Legal Entanglements regarding the Transfer of Commercial Housing Sale and Purchase Agreements under the Law on Real Estate Business 2023

From 01 August 2024, when the Law on Housing 2023 and the Law on Real Estate Business 2023 replaced the Law on Housing 2014 and the Law on Real Estate Business 2014, the regulations on the transfer of housing sale and purchase agreements also changed. These changes, however, have not fully resolved all legal entanglements in the practical implementation of the transfer of housing sale and purchase agreement. 

1. Regulations on the transfer of commercial housing sale and purchase agreements

Prior to 1 August 2024, the transfer of commercial housing sale and purchase agreement was directly regulated by the Law on Housing 2014. The Law on Real Estate Business 2014 and its guiding documents governed the transfer of sale and purchase agreements, lease-purchase agreements of off-the-plan house and the transfer of lease-purchase agreements of existing houses and construction works (excluding social housing). However, regarding procedures for the transfer of off-the-plan house sale and purchase agreements, real estate business laws still refer to housing laws.

With the effectiveness of the Law on Housing 2023 and the Law on Real Estate Business 2023, the Law on Housing 2023 no longer regulates the transfer of housing sale and purchase agreements. Instead, the Law on Housing 2023 refers to real estate business laws. Although the reason for this change is not clearly stated, consolidating these transactions under real estate business laws helps minimize complications from overlapping regulations across various legal documents.

After the Law on Real Estate Business 2023 comes into effect, the legal framework for real estate business is progressively established based on this primary document. Accordingly, the transfer of real estate business agreements is regulated in Section 2, Chapter VI of the Law on Real Estate Business 2023 and is detailed in Decree No. 96/2024/ND-CP (“Decree 96/2024”).

2. Legal entanglements in regulations on the transfers of commercial housing sales and purchase agreement.

First, regarding the subject of application and scope of regulation.

As stated above, according to the Law on Housing 2023, the transfer of sale and purchase agreements of housing (without specifying whether it is commercial housing or not) will be governed by real estate business laws. The referral of the Law on Housing 2023 to real estate business laws has not fully addressed the legal gap due to differences in determining subject of application. 

According to Section 2 Chapter VI of the Law on Real Estate Business 2023, the transfer of real estate business agreements is defined as the transfer of sale and purchase agreement or hire-purchase agreement of housing and construction work, specifically the transfer of these 3 types of agreements: “a) Sale and purchase agreement of off-the-plan housing; b) Hire-purchase agreement of off-the-plan housing; c) Hire-purchase agreement of an existing construction work” This regulation, inherits from the Law on Real Estate Business 2014. Accordingly, the real estate business laws only governed the transfer of sale and purchase agreement of off-the-plan houses.

These regulations raise two key legal questions: (i) whether the concept of “housing” under housing laws is equivalent to “off-the-plan house” under real estate business laws? (ii) If the answer is “no,” which laws govern the transfer of sale and purchase agreements of existing housing and social housing?

Second, regarding the conditions for transferring agreements.

The conditions for transferring sale and purchase agreement, lease-purchase agreement of houses and construction works are currently stipulated in Article 50 of the Law on Real Estate Business 2023. Generally, these regulations are formulated upon similar provisions from the Law on Real Estate Business 2014 and its guiding documents, with consideration of practical legal application. Accordingly, the transfer of sale and purchase agreement, hire-purchase agreement of housing and construction works must meet the following conditions:

1. Belonging to the category of not having submitted application to competent state agencies for issuance of certificates of land use rights, ownership of assets attached to land in accordance with the provisions of the land laws;

2. Sale and purchase agreement, lease-purchase agreement of housing and construction works free from disputes being announced, accepted, and handled by the competent authorities in accordance with the laws, or if there is a dispute over the agreement, it has been resolved by the competent authorities with a legally effective judgment, decision, or award;

3. Housing and construction work under sale and purchase agreements or a lease-purchase agreements are not subject to seizure or mortgage as security for obligations performance under the laws, except with consent of mortgagee;

4. There is a sale and purchase agreement, or lease-purchase agreement executed under real estate business laws.

Meanwhile, previous housing laws took a different approach, primarily focusing on the conditions of the parties and the existence of housing sale and purchase agreement. The only common requirement between these two legal regimes is perhaps the absence of application for the certificate of ownership of the asset, which is the subject of the transferred agreement.

Thus, the current legal framework clearly has stricter conditions than those for the transfer of commercial housing sale and purchase agreement under the previous housing laws. These conditions require close coordination between the parties involved in the transaction and the competent authorities to verify whether there are disputes, seizures, or mortgages on the housing that is the subject of the transferred agreement?

Third, regarding the documentation requirements for housing transfer transactions.

As mentioned above, from 01 August 2024, one of the prerequisites for transferring a housing sale and purchase agreement is to have a sale and purchase agreement or lease-purchase agreement executed under real estate business laws. This condition is further reaffirmed by housing laws in Article 8.6 of Decree 95/2024/ND-CP guiding the Law on Housing (“Decree 95/2024”), whereby, in the case of transferring the sale and purchase agreement, there must be a provision of a document recording the housing sale and purchase that complies with the real estate business laws.

Housing sale and purchase agrement transfers made before 01 August 2024 were regulated by housing laws. Accordingly, the transfer dossier shall include the housing sale and purchase agreement signed with the investor. Article 121 of the Law on Housing 2014 also directly specifies the required contents of housing agreements. This legal framework has caused difficulties in determining the form and content of the target housing sale and purchase agreement that would be transfer. Recent legal framework referring to real estate laws have resolved the issue in determining whether to choose agreement form according to real estate business laws or housing laws.

However, real estate business laws have not yet comprehensively resolved all issues related to the transfer of housing sale and purchase agreement. During this transition period between the new and old laws, the question is which mechanism will regulate the transfers of housing sale and purchase agreement which has already been executed under previous housing laws leading both parties unable to provide a housing sale and purchase agreement drafted in accordance with real estate business laws?

3. Recommendations

Thus, while the Law on Real Estate Business 2023 and its guiding documents have addressed the overlap of regulations governing the transfer of housing sale and purchase agreement and significantly improved regulation regarding the transfer of real estate business agreements, there are several legal issues that still need to be clarified and fixed. Given these issues, we propose some amendments and supplements to the Law on Real Estate Business 2023 as follows:

Firstly, it is necessary to clarify the scope of real estate business laws regarding the transfer of housing sale and purchase agreement. Especially in determining whether the concept of “housing” in the phrase “transfer of housing sale and purchase agreement” as stipulated in housing laws is or can be included in the concept of “sale and purchase agreement of off-the-plan house” – which is the transferred subject under Article 49.1 of the Law on Real Estate Business 2023. If not, it is recommended to add the subject of “sale and purchase agreement of housing” to Article 49.1 or to establish a separate legal mechanism to regulate this type of subject referred from housing laws.

Secondly, there should be a mechanism to check whether the concerned real estate is subject to any disputes that have been announced, accepted, or resolved by competent authorities, or whether it is under seizure or mortgage as security for obligations, which is expected to protect the legitimate rights of transferees and promote real estate transactions.

Thirdly, it is necessary to have clear guidelines for handling the transition period between the old and the new laws to ensure the legal continuity and validity of transactions;

To ensure consistency and effectiveness in law enforcement, it is recommended that the competent authorities promptly issue detailed guidance to address the aforementioned legal issues, thereby establishing a transparent and favorable legal framework for the transfer of housing sale and purchase agreement.

ADK VIETNAM LAWYERS