Some owners of commercial service shops (TMDV) in urban areas are worried when in the Certificate of land use rights, house ownership rights and other assets attached to land, the land use purpose section is stated as "city public land" (CCTP) or "residential public land" (CCKO).
Ms. Le Quynh Anh, Director of Vision & Associates Legal LLC, shares about the legality of the recently controversial commercial real estate type (shop).
According to the 2013 Land Law, land used for public purposes includes land for transportation; irrigation; land for community activities, public entertainment areas; market land... and other public works land.
According to Appendix I, Decree 06/2021/ND-CP on classification of works by function, the group of public works includes commercial works such as shopping malls, supermarkets, markets, shops; restaurants, food and beverage shops and other commercial works.
Based on the above regulations, it can be understood that public land can also be used to construct commercial service facilities.
Thus, the construction of stalls (also known as shops) for business purposes by investors on public land plots of the city (CCTP) and public residential areas (CCKO) leased by the state with one-time land rental payment within the planning scope of the urban area project is in accordance with the provisions of law.
Why do commercial service shops say "public land"?
- Some owners of commercial service shops in urban areas in Hanoi, most recently at Vinhomes Ocean Park, are worried when their Certificate of land use rights, house ownership rights and other assets attached to land, the purpose of their land use is stated as: city public land (CCTP) or residential public land (CCKO). From a lawyer's perspective, can you explain why commercial service shops are stated as "public land"?
As I said above, the fact that investors build booths for business/commercial and service purposes on CCTP and CCKO land plots leased by the state and pay land rent at one time is not against the law.
And if in the decisions on land allocation, land lease, and permission to change the land use purpose of the project, the land plots for building stalls and commercial service shops have the purpose of use as public use of the city or public use of residential areas, the state agency's recording of this purpose of use in the Certificate of land use rights, house ownership rights and other assets attached to land granted to the above-mentioned works is in accordance with the regulations and instructions of the Ministry of Natural Resources and Environment in Official Dispatch 3382/BTNMT-DD dated May 15, 2023.
- Some owners also wonder because the form of land use for the commercial service shop product is shared use. How can this affect the rights of customers, madam?
In principle, customers will and must enjoy benefits corresponding to the type of product they have purchased and specifically described in the Sales Contract.
For the type of e-commerce shop product, the product that the customer buys is a part of the construction project associated with the common land use right, meaning that the customer has the right to own the specific part of the project (booth) that the customer has chosen to buy and at the same time has the right to use the entire land plot to build the related project block.
As an owner, the customer will have full rights according to the provisions of law such as the right to use, the right to possess and the right to dispose of the construction part that he has purchased.
In particular, the National Assembly recently passed the Law on Real Estate Business No. 29/2023/QH15, creating a clear legal corridor for the purchase and sale of construction works, the construction floor area in construction works with land use rights in the form of shared use.
I think this is a breakthrough, solving many problems and backlogs of the real estate market in the past, ensuring the rights of organizations/individuals participating in investment, construction and business activities, buying and selling this type of product.
- So customers' concerns about "spending money to buy but not having the right to use the land" are unfounded?
First of all, it needs to be clarified that, according to regulations, the purchase and sale of houses, construction works or construction floor areas in construction works must always be associated with land use rights. If buying and selling an independent construction work, it can be accompanied by the transfer of the land use rights of the entire plot of land and the buyer will have the right to use the land separately. If buying a part of a construction work, the land use rights in this case must be allocated and determined as common use rights among the owners of the construction work.
This is also the reason why the 2023 Law on Real Estate Business clearly stipulates the conditions for selling a part of the construction floor area in a construction project: the construction project must be built on land allocated by the State with land use fees collected or land leased with one-time land rent collected for the entire lease term, because according to the Land Law, only these types of land can transfer land use rights. For example, the CCTP and CCKO land plots used to build commercial service shops are land leased by the State with one-time land rent collected for the entire lease term.
For ease of visualization, the above case can be compared to the case of buying an apartment or commercial space at the base of an apartment building. The owner also has private ownership of the purchased apartment or commercial space and has the right to use the land plot for the construction of the apartment building.
There is no such thing as a bank refusing to accept a mortgage.
- From another perspective, some opinions say that when land use rights are shared, it is difficult for customers to mortgage with banks and even the banks refuse to mortgage. What is the reality?
This assertion is unfounded. According to Article 8.1 of Decree 21/2021/ND-CP, assets used to secure the performance of obligations include existing assets or assets formed in the future, except in cases where the Civil Code or other relevant laws prohibit the purchase, sale, transfer or other transfer of ownership rights at the time of establishing the security contract or security measure.
According to Article 9.1 of the 2014 Law on Real Estate Business, houses and construction works put into business must meet the following conditions:
- Have registered ownership of the house and construction works attached to the land in the land use right certificate. For houses and construction works available in real estate investment projects, only a land use right certificate is required according to the provisions of the law on land;
- No disputes over land use rights, house ownership, construction works attached to the land;
- Not subject to seizure to ensure enforcement of judgment.
There is no regulation requiring the right to use land separately in order to mortgage it to a bank. In fact, Article 10.1 of Decree 21/2021/ND-CP even stipulates that the use of assets attached to land to secure the performance of obligations may not be concurrent with the right to use land.
According to the above regulations, stalls and commercial service shops that have been granted Certificates of land use rights, house ownership rights and assets attached to land, are not in dispute, and are not subject to seizure to ensure enforcement of judgments will meet the conditions to be mortgaged assets, similar to apartments and commercial areas at the base of apartment buildings.
- However, the valuation of commercial real estate products may not be as high as the real estate products you just mentioned?
In principle, for this type of product, the value of land use rights has been allocated in the investment cost of the product, and of course when determining the selling price of the product, the investor has also allocated the value of land use rights into the selling price, that is, in essence, when determining the value of the product, it is necessary to determine the value of land use rights allocated to the product. The issue of high or low product pricing when mortgaging for bank loans also depends on the regulations of each specific bank at each specific time.
- What do you have to share with owners and interested parties about the diverse opinions on this issue?
As a person working in the legal field, I can only confirm that the current legal framework for this type of product is relatively complete, clear, strict and better ensures the rights of buyers.
Those who already own or wish to invest in this type of product can study the relevant regulations to have a correct assessment of the product as well as a basis for making appropriate decisions.
Thank you!
Regulations in Appendix 1 - Classification of works according to usage function 2. Public works: c) Sports facilities: Stadium; gymnasium; training ground, competition ground for sports such as: golf, football, tennis, volleyball, basketball and other sports; swimming pool. d) Cultural works: Conference centers, theaters, cultural houses, clubs, cinemas, circuses, dance halls; monuments; museums, libraries, exhibitions, entertainment facilities... e) Commercial buildings: Shopping malls, supermarkets, markets, shops; restaurants, food and beverage shops and other commercial buildings. g) Service works: - Hotels, guesthouses, motels; resorts; villas, apartments and other accommodation service establishments... |
Mai Chi
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