OBLIGATION OF GUARANTEE IN SALE OF OFF-PLAN HOUSING

Procedure of guarantee is an important obligation of investors of off-plan housing projects. The purpose of guarantee in sale of off-plan housing is to ensure the investor’s financial obligations to customers when the investor does not comply with their commitment. Applicable from January 1, 2025, how does the Real Estate Business Law 2023 regulate this issue?

The responsibility for implementing procedure on guarantee in sale of off-plan housing must be completed by the investor

One of the most important obligations of the investor is to ensure that the construction project fully meets technical, safety and quality standards. The investor must be responsible for all problems arising from the construction process, maintaining safety for future users and ensuring financial capacity to satisfactorily resolve arising problems.

According to the law, before selling off-plan housing, real estate project investors must obtain approval from a guarantor to issue guarantees for the investor’s financial obligations to the home purchaser. When the investor does not hand over the house as committed in the off-plan housing sale contract. In particular, the financial obligations mentioned here include the amount of money the investor has received in advance from the purchaser and other amount (if any) as agreed in the off-plan housing purchase and sale contract signed.

Guarantor include domestic commercial banks and foreign bank branches legally operating in Vietnam. The guarantor will sign a guarantee agreement with the investor; Issue a letter of guarantee to the purchaser.

The parties have the right to negotiate if a guarantee is required or not

Prioritizing the principle of respect for establishing agreements on the basis of freedom, the law allows parties to choose whether or not to have a guarantee for the investor’s financial obligations in the transaction of sale and purchasing off-plan real estate. However, it should be noted that this agreement of the parties must be recorded in writing at the time of signing the contract.

The scope, conditions, content and term of the guarantee in sale of off-plan housing must be recorded in writing

The scope of guarantee, conditions required to perform guarantee obligations, content and guarantee fees are agreed upon by the parties. All of this content is recorded in the guarantee agreement signed between the guarantor and the investor of the off-plan real estate.

The validity period must be specifically stated in the guarantee agreement signed between the guarantor and the project investor, and the guarantee letter from the guarantor for the purchaser of the off-plan housing.

>> OBLIGATIONS OF ADJOINING IMMOVABLE PROPERTY OWNER https://linconlaw.vn/obligations-of-adjoining-immovable-property-owner/

>> APARTMENT LEASING CONTRACT, WHAT FOREIGNERS NEED TO KNOW https://linconlaw.vn/apartment-leasing-contract-what-foreigners-need-to-know/

The investor is responsible for providing letters of guarantee to customers

The purchaser of off-plan housing has the right to request the investor to provide a letter of guarantee before making payment under the off-plan housing sale and purchase contract.

The specific time limit for providing the letter of guarantee is agreed upon by the parties. If there is no other agreement, the investor shall provide a letter of guarantee to the buyer within 10 working days from the date of signing the off-plan housing sale and purchase contract.

Handling guarantee in sale of off-plan housing in case the investor violates

If the investor does not hand over the house as committed; fails to perform or incompletely fulfills the financial obligations to the purchaser, the guarantor can act on behalf of the investor to perform financial obligations to the purchaser in accordance with the commitment in the letter of guarantee.

Note, the bank will only perform the guarantee obligation under request of the purchaser..