IS SALE ON FLOOR AREA UNDER CONSTRUCTION PERMITTED?

With the development trend of the economy and the increase in the number of businesses in the market, floor area in construction projects is a popular type of real estate and has increasing demand. Buying or leasing available floor space is quite easy and popular. Then, is sale on floor area under construction (construction floor area in future construction projects) legal or not?

Is sale on floor area under construction permitted?

The Real Estate Business Law 2023 (applicable from January 1, 2025) has more detailed regulations on transactions of future construction projects, including instructions for sale on floor area under construction.

Accordingly, the objects of plan-off real estate that are allowed to be traded are works (including construction works with functions serving educational, medical, sports, cultural, office, etc.) commercial, service, tourism, accommodation, industrial and construction works with mixed service functions) and the construction floor area of ​​construction works formed in the future.

Lease purchase, purchase and sale on floor area under construction are permitted forms according to the provisions of law.

Real estate conditions in the case of sale on floor area under construction?

Is a type of high-value asset that is directly related to the safety of users, legal completion conditions for plan-off real estate or specifically the floor area under construction needs to be fully satisfied. Specifically:

Construction works must ensure legal land use rights, shown by documents on land use rights such as land allocation decisions; decide to lease land; contract on leasing land use rights; Certificate of land use rights, ownership of houses and other assets attached to land… corresponding to each specific case.

In addition, the floor area under construction is the subject of the contract and must be commenced according to regulations, possessing all types of construction documents from the licensing, commencement and acceptance stages.

In addition, before the transaction, the procedure to notify the competent state agency that the project has met the sale and purchase conditions must be completed fully and on time.

The investor must fulfill the guarantee obligation

Before the processing the transaction on the floor area under construction, the investors must be guaranteed by a bank for financial obligations. In particular, the commercial bank commits to the buyer that it will perform financial obligations on behalf of the investor when the deadline for delivering and receiving the committed part of the project comes but the investor does not hand it over to the buyer. Non-refundable or incomplete refund of the advance payment and other amounts under the contract for sale and purchase of floor area under construction signed to the buyer; The investor must accept the debt and repay the commercial bank.

The buyer of a plan-off project can request the investor to provide a letter of guarantee to ensure compliance with contractual obligations.

>> NOTES IN SALE AND PURCHASE APARTMENT UNDER CONSTRUCTION https://linconlaw.vn/notes-in-sale-and-purchase-apartment-under-construction/

>> WHERE TO REGISTER FOR PERSONAL INCOME TAX REFUND? https://linconlaw.vn/where-to-register-for-personal-income-tax-refund/

Payment for contracts of sale on floor under construction must comply with the prescribed ratio

The law gives priority to the right of agreement of the parties in the transaction to ensure compatibility with the actual needs and construction progress that the project meets. In particular, the payment can be made many installments, however, it is necessary to pay attention to the limits on the prescribed execution ratio.