Currently, in the context of the rapidly growing and developing real estate market, it is not difficult to see advertisements introducing many attractive land plot projects in terms of location and price that attract the attention of many investors. However, many of them are just “fake projects” that are not yet eligible for sale, because some investors do not have enough financial resources to implement the project or have not yet received the approval to implement the project but they still sell bogus products to collect money. This leads to unintended consequences for buyers and even the real estate market in general. For buyers, due to lack of legal knowledge, the psychology of being into low-price products and trust in advertising, promotions, and commitments of the investor, they put down money without hesitation while the project is not eligible to open for sale. Eventually, buyers have to receive unexpected results.
So, a question that buyers should ask is: When will the land plot be opened for sale?
Pursuant to Article 194.1 of the Land Law 2013; Article 41 of Decree No. 43/2014/ND-CP; Article 1.17 of Decree No. 148/2020/ND-CP:
“1. Conditions for the investment projects for the construction of houses for sale or for a combination of sale and lease to transfer land use rights in the form of subdivision, include:
a) The project investor shall complete the investment for the construction of infrastructure including service works, technical and social infrastructure works according to the approved detailed construction planning at 1/500 scales; ensure the connection between the infrastructure of the project and the common infrastructure system of the area before transferring land use rights to people to build their own houses; ensure the provision of essential services including electricity supply, water supply, water drainage, waste collection;
b) The investor shall fulfill the financial obligations relating to the project’s land, including land use levy and land rent; taxes, fees and charges related to land (if any);
c) Projects shall be in places or urban areas where land use rights may be transferred in the form of subdivision specified in Clause 2 of this Article;
d) Other conditions as prescribed by the law on urban planning, urban construction, and development, real estate and housing business.
2. Investors of the projects for the construction of houses for sale or for a combination of sale and lease may transfer land use rights in the form of subdivision in areas not located within the wards of the special–grade urban areas and grade–I urban areas which are directly under the management of the Central Government; areas with high requirements for landscape architecture, the central area and around the works that are architectural landmarks in urban areas; facades of roads of regional level or higher and major landscape roads in urban areas.
3. Provincial-level People’s Committees shall be liable for organizing public announcement of areas where the projects for the construction of houses for sale or for a combination of sale and lease are allowed to be implemented and investors may be entitled to transfer land use rights in the form of subdivision before the implementation of investment projects.
4. Households and individuals that receive the land use rights to build their own houses shall carry out the construction of houses in strict accordance with the construction permits, comply with the detailed plannings and urban designs that have been approved.”
Thus, from the above provisions, it can be seen that an ordinary land plot project is only eligible to open for sale when there is a minutes of acceptance of completion of the construction of technical infrastructure according to the approved detailed construction planning at 1/500 scales and upon the investor’s fulfillment of financial obligation. This acceptance is carried out after the investor completes the construction of the project’s infrastructure, and there are written acceptance and written approval from provincial People’s Committee. Accordingly, if you want to know if the investor is eligible to open for sale or not, the buyer just needs to ask the investor for the acceptance document of infrastructure and the vouchers for the investor’s fulfillment of financial obligations.
For urban development projects, the project land may only be opened for sale when it is not located in the wards of special-class urban areas and grade-I urban areas which are directly under the management of the Central Government; areas with high requirements for landscape architecture, the central and area around the works are architectural landmarks in urban areas; facades of roads of regional level or higher and major landscape roads in urban areas.
It should be noted that signing a reservation contract, cooperation contract, escrow, deposit, purchase or sale or any other written form where the subject of the transaction is the purchase and sale of land in the project when the conditions are not met, they shall be considered invalid because of violating the prohibition of the law. The consequences of the contract being void are that the parties will have to return to each other what they have received and then most of the damages and risks (if any) must be borne by the buyer.
In addition to the above conditions, when choosing to buy land plots, buyers need to check the conditions as prescribed in Article 9 of the Law on Real Estate Business 2014 as follows:
“1. Houses, construction works to be put on the market shall fully meet the following conditions:
a) Registered for ownership of houses and construction works attached to land in the certificate of land use rights. For houses and construction works available in real estate investment and business projects, only a certificate of land use rights is required in accordance with the provisions of the law on land;
b) There is no dispute over land use rights, ownership of houses and construction works attached to the land;
c) Not being distrained to ensure judgment enforcement.
2. Types of land permitted to trade in land use rights shall fully satisfy the following conditions:
a) Having a certificate of land use right in accordance with the law on land;
b) There is no dispute over land use rights;
c) The land use right is not distrained to secure judgment enforcement;
d) Still on the land use term.”
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The article is based on the current legal regulations at the time of writing, and it may no longer be valid or relevant at the time you are reading it due to changes of the law. The article, therefore, is seen as reference only.