NOTES IN SALE AND PURCHASE APARTMENT UNDER CONSTRUCTION

Apartment under construction is a type of off-plan housing or real estate that is allowed to do business according to the provisions of law. However, due to the incomplete nature of the project at the time of the transaction, buying and selling this type of real estate can bring many risks to the buyer. To ensure safety for transactions of sale and purchase apartment under construction, what are the contents that need to be kept in mind?

Conditions for a purchase and sale transaction of apartment under construction to be legally effective

Before delving into detailed conditions related to risk prevention, parties involved in transaction of sale and purchase apartment under construction need to ensure that the transaction does not violate the conditions on the subject’s capacity; voluntariness; suitability of the purpose and content of the contract.

Regarding transaction form, transaction of sale and purchase apartments under construction must be made in writing, ensuring complete content and notarized and authenticated according to the provisions of law.

Legal documents of the apartment under construction

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

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

In addition, apartment under construction that is the subject of the contract must be commenced according complying with regulations and possess all types of construction documents from the licensing, commencement and acceptance stages. Noted that, for apartment under construction, there must be an acceptance minutes of the completed foundation of the building at the time implementing the transaction.

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

The guarantee obligation must be fulfilled by the investor

Before selling the apartment under construction, the project investor 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 committed deadline for delivering and receiving the house arrives but the investor does not hand over the house to the buyer without refunding or incompletely refunding the advance payment and other amounts under the signed contract for sale and purchase of an apartment under construction to the buyer; The investor must accept the debt and repay the commercial bank.

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

Payment for purchase and sale contracts of apartment 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 in many installments, however, it is necessary to pay attention to the limits on the implementation ratio as follows:

The first payment must not exceed 30% of the value of the sale and purchase contract of apartment under construction.

Subsequent payments can be divided into installments but must be consistent with the construction progress. At the same time, the total payment value must not exceed 70% of the contract value before handing over the house to the customer. In case the seller is a foreign-invested enterprise, the total payment value must not exceed 50% of the contract value.

In case the buyer has not been granted a Certificate of land use rights, ownership of housing and other assets attached to land, the payment value up to this point must not exceed 95% of the contract value. The entire remaining value will be paid when the issuance of Certificate of land use rights, ownership of houses and other assets attached to land to the buyer has been completed.

>> OBLIGATION OF GUARANTEE IN SALE OF OFF-PLAN HOUSING https://linconlaw.vn/obligation-of-guarantee-in-sale-of-off-plan-housing/

>> PROCEDURES FOR ISSUANCE OF ELIGIBILITY CERTIFICATE  FOR CONSTRUCTION EXECUTION CLASS II https://linconlaw.vn/procedures-for-issuance-of-eligibility-certificate-for-construction-execution-class-ii/

Conditions for penalties for violations, damages compensation and contract termination

The phenomenon of delays and fails in performing contractual obligations is quite common in reality.

In order to prevent unwanted consequences from obligations delay or refusal, in addition to the description of the obligations, it is necessary to agree in details on the terms of penalties for violations and compensation for damages. It should be noted that, penalties for violations are only applied when the parties have agreed and specifically recorded in details in the contract.

When a violation of contract is so serious that it cannot be remedied, the parties involved should consider the right to terminate the contract before term.