On January 6, 2022, the Government issued Decree No. 02/2022/ND-CP guiding the implementation of the Law on Real Estate Business 2014, which will take effect from March 1, 2022 in Vietnam. Here are some new and notable contents in this Decree.
Real estate businesses must disclose their information
Organizations and individuals doing real estate business must satisfy 03 groups of conditions as prescribed in Clause 1, Article 4 of Decree No. 02/2022/ND-CP dated January 6, 2022.
In particular, compared with Decree 76/2015/ND-CP, Decree No. 02/2022/ND-CP has specified the provisions in Article 6 of the Law on Real Estate Business 2014 on publicizing information about real estate business, as well as demonstrating the Government's point of information transparency in real estate business.
Accordingly, the contents and information of enterprises must be publicized on the enterprise's website, at the headquarters of the Project Management Board, at real estate trading floors, including:
- Information about the enterprise: Name, head office address, contact phone number, name of the legal representative.
- Information about real estate put into business.
- Information on mortgage of houses, construction works, real estate projects put into business (if any).
- Information on the quantity and type of real estate products to be traded, the quantity and type of products sold, transferred, or leased to; The rest are in business.
Officially removing real estate business legal capital regulations
Previously, Decree 76/2015/ND-CP stipulates the legal capital of real estate enterprises at least 20 billion VND and the basis for determining this level of legal capital. However, the Investment Law 2020 has officially abolished the regulation on legal capital of real estate businesses.
Article 4 of Decree No. 02/2022/ND-CP also abolished the regulation on legal capital in Decree 76/2015/ND-CP, and added regulations on the equity capital of real estate project investors based on the scale of land use as well as the method of determining the equity level:
In case an investor is selected as the investor of a real estate project according to the provisions of law, such investor must have an equity capital of not less than 20% of the total investment capital for a project with the scale of land use is less than 20 ha, not less than 15% of the total investment capital, for projects with a land use scale of 20 ha or more. When conducting real estate business, the project investor must satisfy the conditions specified in Clause 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 enterprise (made in the year or immediately preceding year); In the case of a newly established enterprise, the equity capital shall be determined according to the actual contributed charter capital as prescribed by the law.
Thus, Decree 02/2022/ND-CP has clarified the financial capacity conditions of real estate project investors, ensuring the synchronization between the law on real estate business and the law on land as well as new regulations of the Investment Law 2020.
Applying general contract form when doing real estate business
One of the notable new points is that in the near future, a series of real estate business activities will be "required" to follow the form of Decree 02/2022/ND-CP, including the form of a "purchase and sale" contract of condotels, officetels, clearer regulations apply the law in project transfer.
In fact, the implementation of business activities of real estate products such as tourist apartments, tourist villas (condotels), office apartments combined with accommodation (officetel) is still controversial.
Therefore, the promulgation of Decree 02/2022/ND-CP, uniform application of legal frameworks of this Decree will minimize legal risks in practice.
However, real estate investors also need to pay special attention to the mandatory application of contract forms issued together with Decree 02/2022/ND-CP instead of just for reference in contract signing process as prescribed in Decree 76.
New conditions when buying and selling housing projects formed in the future
According to Article 7 of Decree 02/2022/ND-CP, the transfer of contracts for purchase, sale and lease-purchase of houses to be formed in the future and the transfer of lease-purchase contracts for existing houses and construction works (except for contracts of sale, lease-purchase of social housing) must ensure the following conditions:
- Having a contract of sale, purchase and lease purchase according to regulations. If the parties sign before March 1, 2022, there must be a signed contract.
- The application for a certificate of land use right must not be submitted.
- Purchase and sale contracts, hire purchase must be free from disputes, lawsuits; Houses and works in the contract are not subject to distraint or mortgage, unless the mortgagee agrees.
- If buying, selling, or renting-purchase more than one house in the same contract and the parties want to transfer each house, the seller must agree with the investor to amend the purchase and sale contract, hire-purchase or sign an addendum to the contract before transferring the contract.
Thus, only projects that are approved by investors (as specified in Clauses 3 and 4, Article 29 of the Law on Investment 2020) or granted an Investment Registration Certificate will apply the regulations on investment during the procedures for transferring the whole or a part of the project.
Particularly for projects that have already had an investment policy decision, investment decision, investment approval document or other documents of equivalent legal validity according to previous investment regulations or selected projects. Investors through auction or bidding without carrying out the procedures for granting an Investment Registration Certificate will apply the regulations on real estate business when there is a project transfer.
It can be seen that the new regulations in Decree 02/2022/ND-CP will tighten conditions for investors, avoid setting up unreal projects, mobilize people's money as well as make all information about the project public. Thereby, it will create trust for customers and help management agencies grasp the progress and project documents to choose an investor with enough resources to complete the project on schedule.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.