TRANSFER OF COMMERCIAL HOUSING INVESTMENT PROJECTS
The transfer of a housing project is the process whereby the previous investor (the Transferor) hands over the entire or a portion of the project to a new investor (the Transferee). The acquirer does not merely purchase the 'land,' but acquires the comprehensive right to develop the project, along with all associated permits, obligations, and legal commitments.
Chào bạn, tiếp tục đồng hành cùng bạn, tôi đã hoàn thành bản dịch chuyên sâu cho tài liệu về "Chuyển nhượng dự án nhà ở" sang tiếng Anh. Bản dịch này sử dụng các thuật ngữ pháp lý và thương mại chuẩn xác nhất theo Luật Kinh doanh bất động sản (Law on Real Estate Business) hiện hành, đồng thời bảo toàn tuyệt đối cấu trúc thẻ HTML như bạn yêu cầu:
1. Benefits of transferring housing business investment projects
In the context of an increasingly developing real estate market and the constantly rising demand for housing, the transfer of housing projects has become a crucial mechanism to restructure investment resources, accelerate project progress, and attract massive foreign investment capital. Allowing investors to transfer entire or partial projects not only creates opportunities for capable enterprises to continue project implementation but also contributes to safeguarding homebuyers' rights and stabilizing market prices. Therefore, researching and assessing the risks involved in housing project transfers holds practical significance, helping investors avoid financial losses and ensuring the successful handover of investment projects.
2. What is a real estate project?
A real estate project is an investment project for constructing works for business purposes, which has been granted investment policy approval by a competent state agency in accordance with the law.
Real estate projects include:
- Housing construction investment projects;
- Urban area construction investment projects;
- Housing construction investment projects;
- Urban area construction investment projects;
- Rural residential area construction investment projects;
- Investment projects for the construction of works serving educational, medical, sports, cultural, office, commercial, service, tourism, accommodation, and industrial purposes, and mixed-use construction works;
- Technical infrastructure construction investment projects;
- Investment projects for the construction of infrastructure in industrial parks, industrial clusters, and high-tech zones.
Legal basis: Clause 3, Article 3 of the 2023 Law on Real Estate Business.
3. Can a real estate project investor transfer the project to other investors?
Clause 1, Article 3 of the 2023 Law on Real Estate Business explains the "transfer of a real estate project" as a real estate business activity. Furthermore, in Clause 7 of the same Article, the transfer of a real estate project is once again explicitly explained and affirmed as a right of the investor.
Therefore, real estate project investors are fully entitled to transfer their real estate projects to other investors, and this project transfer activity is considered a real estate business activity.
4. Conditions required for the transfer of a real estate project
To transfer a real estate business investment project, full compliance with the legal conditions stipulated in Article 40 of the 2023 Law on Real Estate Business is required. Specifically:
Firstly, the conditions that the real estate project must satisfy:
- The project has obtained investment policy approval or investment approval; the investor has been selected or recognized in cases where procedures for investor recognition are required;
- The project is still within its implementation schedule;
- In case the project is mortgaged to secure the performance of obligations in accordance with the law, it must be released from mortgage (discharged);
- The land use rights of the project or the transferred portion of the project are not subject to any ongoing disputes;
- The project is not suspended, terminated, or subject to a land recovery decision by a competent state agency;
And certain other conditions specifically stipulated in Clause 1, Article 40 of the 2023 Law on Real Estate Business.
Secondly, the conditions the investor must satisfy to transfer the real estate project:
Before acquiring the entire or a portion of a real estate project, the new investor (Transferee) must satisfy the conditions stipulated in Clauses 1 and 2, Article 9 of the 2023 Law on Real Estate Business:
- The new investor must establish an enterprise, a cooperative, or a union of cooperatives and register for real estate business lines;
- If the investor is an individual conducting small-scale real estate business, establishing an enterprise is not required, but they must declare and pay taxes in accordance with the law;
- Not being in a period of being prohibited from real estate business operations, temporarily suspended, or suspended from operations pursuant to a legally effective court judgment or decision, or a decision of a competent state agency;
- Ensuring the ratio of outstanding credit balances and outstanding corporate bonds to equity;
- An enterprise conducting real estate business via a real estate project must have an equity capital not lower than 20% of the total investment capital for projects with a land use scale of under 20 hectares, and not lower than 15% of the total investment capital for projects with a land use scale of 20 hectares or more, and must ensure the ability to mobilize capital to implement the investment project; if the real estate enterprise simultaneously implements multiple projects, it must have sufficient equity capital allocated to ensure the aforementioned ratio for each individual project to implement all projects.
- Committing to continue the construction investment and business operations in accordance with the approved project contents; in case of changes to the project contents, compliance with Clause 3, Article 39 of the 2023 Law on Real Estate Business is required.
The transferring investor must satisfy the following conditions:
- Must have a decision on land allocation, land lease, or permission to change the land use purpose to implement the project issued by a competent state agency;
- Must have fulfilled land-related financial obligations for the project, including land use fees, land rents, and land-related taxes, fees, and charges (if any) to the State.
Legal basis: Clauses 2 and 3, Article 40 of the 2023 Law on Real Estate Business.
5. Risks for investors in the transfer of housing business investment projects
The transfer of investment projects entails highly significant risks, relating not only to the transfer value but also to legal procedures and the project's mission.
Typically, the seller (transferor) will request an advance payment/deposit prior to executing the legal procedures to transfer the investment project. The purpose of this action is to prevent the buyer from unilaterally terminating the project purchase agreement. Because the transfer value is exceptionally high and the legal procedures are cumbersome, if the seller completes the project transfer procedures to the buyer but the buyer subsequently refuses to proceed with the agreement, the seller would have to initiate further legal procedures to reclaim the project. This would cause project stagnation, operational downtime during the transfer period, and a negative impact on the investor's profits.
In addition, the buyer may encounter risks related to legal procedures during the investment project transfer process. Risks the buyer might face include:
- Failing to meet the conditions to acquire the project;
- Legal dossiers taking excessive time for adjustment, generating no profit during the adjustment period, thereby affecting the payback period;
- The seller having substantial outstanding debts, causing the investment project to be frozen, leaving the buyer unable to proceed with the project implementation;
From the aforementioned analysis, it is evident that the transfer of investment projects contributes to accelerating Vietnam's economic growth, helping investment projects maintain capital flow, restructure, and ensuring the price stability of the real estate market. However, alongside the economic and legal benefits, this activity also harbors numerous risks for investors. Without thorough research into the legal dossier, the financial capacity of the transferor, and the project implementation plan, the project buyer risks facing a scenario of "completely losing" their investment capital. Therefore, perfecting the legal framework, enhancing project transparency, and strengthening the governance capacity of investors are essential factors to ensure that the transfer process takes place successfully and smoothly.
DL PINNACLE LAW FIRM LLC
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