On January 6, 2022, the government issued Decree No. 02/2022/ND-CP guiding the implementation of the Real Estate Business Law of 2014, which will come into force on March 1, 2022 in Vietnam. Here are some new and notable contents in this Decree.
Real estate companies must disclose their information
Organizations and persons carrying out a real estate activity must meet 03 groups of conditions as prescribed in Article 1 of Article 4 of Decree No. 02/2022/ND-CP of January 6, 2022.
In particular, with respect to Decree 76/2015/ND-CP, Decree No. 02/2022/ND-CP clarified the provisions of Article 6 of the Law on Real Estate Affairs of 2014 concerning the publication of information on real estate affairs, as well as demonstrating the government’s point of transparency of information in real estate affairs.
Accordingly, the companies’ content and information must be made public on the company’s website, at the headquarters of the Project Management Board, in the real estate trading floors, including:
- Company information: Name, head office address, contact telephone number, name of legal representative.
- Information on properties put into operation.
- Information on the mortgage of houses, construction works, real estate projects put into operation (if any).
- Information on the quantity and type of real estate products to be exchanged, the quantity and type of products sold, transferred or leased; The others are in business.
Official abolition of regulations on the legal capital of real estate companies
Previously, Decree 76/2015/ND-CP stipulates that the legal capital of real estate enterprises is at least VND 20 billion and the basis for determining this level of legal capital. However, the Investment Law 2020 officially abolished the regulations on the legal capital of real estate businesses.
Article 4 of Decree No. 02/2022/ND-CP also removed the regulations on legal capital in Decree 76/2015/ND-CP, and added regulations on the equity of investors of real estate projects in depending on the scale of land use as well as the method of determining the level of equity:
In the event that an investor is selected as an investor of a real estate project in accordance with the provisions of the law, this investor must have a share capital of at least 20% of the total investment capital for a project whose scale land use scale is less than 20 ha, not less than 15% of the total investment capital, for projects whose land use scale is 20 ha or more. In the exercise of its real estate activities, the project investor must meet the conditions specified in paragraph 1 of this article.
The determination of equity specified in this clause is based on the results of the most recent audited financial statements or the results of independent audit reports of the operating business (conducted within the year or last year ); In the case of a newly created company, the share capital is determined according to the share capital actually contributed as prescribed by law.
Thus, Decree 02/2022/ND-CP clarified the conditions of financial capacity of investors in real estate projects, ensuring synchronization between the law on real estate affairs and the law on land as well as the new regulations of the law on real estate projects. investments 2020.
General contract form application when doing real estate business
One of the notable novelties is that in the near future a series of real estate commercial activities will be “forced” to follow the form of Decree 02/2022/ND-CP, including the form of a “purchase and sale” of condotels, officetels, clearer regulations apply the law on project transfer.
Indeed, the establishment of commercial activities of real estate products such as tourist apartments, tourist villas (condotels), office apartments combined with housing (officetel) is still controversial.
Therefore, the promulgation of Decree 02/2022/ND-CP, the uniform application of the legal frameworks of this decree will minimize legal risks in practice.
However, real estate investors should also pay special attention to the mandatory application of the contract forms issued with Decree 02/2022/ND-CP instead of simply being used for reference in the process of signing the contract, as prescribed by Executive Order 76.
New conditions when buying and selling formed housing projects in the future
According to article 7 of Decree 02/2022/ND-CP, the assignment of purchase, sale and lease-purchase contracts of houses to be formed in the future and the transfer of lease-purchase contracts of existing houses and construction work (except for contracts for the sale, rental-purchase of social housing) must meet the following conditions:
- Have a contract of sale, purchase and lease-purchase according to the regulations. If the parties sign before March 1, 2022, there must be a signed contract.
- The application for a land use right certificate does not have to be submitted.
- Contracts of purchase and sale, hire-purchase must be exempt from disputes, prosecution; The houses and works provided for in the contract are not subject to seizure or mortgage, except with the agreement of the mortgagee.
- If the purchase, sale or lease-purchase of several houses in the same contract and the parties want to transfer each house, the seller must agree with the investor to modify the contract of purchase and sale, lease- sale or to sign an amendment to the contract before transferring the contract.
Thus, only projects approved by investors (as specified in clauses 3 and 4 of article 29 of the investment law 2020) or benefiting from an investment registration certificate will apply the regulations on investment during transfer procedures for all or part of the project.
In particular for projects which have already been the subject of an investment policy decision, an investment decision, an investment approval document or other documents of equivalent legal validity according to previous investment regulations or selected projects. Investors through auctions or tenders without carrying out the procedures for granting an Investment Registration Certificate will apply the regulations on real estate affairs when transferring a project.
It can be seen that the new regulations of Decree 02/2022/ND-CP will toughen the conditions for investors, avoid the establishment of unreal projects, mobilize people’s money and make all information about the project public. Thus, it will create the confidence of the clients and help the management agencies to grasp the progress and project documents to choose an investor with enough resources to complete the project on time.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.