ISSUES NEED TO BE NOTED WHEN ENTERING INTO OFF-THE-PLAN REAL ESTATE CONTRACTS
To ensure the performance of the contract in practice and better protect the legitimate rights and interests of the parties involved, minimizing the risks that may occur during the implementation process when drafting the terms is extremely important. The content of these terms must not only comply with the provisions of the law but also must not be detrimental to the Buyer. In the previous article, TNTP shared the conditions for offering for sale for off-the-plan real estate. Accordingly, we will mention the issues that customers need to pay attention to when entering into a contract to buy and sell off-the-plan real estate, specifically as follows:
1. The entity of the off-the-plan building sale agreement
The entity entering into an off-the-plan real estate sale agreement with the Buyer can only be (i) the project investor; or (ii) individuals/organizations authorized by the Investor to conduct real estate business of the Project.
Accordingly, if there is a violation of the subject of the contract, mainly where the seller of real estate is not competent but still signs it, the agreement will be invalid even after it has been signed.
For the Buyer’s legitimate rights and interests to be best guaranteed, before signing, the Buyer needs to determine that the seller in the contract is the one who has the right to sign the contract through understanding the relevant information on the certificate of land use rights, ownership of houses and other land-attached assets (below referred to as the certificate), project dossiers, and construction drawings design approved by competent authorities.
2. Ensuring the inherent interests of the Buyer when the real estate sale agreement has unfavorable terms
Under Decision No. 02/2012/QD-TTg and Decision No. 35/2015/QD-TTg on promulgating the list of essential goods and services for which contract forms and general transaction conditions must be registered, the sale of apartments will have to follow a contract form. Accordingly, if this contract contains provisions that exempt the Investor from liability or increase liability, remove the legitimate interests of the Buyer, this provision will not be legally binding on the parties.
Therefore, even though there are provisions with the above contents in the real estate sale agreement which has been entered into, the legitimate rights and interests of the Buyer are still protected in the event of a dispute. Referring to the provisions of the Civil Code and the Law on Protection of Consumer Rights, the Buyer has the right to request the Investor to ensure his inherent rights. Suppose the Investor fails to perform or function fully. In that case, the Buyer has the right to request a competent authority, such as the Consumer Protection Association, the Court, etc., to settle the dispute with the Investor.
3. Real estate that is not eligible to be granted a certificate
The reason for not being granted the certificate comes not only from the Investor but also from the subjectivity of the Buyer. Accordingly, the Buyer did not check and compare with relevant state agencies about project information but decided to sign the contract. Before signing, the Buyer should verify and check that the Project is subject to a land acquisition decision, a notice of house clearance, and demolition from a competent authority. In addition, considering whether the Investor has fulfilled the obligation to pay land use levy and land-related taxes is also an issue that needs to be done to limit the risk of not being granted a certificate.
Moreover, checking the legal status of the property intended to buy helps the Buyer determine whether the property is eligible for sale and ensures that a certificate shall be issued upon contract termination.
4. Price disadvantage when deciding to buy off-the-plan real estate
Facing the constantly changing situation in the price of the real estate market, accurately determining the price at the time of signing the off-the-plan real estate sale agreement will help the Buyer ensure maximum benefits in the transaction process.
Regarding the current provisions of the law on the real estate sale price, the parties are required to agree on the term of the sale price when signing the contract, and the Buyer will be entitled to the purchase price of the house at the time of signing the contract unless otherwise agreed. As can be seen, the law only binds the parties to decide on the term of the sale price right at the time of signing the contract. The exact price at any time will depend on the parties’ agreement.
However, to best ensure their interests, the Buyer should ask the seller to fix the purchase price when signing the contract. Thus, the amount buyers spend to buy real estate will not be affected even if the land price changes.
Entering into a contract, the Client needs to identify the issues mentioned above to protect their legitimate interests and serve as a basis for settlement in case of a dispute.
Above are 04 risks customers may face when entering an off-the-plan real estate sale agreement. Through the above legal sharing, TNTP hopes to contribute to helping customers feel more secure in buying and selling this type of object.
TNTP & Associates International Law Firm