NOTABLE PROVISIONS OF DECREE 02/2022/ND-CP

On 06 January 2022, the Government promulgated Decree 02/2022/ND-CP on elaboration of certain articles of the Law on Real Estate Trading (“Decree 02”). Decree 02 takes effect on 1 March 2020 and supersedes current regulations stipulated in Decree 76/2015/ND-CP and its relevant amendments relating to the conditions for organizations and individuals engaging in real estate trading; contract templates in real estate trading; conditions for transfer of contracts for sale, purchase and lease-purchase of a house or construction work; and transfer of real estate project.

Redefinition of conditions for conducting real estate trading

Under Decree 02, organizations and individuals engaging in real estate trading (“Real Estate Business”) must satisfy the following conditions:

• Establish an enterprise or a cooperative in Vietnam in accordance with the law on enterprises or cooperatives, and must register business lines in relation to real estate trading.
• Publicize on its website, at the head office of the project management board and/or at the real estate exchange certain information, including: information on the Real Estate Businesses; information on real estate to be put on market; information on mortgages; information on the quantity and type of real estate products put into business; information on the number, type of real estate products being traded, quantity and type of real estate products sold, transferred, lease-purchased and the quantity and types of remaining products that are still being traded.
• Relating to the legal capital requirement of Real Estate Business, Decree 02 removed the VND 20 billion minimum charter capital requirement. Instead, under Decree 02, in case a Real Estate Business is selected as the investor of a real estate project, it must have an equity of: (i) not less than 20% of the total investment capital for projects using less than 20 hectares of land; or (ii) not less than 15% of the total investment capital for projects using at least 20 hectares of land. The equity of the operating enterprise is determined based on its most recent audited financial statements or independent audit reports (of the current year or the preceding year); for a newly established enterprise, the equity shall be determined based on the contributed charter capital.

Requirement for the use of contract templates in real estate trading

Along with the promulgation of Decree 02, a set of contract templates for real estate trading has been issued and the parties engaging in real estate trading are required to apply these templates. Specifically, the contract templates for real estate trading include the following:

• Contract for sale, purchase, or lease-purchase of an apartment;
• Contract for sale, purchase, or lease-purchase of tourist apartment and officetel;
• Contract for sale, purchase, or lease-purchase of detached houses;
• Contracts for sale, purchase, or lease-purchase of house, and other construction work not specified above;
• Contracts for lease of house or construction work;
• Contracts for transfer of land use rights;
• Contracts for lease or sublease of land use rights;
• Contracts for transfer of the whole (or part of) the real estate project.

Addition of conditions for transfer of contracts for sale, purchase and lease-purchase of a house or construction work

Under Decree 02, the transfer of a contract for sale, purchase or lease-purchase of a house or construction work (except for contracts of sale, purchase or lease-purchase of social housing) must satisfy the following conditions:

• There is a contract for sale, purchase or lease-purchase made according to Decree 02; in case the parties have signed a contract before the effective date of Decree 02, the signed contract must be provided;
• The application for issuance of land use rights certificate has not been submitted to the competent authority;
• The contract for sale, purchase or lease-purchase of house or construction work must be free from disputes or litigation;
• The house or construction work under the contract for sale, purchase or lease-purchase is not subject to distraint or mortgage to secure the performance of obligations as prescribed by law, unless otherwise agreed by the mortgagee.