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The market of real estate and construction in Vietnam is increasingly becoming vibrant, with the growth in both scale and the level of diversity of transactions. However, along with that are many potential legal risks which, if not controlled, can cause serious damage in terms of finance, time, and reputation.
Early identification of these risks and having appropriate avoidance strategies is a prerequisite to ensure legal safety for the participating parties. This article reviews the four most common legal risks and provides some practical recommendations to help investors, organizations, and individuals proactively prevent them.
1. Lack of transparency in the legal status of the real estate
A common risk is transacting with real estate that does not yet have a Land Use Right Certificate (red book), is under suspended planning, or is under ongoing dispute. Many transactions also involve assets under co-ownership but the seller does not have sufficient representative authority or valid authorization. These cases all lead to the risk that the contract is invalid or cannot complete name transfer.
Avoidance: Before placing a deposit or signing a contract, the buyer should request a valid copy of the red book, verify planning information at the land registration office, and carefully check the seller’s legal status. Consulting a lawyer is essential.
2. Contract not in proper form and lacking protective clauses
Many real estate transactions are conducted with handwritten documents or contracts not notarized as prescribed by law, causing the transaction to possibly be declared invalid. In addition, contracts often lack important clauses such as: payment conditions, rights and obligations of parties, remedies for breach or dispute resolution.
Avoidance: Always draft the sale and purchase contract in writing, notarized at a notarial practice organization. The contract content should be carefully prepared, transparent regarding responsibilities, obligations, and remedial measures if one party fails to fulfill commitments.
3. Unclear deposit and project not eligible to mobilize capital
Some buyers make payments in the form of deposit, reservation, or capital contribution agreement for projects that have not yet met legal conditions (no project approval decision, no construction permit, or incomplete land-use conversion procedures). As a result, the transfer cannot be implemented, and the buyer risks losing all paid money.
Avoidance: Deposit must have a clear contract, specifically stipulating implementation conditions, refund terms, and remedies for breach. For legal advice on real estate in Vietnam, the buyer should request all legal documents of the project and verify information on the website of the Department of Construction or Ministry of Construction.
4. Financial obligations not completed and risks regarding tax, fees
In some cases, the seller has not completed financial obligations related to land use tax, personal income tax, or transfer fee, causing name transfer to be delayed or the buyer being requested to pay additional amounts after the transaction.
Avoidance: The contract should clearly specify which party is responsible for paying taxes and fees. The buyer needs to check tax payment receipts, and documents confirming completion of financial obligations before proceeding with notarization and payment.
Conclusion
Real estate is a high-value sector subject to strict legal regulations. To avoid risks that can cause serious damage, participating parties need to proactively conduct legal due diligence, carry out transactions in accordance with proper procedures, and have support from Vietnam Real estate law firm. Investing in legal consultancy from the beginning is a worthwhile cost to protect long-term interests in every real estate transaction.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top tier Real Estate law firm in Vietnam. If you need any advice, please contact us for further information or collaboration.
