The revised Law on Real Estate Business has just been passed by the National Assembly and will take effect from January 1, 2025, expected to resolve many shortcomings of the 2014 Law on Real Estate Business.
Notably, this new Law has focused on protecting the rights of buyers of future housing (also known as "paper" housing).
The investor must be approved by the bank to issue a guarantee.
Specifically, regarding guarantees in the sale and lease-purchase of future housing (Article 26), this law stipulates that real estate project investors must obtain bank approval to issue guarantees before selling or leasing future housing.
Accordingly, the bank will guarantee the financial obligations of the investor to the home buyer or lessee when the investor fails to hand over the home as committed in the contract for the sale or lease-purchase of future housing.
In reality, many investors do not hand over houses to customers on time as committed, causing frustration (Illustration: Tran Khang).
The investor's financial obligations to customers who purchase or hire-purchase housing when the investor fails to hand over the housing as committed to the customer in the contract for purchase or hire-purchase of future housing include the amount the investor has received in advance from the customer and other amounts, if any.
The guarantor bank is responsible for issuing the letter of guarantee.
Article 26 of this law also stipulates that in case the guarantor bank agrees to issue a guarantee to the investor, the guarantor bank and the investor will sign a guarantee agreement on the contents specified above.
Based on the signed guarantee agreement, the guarantee bank sends the real estate project investor a written commitment confirming that it will issue a guarantee letter to all customers who purchase or lease-purchase houses in the project approved for the investor's guarantee.
The investor is responsible for sending a copy of this commitment document to the customer when signing a contract for the purchase or lease-purchase of future housing.
In addition, when signing a contract for the purchase or lease of future housing, customers can choose whether or not to have a guarantee for the investor's financial obligations to them.
The customer's refusal to guarantee the investor's financial obligations to him/her is agreed in writing at the time of signing the contract for sale or lease-purchase of future housing.
The guarantor bank is responsible for issuing a letter of guarantee to customers who have signed a contract for the purchase or lease-purchase of future housing with the investor according to regulations. At the same time, the guarantor bank also sends it to the investor so that the investor can provide it to each customer who has signed a contract for the purchase or lease-purchase of future housing.
The investor will only receive money when the customer has received the guarantee letter.
The scope of guarantee, conditions required to perform the guarantee obligation, content and guarantee fee shall be agreed upon by the parties but must ensure the performance of the responsibilities of the guarantor bank as prescribed in Article 26 of this Law and must be recorded in the guarantee agreement signed between the guarantor bank and the real estate project investor.
The investor left the project "on hold", causing many difficulties for home buyers (Illustration: Tran Khang)
The guarantee agreement signed between the guarantee bank and the project investor and the guarantee letter issued by the guarantee bank to customers purchasing or leasing future housing must specifically state the validity period.
The investor shall provide a letter of guarantee to the customer within 10 working days from the date of signing the contract for sale or lease-purchase of future housing or another period agreed upon by the parties in the contract for sale or lease-purchase of future housing.
The investor is only allowed to receive payment from customers according to the contract for sale and purchase or lease-purchase of future housing after providing it to the customer and the customer has received a letter of guarantee from the guarantor bank.
The guarantor bank is responsible for paying on behalf of the investor.
In case the investor fails to hand over the house as committed in the house sale and purchase or lease-purchase contract without performing or not fully performing the financial obligations to the customer as prescribed in Article 26 of this Decree.
If the customer requests, the guarantor is responsible for fulfilling financial obligations to the customer on behalf of the investor in accordance with the commitment in the letter of guarantee.
The guarantor bank must be responsible for fulfilling financial obligations to customers on behalf of the investor (Illustration: Ha Phong).
Guarantees in the sale and lease-purchase of future housing are implemented in accordance with the provisions of law on bank guarantees.
The provisions on guarantees in the sale and hire-purchase of future housing in Article 26 do not apply to the sale and hire-purchase of social housing.
The State Bank is responsible for providing guidance on guarantees for the sale and lease-purchase of future housing.
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