Recommendation that in the newly promulgated Law on Real Estate Business, the Article 56 has stipulated that the owner must buy a future housing guarantee when it is sold to the client during the construction process, but guidelines and regulations detail

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Name of recommendations: Recommendation that in the newly promulgated Law on Real Estate Business, the Article 56 has stipulated that the owner must buy a future housing guarantee when it is sold to the client during the construction process, but guidelines and regulations detail

Status: Responded

Recommended by units: The Vietnam Association of Contractors

Official letter: 1389/PTM - VP, dated: 2017-06-13

Recommended contents:

In the newly promulgated Law on Real Estate Business, the Article 56 has stipulated that the owner must buy a future housing guarantee when it is sold to the client during the construction process, but guidelines and regulations details of this regulation are still unclear and too late: The law comes into effect from July 1, 2015, but by September 2015 the State Bank of Vietnam has issued a circular, the guidelines are too sketchy. In general, there is a lack of information needed for applications:

For example, does the guarantee fee for a project life change? Normally, when buying a house at the new project that has just completed the foundation will see higher risks when finishing the civil work, the guarantee fee must be reduced, but in the Circular of the State Bank of Vietnam does not provide detailed guidance to investors. and commercial banks have to deal with this issue or even guarantee fees for each investor must also be different due to the reputation of each investor ...

in  the Article 57, the provisions on the red book is that a customer who pays up to 95% of the value of the contract, the investor has to make the red book for them, but this regulation conflicts with the usual business practices: Whenever the customer wants to liquidate the contract, he/she must pay full  100%. When the contract has not been liquidated, there are not sufficient documents to submit to the Department of Natural Resources and Environment, It also means that there are not enough documents to do the red book, which is the impossible point of Article 57 – the Law on Real Estate Business.

Responded by units: The Ministry of Construction; The State Bank of Vietnam

Official letter: 1862/BXD - PC; 5804/NHNN - VP, dated: 2017-07-25

Responded contents:

Article 56 of the Law on Real Estate Business has stipulated: (i) Investors of real estate projects before sale or lease of houses to be formed in the future must be qualified by the commercial bank to perform the financial obligation guarantee of innvestors for customers when investors fail to hand over houses in accordance with the schedule already committed to customers; (ii) The scope, conditions, contents and non-guarantee shall be agreed upon by the parties.

Circular No. 07/2015 / TT-NHNN dated 25 June 2015 (Circular 07) has stipulated on a bank guarantee which is a legal document defining the general legal framework for credit guarantees. With regard to the contents of guarantee activities in the sale or lease of houses built in the future, Article 12 of Circular 07 specifically specifies the regulations that the credit institutions must comply with when carrying out this operation; Other contents shall comply with the general provisions on guaranty activities in Circular 07.

In addition, in order to implement Circular 07, dated December 03, 2015, the State Bank of Vietnam has issued an Official Letter No. 9233 / NHNN-TD, which instructed authorized commercial banks to carry out guarantee activities in selling, leasing houses to build in the future to expeditiously promulgate internal regulations to guide uniform and implemented in the system; to take the initiative in formulating the guarantee granting process, guiding documents and procedures for enterprises which have demand for guarantee for sale or lease-purchase of houses to be formed in the future. At the same time, detailed guidance on the process of granting guarantee in selling and leasing houses will be formed in the future so that commercial banks have a basis for uniform implementation.

Thus, The State Bank of Vietnam has guided and provided specific regulations on guarantee activities, creating a legal framework for credit institutions to implement. Concerned with the specific issues such as the scope, conditions of content, interest rate, guarantee fee agreed by customers and credit institutions in accordance with the Law on Real Estate Business (Article 56) and the Law on Credit Institutions, Article 91).

In fact, the period from the effective date of the Law on Real Estate Business 2014 (July 1, 2015) until Circular 07 takes effect on August 9 2015, at commercial banks there were not any arisen problems, difficulties with proposals for guaranty to project investors in order to sell the house formed in the future. Currently, The State Bank of Vietnam (SBV) is continuing to revise Circular 07 and has published a draft Circular amending Circular 07 for comments on the website of the Government and the State Bank of Vietnam is based on that will study and synthesize contributed comments to improve and promulgate.

• Ministry of Construction:

Article 56 of the Law on Real Estate Business 2014 has provided on the guarantee for the sale or lease of houses built in the future aimed to protect interests of homebuyers when the project investor does not hand over the house properly according to the schedule committed to customers. The guiding responsibility for guiding the sale or lease-purchase of houses to be formed in the future shall fall under the functions and tasks of the State Bank of Vietnam according to the provisions in Clause 5, Article 77 of the Law on Real Estate Business. Currently, the State Bank of Vietnam is considering to study and amend Circular No. 07/2015 / TT-NHNN dated June 25, 2015 regulating bank guarantees to guide more specifically  and solve problems encountered during the prior application process. The State Bank of Vietnam is also the coordinating agency in responding to this recommendation (assigned in Appendix 1 of Report No. 1389 / PTM-VP of the Vietnam Chamber of Commerce and Industry) Therefore, there will be specific comments on the obstacles in the implementation of houses guarantee formed in the future of the Vietnam Association of Contractors.

Article 57 of the Law on Real Estate Business has stipulated that the seller or the lessor shall not be entitled to pay over 95% of the contract price when the purchaser or the lessee has not yet been issued a certificate of land use right or house ownership  and other assets attached to land to enhance the responsibility of the investor in the completion of the project, the delivery to customers on schedule committed, ensuring the interests of customers. Pursuant to Clause 3, Article 72 of the Government's Decree No. 43/2014 / ND-CP of May 15, 2014 detailing the implementation of a number of articles of the Law on Land and Clause 5, Article 8 of Circular No. 24/2014 TT-BTNMT dated May 19 2014 of the Ministry of Natural Resources and Environment on the cadastral file, the application file for registration, issuance of the certificate of land use right, ownership of houses and other assets attached with land not required to submit minutes of liquidation of housing purchase contract. In addition, in Clause 1, Article 11 of Circular No. 24/2014 / TT-BTNMT of May 19, 2014, the Ministry of Natural Resources and Environment has stipulates that "the receiving agencies of dossiers shall carry out the procedures for registration and grant of certificates and shall not allowed to require the land user or land-attached asset owner to submit other papers without the papers to be submitted under the provisions of Articles 8, 9, 10 of this Circular.

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