on enterprise and law on cooperative25. The investor determining
legal capital improperly as prescribed shall suffer administrative sanction with fine
between 50,000,000 dong and 60,000,000 dong26. In terms of financial capacity on
project, the investors shall meet the following conditions according to clause 2
Article 14 Decree No. 43/2014/ND-CP of the Government dated May 15, 2014
providing detailed regulations for implementation of some articles of Land Law:
To have their own capital for project implementation of no less than 20% of
the total investment in the case of projects using under 20 hectares of land;
and no less than 15% of the total investment in the case of projects using 20
hectares of land or more;
To be able to raise funds for project implementation from credit institutions,
foreign bank branches and other organizations and individuals.

21

No. 107 List of conditional business lines Annex 4 Law (Law No. 03/2016/QH14) dated November 22,

2016 on amendment and supplement to Article 6 and Annex 4 on the list of conditional business lines
stipulated in Investment Law
22
Clause 1 Article 3 Decree No. 153/2007/ND-CP of the Government dated October 15, 2007 providing
detailed regulations and guidelines for the implementation of Real Estate Business Law
23
Clause 1 Article 10 Real Estate Business Law 2014, clause 1 Article 3 Decree No. 76/2015/ND-CP
24
Clause 1 Part 1 Circular No. 13/2008/TT-BXD of the Ministry of Construction dated May 21, 2008
guiding the implementation of some points of the Decree No. 153/2007/ND-CP of the Government dated
October 15, 2007
25
Article 4 Decree No. 76/2015/ND-CP
26
Point đ clause 1 Article 35 Decree No. 121/2013/ND-CP of the Government dated October 10, 2013
stipulating sanction of administrative violation in construction activities; real estate business; exploitation,
production and business of building materials; management of technical infrastructure; management of
housing and office development

16


Accordingly, if an investor conducts at least 02 projects in the same period or
start the new project when conducting at least 01 project, will the capital be used to
calculate for all the projects? Or, will the capital already used to calculate for a
project not be used to calculate for other projects with the same investor 27? In the
author’s opinion, the author consents to the latter explanation. Although by such
explanation the investor must have a large amount of capital to meet those
conditions, this explanation contributes to ensuring the security for real estate
business which is essentially an industry containing a lot of risks, simultaneously

adjust investment in real estate business towards quality more than quantity.
Escrow deposit
Land Law (Law No. 45/2013/QH13) dated November 29, 2013 stipulates
condition of escrow deposit in accordance with the law on investment for the
investors who are allocated or leased land or permitted to change land use purpose
by the State 28 . Likewise, Residential Housing Law 2014 also specifies such
condition for each commercial residential housing project 29 . It is useful for the
escrow deposit to bind and enhance the responsibility of the investor in conducting
the real estate projects. According to clause 2 Article 42 Investment Law (Law No.
67/2014/QH13) dated November 26, 2014, the investor accordingly shall provide
“the rate of escrow deposit from 1% to 3% of investment capital of the project
subject to the scale, nature and implementation schedule of each specific project”.
Nevertheless, there are 04 cases in which it is non-compulsory for the investor to
provide the escrow deposit30.
1.4.2. The buyer
Article 14 Real Estate Business Law 2014 specifies subjects permitted to buy
real estate (including residential house to be formed in the future) from real estate
business enterprises, involving in: domestic organizations and individuals, overseas
Vietnamese, and foreign organizations and individuals.
Although the subjects mentioned above have the right to purchase residential
house to be formed in the future from real estate business enterprises, there are
some restrictions applicable to overseas Vietnamese and foreign organizations and
foreign individuals. With respect to overseas Vietnamese, they are construed as
“Vietnamese citizens and persons of Vietnamese origin who permanently reside in
27

Phan Huy Hong, Bui Thi Thanh Thao (2014), “Bàn về đổi mới quy định pháp luật về điều kiện kinh doanh
bất động sản” [TRANS: “Discussion on the renewal of regulations on conditions for real estate business”],
Legal sciences journal, No. 01 (80)/2014, p. 17
28

Point b clause 3 Article 58 Land Law (Law No. 45/2013/QH13) dated November 29, 2013
29
Clause 2 Article 21 Residential Housing Law 2014
30
Clause 1 Article 27 Decree No. 118/2015/ND-CP of the Government dated November 12, 2015 providing
guidelines for a number of articles of Investment Law

17


foreign countries”31. Overseas Vietnamese who wants to purchase residential house
to be formed in the future shall be permitted to enter Vietnam32, which must be
proven through valid passport affixed with entry stamp of Vietnamese immigration
authority. Such passport can be Vietnamese one, or, foreign one that shall be
enclosed with documents proving Vietnamese nationality or Vietnamese origin
issued by competent authority or other documents prescribed by Vietnamese law 33.
Foreign organizations permitted to purchase residential houses to be formed in the
future comprising foreign invested enterprises, branches and representative offices
of foreign enterprises, foreign investment funds and branches of foreign banks
currently operating in Vietnam34. It is mandatory for such foreign organizations to
have valid investment certificates or documents regarding permission to operate in
Vietnam issued by Vietnamese competent authorities 35 , and, only use residential
houses to serve as accommodations for their employees without using for other
purposes 36 . In terms of foreign individuals, they shall be permitted to enter into
Vietnam, which must be proven through valid passports affixed with entry stamp of
Vietnamese immigration authority; and shall not be in the category entitled to
diplomatic or consular privileges, immunities prescribed by law37.
In conclusion, the buyer in residential house to be formed in the future may be
domestic organizations and individuals, overseas Vietnamese, foreign organizations
and individuals. Existing conditions on residential house ownership of overseas

Vietnamese, foreign organizations and individuals are more accessible than
previous conditions, which make a movement for real estate market and economy,
and still assure the sovereignty on land and public security.
1.5.

Object in purchase and sale relationship of residential house to be
formed in the future
The object in purchase and sale relationship of residential house to be formed
in the future is residential houses to be formed in the future which are met following
statutory conditions to be put into trade.
Firstly, according to clause 1 Article 55 Real Estate Business Law 2014, the
investor shall have sufficiently documents comprising:
(i) Documents proving the land use rights
31

Clause 3 Article 3 Vietnamese Nationality Law (Law No. 24/2008/QH12) dated November 13, 2008
Clause 1 Article 8 Residential Housing Law 2014
33
Clause 2 Article 5 Decree No. 99/2015/ND-CP
34
Point b clause 1 Article 159 Residential Housing Law 2014
35
Clause 2 Article 160 Residential Housing Law 2014, clause 2 Article 74 Decree No. 99/2015/ND-CP
36
Point b clause 2 Article 162 Residential Housing Law 2014
37
Point c clause 1 Article 159, clause 3 Article 160 Residential Housing Law 2014, clause 1 Article 74
Decree No. 99/2015/ND-CP
32

18