GUARANTEE FOR OFF-PLAN HOUSING: A TOOL TO PROTECT HOMEBUYERS' INTERESTS AGAINST "GHOST" PROJECTS

Explore the new regulations on bank guarantees in the sale of off-plan housing under the 2023 Law on Real Estate Business and Circular No. 61/2024/TT-NHNN. Stay updated on the conditions, buyers' rights, and developers' responsibilities to help you avoid risks from 'ghost' real estate projects.

Index

WHAT RISKS ARE HOMEBUYERS FACING?

When the dream of settling down remains full of insecurities

THE HOMEBUYER PROTECTION FRAMEWORK HAS BEEN STRENGTHENED

1. The regulation is not new but has been significantly upgraded

2. Bank guarantee mechanism: How does it protect the buyer's money?

3. Specific guaranteed amounts:

RIGHTS AND RESPONSIBILITIES OF THE PARTIES

4. The guarantee is not mandatory – but must be clearly chosen

5. Responsibilities of the developer and the bank

HOW WILL THE GUARANTEE BE TRIGGERED IF THE DEVELOPER BREACHES?

6. The buyer's rights when the project fails to hand over the house

7. What documents are required for a guarantee claim?

8. How to determine the time the bank receives the dossier:

PRACTICAL LESSONS

9. Van Phuc City Urban Area, Hiep Binh Ward, HCMC: A typical project for the risk of non-guarantee

KNOW YOUR RIGHTS, KEEP YOUR MONEY

WHAT RISKS ARE HOMEBUYERS FACING?

When the dream of settling down remains full of insecurities

Ms. Tam, a teacher in Da Nang, poured her entire life savings of nearly 30 billion VND accumulated over 10 years to deposit for an apartment at the Van Phuc 3 Project, on National Highway 13, Hiep Binh Phuoc Ward, Thu Duc City, Ho Chi Minh City (now Hiep Binh Ward, Ho Chi Minh City), developed by Van Phuc Real Estate Investment Joint Stock Company. After three years, instead of a home, she is left with only a wasteland and a contract with "no further news" from the developer.

In a volatile market, where many projects are merely drawings on paper, homebuyers easily become the ultimate risk bearers. The question arises: How to protect one's finances when buying "off-plan" homes?

THE HOMEBUYER PROTECTION FRAMEWORK HAS BEEN STRENGTHENED

1. The regulation is not new but has been significantly upgraded

• Bank guarantees have appeared since the Law on Real Estate Business 2014.

• Under the Law on Real Estate Business 2023 (Article 26) and Circular 61/2024/TT-NHNN, this tool is perfected, with clearer and higher legal bindings.

2. Bank guarantee mechanism: How does it protect the buyer's money?

• Before signing the contract, the developer must obtain the bank's agreement to issue a guarantee letter for financial obligations.

• If the house is not handed over on time, the bank will refund:

o Deposit money

o Valid payment installments

o Penalty or compensation amounts (if any)

The bank has the right to refuse the guarantee for the portion exceeding the legal limit (e.g., exceeding 70% of the contract value).

3. Specific guaranteed amounts:

• Advance payments made after the buyer receives the guarantee letter.

• Damage compensation amounts, if clearly stated in the contract.

• Does not apply to social housing.

RIGHTS AND RESPONSIBILITIES OF THE PARTIES

4. The guarantee is not mandatory – but must be clearly chosen

• The buyer has the right to request or not request a guarantee.

• If opting out, both parties must sign a written agreement.

• In the case of no guarantee: the buyer bears the risk entirely.

5. Responsibilities of the developer and the bank

Before launching the sale:

• Publicize the guarantee information on the system and website.

• Send a commitment to issue a guarantee letter to all buyers.

After signing the contract:

• The bank must issue the guarantee letter within 10 working days.

• The developer is only allowed to collect money when the buyer has received the guarantee letter.

Violating this is against the law under the Law on Real Estate Business 2023.

HOW WILL THE GUARANTEE BE TRIGGERED IF THE DEVELOPER BREACHES?

6. The buyer's rights when the project fails to hand over the house

• The buyer has the right to request the bank to perform its guarantee obligations.

• The guarantee letter remains effective even if the bank and the developer have terminated the guarantee agreement.

7. What documents are required for a guarantee claim?

• A written request to perform obligations

• The issued guarantee letter

• Sales contract

• Other attached documents as clearly stated in the guarantee letter

8. How to determine the time the bank receives the dossier:

• Direct submission: calculated by the date the bank receives it.

• Registered mail: calculated by the date of receipt signature.

• Electronic submission: based on the time the system receives the data (according to the Law on Electronic Transactions 2023).

PRACTICAL LESSONS

9. Van Phuc City Urban Area, Hiep Binh Ward, HCMC: A typical project for the risk of non-guarantee

After purchasing an apartment at the project, a customer accused Dai Phuc Land Real Estate JSC (a member of Van Phuc Group) of misappropriating up to thirty billion VND in buyer capital. Currently, the project is behind schedule, and the buyer has no basis to request a refund from the bank because the developer did not issue a guarantee letter for the project.

KNOW YOUR RIGHTS, KEEP YOUR MONEY

In a market with many "grey areas", a bank guarantee letter is not just a legal tool, but also a risk shield that gives buyers more peace of mind when betting a large amount of money on an unbuilt future.

Know your rights – Keep your money – Do not sign blindly.

Contact Information:

DL PINNACLE LAW FIRM LLC

Address: 3rd Floor, 18A/76 Nguyen Thi Minh Khai, Sai Gon Ward, Ho Chi Minh City

Hotline: 0914.491.911

Email: info@dlpinnacle.vn

Website: https://www.dlpinnacle.vn

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