The Vietnamese real estate market is experiencing a strong recovery following the COVID-19 pandemic. Transactions and prices are rising, particularly in major cities such as Hanoi and Ho Chi Minh City, indicating a resurgence in the sector. The government is promoting sustainable development through supportive policies and adjustments to legal regulations, facilitating investment from both domestic and international sources. To conduct legal and effective real estate transactions, it is crucial to understand the regulations regarding property ownership, foreign ownership limits, and necessary conditions. Mastering these regulations helps you avoid legal risks, protect your rights, and optimize investment opportunities.
Understanding Property Ownership Laws in Vietnam
Property ownership laws in Vietnam have undergone numerous changes and adjustments to align with economic development and international integration needs. Previously, foreign property ownership in Vietnam was highly restricted, permitted only under special circumstances such as marriage to a Vietnamese citizen or joint investment with a Vietnamese partner.
In 2014, amendments to the Housing Law expanded property ownership rights for foreigners, marking a significant step in attracting foreign investment. However, these rights remain limited with regulations allowing foreigners to own property only within commercial housing projects, with a maximum period of 50 years and a cap of 30% of the apartments in a condominium or 250 individual houses within a precinct. The 2024 Land Law further extends property rights to overseas Vietnamese, allowing them to be recognized for land use rights in Vietnam.
According to the latest regulations under the 2024 Land Law, foreigners cannot acquire land use rights but can own residential property through purchasing, leasing, or inheriting commercial housing in investment projects. Foreigners can own up to 30% of the apartments in a condominium and 250 individual houses within an equivalent area. The ownership period lasts 50 years, with the option to extend it once for an additional 50 years if needed.
Additionally, foreigners married to Vietnamese citizens or overseas Vietnamese enjoy property ownership and rights equivalent to those of Vietnamese citizens.
Steps for Foreigners to Purchase Property in Vietnam
According to Articles 162 and 164 of the Housing Law 2024, the steps for foreign investors to purchase residential property are as follows:
Agreement and Contract Preparation
Parties involved in the transaction (including foreigners and the seller) must agree and draft a purchase agreement. This contract must include the contents specified in Article 161 of the Housing Law.
Notarization and Authentication of Contracts
For transactions involving buying, leasing, gifting, exchanging, contributing capital, or mortgaging property, parties must complete notarization or authentication of the contract. The contract becomes effective upon completion of notarization or authentication.
Notarization and authentication locations:
- Notarization is carried out at a notary organization.
- Authentication is done at the local People’s Committee where the property is located.
Submitting Documents
One of the parties in the transaction may submit a request to the competent authority to issue a certificate of property ownership.
If buying property from a project developer, the developer is responsible for issuing the certificate to the buyer or lessee. If the buyer or lessee voluntarily handles this procedure, the developer is not required to do so.
Recognition of Ownership
The competent authority, when issuing the certificate, also recognizes the legal ownership of the property and the land use rights of the property.
Tips for a Smooth Transaction
Legal Verification: Verify the legal status of the project and the reputation of the developer.
Seek Legal Advice: Use legal services to ensure contracts and processes comply with the law.
Read Contracts Carefully: Ensure terms are clear and valid.
Identify Costs: Understand related costs and plan financially.
Verify Ownership: Confirm ownership rights and the issuance of the land use certificate.
Monitor Transfer Process: Ensure that all transfer steps are followed correctly.
Prepare for Disputes: Plan for potential issues.
Potential Challenges and How to Overcome Them
Projects Not Meeting Legal Conditions
Developers may sell properties before meeting all legal requirements, such as completing technical plans and financial obligations. Buyers should request legal documents and verify the developer’s rights before signing the contract. If conditions are not met, buyers should consider cancelling the contract and seeking refunds or waiting until conditions are fully met.
Unclear Property Function
The function of the property may be unclear or misunderstood. Buyers need to clarify the intended use and related ownership rights and ensure compliance with legal regulations. Request detailed information from the developer about the property’s function and usage rights.
Commitment to Purchase Before Receiving Ownership Certificate
If the ownership certificate has not been issued, buyers may face challenges in executing and transferring the purchase contract. Ensure that the contract is signed only after clear assurance of certificate issuance, and monitor the transfer process closely.
Financial Obligations
Buyers should be cautious of potential financial obligations, including management fees, maintenance fees, and other charges. Review the contract thoroughly to ensure all costs are agreed upon.
Transfer Costs and Fees
Transfer costs and related fees should be clarified and determined before completing the transaction to avoid unforeseen expenses. Plan your finances carefully to manage any unexpected costs or financial issues during the process.
Conclusion
In summary, investing in the Vietnamese real estate market offers many attractive opportunities, but also presents several challenges that need attention. Understanding the regulations regarding property ownership, foreign ownership limits, and transaction procedures is crucial. From verifying the legal status of projects and drafting accurate contracts to addressing potential challenges, all these aspects play a significant role in ensuring smooth and legal real estate transactions.
To maximize investment opportunities and protect your interests, seeking professional legal advice is essential. Lawyers and consultants will help you understand current regulations, ensure proper procedures, and minimize legal risks. Consider working with experts to make informed and effective investment decisions in the Vietnamese real estate market.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town Building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn