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Buying and selling future housing – Notes to avoid falling into the “trap” of losing money and getting nothing in return
In the context of a thriving real estate market, the form of buying and selling future housing is becoming the choice of many people who want to own a house early at a "softer" price than the finished product. However, this is also a type of transaction that has many potential legal risks if the buyer lacks understanding, easily leading to the situation of "losing money and getting sick".
1. Common “traps” and risks that buyers can easily encounter:
- Projects that do not meet legal requirements but are still for sale: many projects do not have a construction permit, have not yet accepted the foundation, or have not completed the infrastructure but are still for sale. Buyers are easily lured by “reservation tickets”, “deposit agreements”, leading to losing the deposit or prepayment without receiving the house as committed.
- Excessive payment: Some investors require buyers to pay 30% more the first time, 70% more before handover, causing great risks if the project is behind schedule or stops construction.
- No bank guarantee: when the investor does not hand over the house as committed, it is difficult for buyers to get back the money they paid in advance.
- Buying and selling by “handwritten contracts”, unclear agreements: some brokers use written agreements, sign indefinite deposit documents, and then do not sign official sales contracts or require many other conditions, causing the buyer to have their capital locked.
- Land use rights disputes: Project land may be mortgaged, disputed or not legally sufficient, which can easily lead to disputes later.
- Late progress or failure to hand over the house on time: Weak investors or lack of capital cause the project to drag on for many years. If the contract does not clearly stipulate penalties for late handover, or require a guarantee, the buyer will suffer.
- Unclear about common ownership and private ownership: In an apartment project, if common ownership and common use are not clearly stated according to the approved design, disputes over maintenance costs, management, and common use rights can easily arise later.
- Non-transparent additional costs: many contracts leave out additional fees such as: management fees, maintenance fees, book issuance fees… When receiving the house, the buyer is “shocked” because the additional amount to be paid is too large.
Therefore, before signing a sales contract, the buyer needs to pay special attention to the following points:
1. Check the legal status of the investor and whether the housing in the project is eligible for business
When the project has not been licensed and is not eligible for business, instead of signing a sales contract with the buyer, the investor often uses other documents such as deposit agreements, reservations, agreement documents… to collect money from the buyer. If they do not have a clear understanding of the project’s legal status and are “lack of vigilance” in the face of attractive incentives, home buyers can completely “fall into the trap” of fraud.
Therefore, before purchasing a future housing project, the buyer needs to check the legal status of the investor and the project on the following issues:
- Does the investor meet the conditions for a real estate business organization according to the provisions of the law on real estate business?
- Does the investor have documents on land use rights for the project? (Land allocation decision, Land use rights certificate, etc.)
- Has the project been approved for planning, construction permit and has a document notifying the eligibility to sell future housing issued by the Department of Construction?
- Has the project been accepted for completion of foundation construction according to the provisions of the law on construction (in the case of apartment buildings, mixed-use buildings with houses)?
- Is the house in a real estate project that has been approved by a competent state agency according to the provisions of law and does the approved project content include the purpose of investing in the construction of houses for sale?
- Is the investor mortgaging the project at a bank? If so, the investor must release part or all of the mortgage on the project or the housing and land use rights before signing the housing purchase contract with the buyer.
- Has the investor been granted a guarantee by a domestic commercial bank or a branch of a foreign bank legally operating in Vietnam for the investor’s financial obligations to the home buyer when the investor fails to hand over the housing as committed in the future housing purchase contract?
- Has the project investor fulfilled its financial obligations regarding land, including land use fees, land rents, and taxes, fees, and charges related to land (if any) to the State?
- Is the housing in dispute? Has it been seized to ensure enforcement of the judgment? Is it prohibited by law from trading? Is it in a case of being suspended or temporarily suspended from trading according to the provisions of law?
- Has information on real estate and real estate projects put into business been fully disclosed in accordance with the law?
2. Content to note when signing a sales contract
- Only sign a sales contract when the project has met all the conditions to be put into business.
- Buyers only sign contracts directly with the investor without going through other organizations or individuals.
- The housing sale contract must be made in writing and have all the required content according to the form.
- Payment progress:
- The investor can only collect a deposit of no more than 5% of the selling price when the house has met all the conditions to be put into business.
- The first payment must not exceed 30% of the contract value including the deposit.
Subsequent payments must be consistent with the construction progress but the total must not exceed 70% of the contract value when the house has not been handed over to the buyer; in case the seller is an economic organization with investment capital
For foreign investors, the total amount must not exceed 50% of the contract value.
If the buyer has not been granted a certificate of land use rights and ownership of assets attached to the land in accordance with the provisions of the law on land, the seller must not collect more than 95% of the contract value; the remaining value of the contract is paid when the competent state agency has granted a certificate of land use rights and ownership of assets attached to the land in accordance with the provisions of the law on land to the buyer.
- Terms on housing handover and handling of violations:
House handover deadline: specify the day, month, year, avoid general terms “expected” or “upon completion”.
Quality standards, usable area: apartments, infrastructure, utilities must be described in detail.
Sanctions for slow progress: need to clearly agree on the penalty level, late payment interest rate, or the right to unilaterally terminate the contract and refund the money to the buyer.
Terms on common ownership and common use if it is an apartment: specific regulations on common ownership, private ownership, and purpose of use.
Fees and financial obligations:
Management fees, maintenance fees.
Tax payment obligations, registration fees.
Terms on handing over legal documents.
Commitments on the investor’s bank guarantee, validity period of the guarantee letter, security deposit, and liability if the investor violates.
Legal advice before signing
In high-value transactions, it is necessary to consult a lawyer or legal expert on the contract. This helps buyers identify unfavorable terms and avoid falling into the “trap” caused by the investor’s deliberate vague drafting.
Conclusion: Buying a house in the future can be an opportunity to own a home at a reasonable price, but it also has many potential risks. Buyers need to be alert, thoroughly understand the project’s legal aspects, read the contract carefully, and only sign and pay when they have all the information. Careful preparation is the key to avoiding the situation of ‘losing money and getting nothing in return’ and ensuring the safety of their future home.
