On 15 October 2007, Decree 153/2007/ND-CP ("Decree 153") was issued to provide detailed regulations for implementation of the Law on Real Estate Business. Decree 153 will help create transparency in Vietnam's real estate market and enhance management efficiency of the State in this area.
Under Decree 153, businesses wanting to operate in real estate business must have charter capital of at least VND6 billion (over US$373,000). However, there is no requirement on charter capital with regard to businesses providing real estate business services.
Decree 153 stipulates that project investors must have "investment capital of their possession" of at least 20 percent of the total investment capital for approved projects in new urban areas or industrial parks, 15 percent for housing projects under 20 hectares, and 20 percent for housing projects over 20 hectares. "Investment capital of investors' possession" is defined as the capital that the investor actually has up to the immediate preceding year of the implementation of the project and is shown in the audited financial statement of the investor.
The requirements as well as procedures for project assignment with regard to new urban areas project, housing projects or industrial zone technical infrastructure project are now provided in details in Decree 153. Such projects can only be assigned completely when they satisfy five conditions: (1) the investor does not violate its legal obligations; (2) the project has been approved; (3) the investor has the right to use the land in question; (4) the investor has finished the clearance and compensation process for the whole project or in phases; and (5) with regard to new investor, it must establish an enterprise and cooperative, must be registered for real estate business, must have charter capital of at least VND6 billion, must meet the financial requirements as mentioned above, and must make commitment in writing to implement the project in accordance with the approved implementation schedule.
The application dossier for assignment of project includes: (1) request for assignment of project; (2) written investment permit issued by competent state authority; (3) the file of the approved project; (4) land lease agreement or land allocation decision or land use right certificate; and (5) commitments in writing with regard to new investor.
According to Decree 153, individuals must meet three conditions in order to be issued certificate for real estate brokerage or real estate appraisal, which are: (1) they cannot be bureaucrats; (2) they must have successfully completed a course in real-estate brokerage and property assessment; and (3) they must have a college or university degree. Individuals and organizations not yet certified are allowed until the end of 2008 to obtain certification; and up to the end of 2008, individuals with price-appraisal or construction cost-assessment certification will still be allowed to provide real estate appraisals. However, after 1 January 2009, they must have a certificate of real estate appraisal.
Decree 153 further stipulates that in cases where developers and clients sign a sales agreement with advanced payments, the payments must be made repeatedly and the first advance can only be paid after developers start building the infrastructure of the project in question and further advances must be paid as construction progresses. This provision is meant to minimize the risks of the buyers; however, it shall eliminate financially unable project investors. With regard to housing projects for which advances have already been paid, developers must bear responsibility for being late in handing over houses to clients or providing sub-standard structures and clients will have the right to require their advances be reimbursed.
Author: Phuong Do
For further information, please contact:
Name: Dao Nguyen
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