Forms of capital mobilization in real estate business to be formed in the future

Mobilizing capital in real estate business to be formed in the future is a necessary activity to bring capital to investors, however, capital mobilization must comply with regulations, illegal capital mobilization is not allowed.

What is capital mobilization in real estate business?

It is the activity of an individual or a business organization that creates capital to implement real estate projects in different forms. This is also an activity that appears frequently in real estate business. This helps investors have quick capital to implement other projects.

Forms of capital mobilization in real estate business

According to Article 69, Housing Law 2014, investors can mobilize capital in real estate business through the following forms:

• Capital is owned by the investor.
• Capital is mobilized through capital contribution, investment cooperation, business cooperation, joint venture, and association of organizations, households, and individuals.
• Purchase money, rent-purchase money, rent, prepaid housing according to contracts to buy, sell, lease, or lease-purchase housing formed in the future.
• Loans from credit institutions and financial institutions operating in Vietnam.

Principles for mobilizing capital to implement real estate projects:

+ The method of capital mobilization must comply with each type of housing as prescribed in this Law. Any capital source is mobilized not in accordance with requirements of type of housing as prescribed in law on housing shall be invalidated.

+ Any organization or individual must satisfy requirements of capital mobilization as prescribed in law on housing.

+ Ensure publicity and transparency; protect lawful rights and interests of organizations or individuals invested in housing development.

+ The organization or individual must use that capital for proper purposes, and may not use it for other projects or improper purposes.

Organizations and individuals mobilizing capital must use the mobilized capital for the correct purpose of building housing in that project; Investors are strictly prohibited from mobilizing more than the amount of money to buy or rent-purchase housing advanced from customers according to the provisions of law; In case of improper use of mobilized capital or misappropriation of mobilized capital or mobilization over the amount of advance purchase or lease purchase of housing from the customer, the improperly mobilized amount must be refunded, Compensate (if causing damage) and be punished for administrative violations according to the law on sanctions or be prosecuted for criminal liability according to the provisions of law.

What is considered illegal capital mobilization?

Based on Clause 4, Article 19 of Decree 99/2015/ND-CP, the following cases are used to mobilize capital illegally:

Firstly, illegal capital mobilization by investors is when the investor is not eligible to mobilize capital but has mobilized capital from customers.

Second, the investor uses mobilized capital for the wrong purpose or misappropriates capital that has been mobilized or mobilized to exceed the amount of advance purchase or rental purchase of housing from customers.

In case of improper use of mobilized capital or misappropriation of mobilized capital or mobilization over the amount of advance purchase or lease-purchase of housing from the customer, the improperly mobilized amount must be refunded, Compensate (if causing damage) and be punished for administrative violations according to the law on sanctions or be prosecuted for criminal liability according to the provisions of law.

Recommendations of LS Law Firm

The above are the basic contents of forms of capital mobilization in real estate business to be formed in the future based on the provisions of law at the time of writing. If you need advice on the above issue or are interested in other legal services, please contact LS Law Firm immediately via Email: lslawfirm2014@gmail.com for timely support.

Note: The above article is for reference only, any copying or use of the article as personal evidence in any case or matter is considered unauthorized./.