PAYMENT FOR OFF-PLAN HOUSING TRANSACTION

As a type of asset with large value, but characterized by its incompleteness at the time of transaction, off-plan housing requires somewhat more caution when compared to existing housing types. In order for the transaction to take place safely, one of the contents that needs special attention from the buyer is the issue of payment for off-plan housing transaction.

Off-plan housing transaction can take place under many forms

Real estate project investors have the right to sell, lease, or lease-purchase off-plan houses and construction works. From January 1, 2025, according to the enforcement of the Real Estate Business Law 2023, the subjects allowed to transact will be expanded and regulated in more detail, including the off-plan floor area in ​​construction projects.

It should be noted that transactions always need to strictly comply with the principles prescribed by law, and depending on the form of transaction, the conditions will be different in detail.

Payment for off-plan housing transaction will be according to the agreement of the parties, but must comply with the limit ratio by law

The law prioritizes the parties’ right to negotiate in off-plan housing transaction to ensure compatibility with actual needs and construction progress that the project meets. In particular, the payment can be made into different installment, however, it is necessary to pay attention to the limits on the implementation ratio corresponding to each form as follows:

Payment in the purchase and sale of off-plan housing, the first payment made must not exceed 30% of the value of the sale purchase contract of off-plan housing. From January 1, 2025, this 30% limit on first payment will include the deposit. 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.

Payment for lease-purchase of future housing, the first payment shall not exceed 30% of the value of the sale purchase contract of off-plan building. 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.

From January 1, 2025, payments for lease-purchase of off-plan housing, construction projects, and construction floor in construction projects will be made many times. The first time of payment must not exceed 30% of the contract value including the deposit. Subsequent times must be consistent with the construction progress until handover to the lessee-purchaser, but the total advance payment to the lessor-purchaser must not exceed 50% of the value of the lease-purchase contract of the off-plan housing or construction project, floor area in construction project. The remaining amount is calculated as rent to be paid to the lessor-purchaser within a certain period of time as agreed in the contract.

In case the buyer has not been issued 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.

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There should be an agreement on sanctions for violations of payments for off-plan housing transactions

The phenomenon of delays and failure in performing contractual obligations is quite common in reality. Therefore, right from the transaction negotiation stage to contract signing, it is necessary to mention forms of handling violations and preventing risks.

In order to prevent unwanted consequences from delay or refusal of obligations, in addition to the description of the obligations, it is necessary to agree in detail on the terms of penalties for violations and compensation for damages (if any). Note, 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 ahead of time and the regulations on the rights and obligations of the parties at this time.