(KTSG) – Deposit relationships in real estate business transactions have recently undergone many changes. A series of complex disputes have arisen, causing chaos in the real estate market, and the loss often falls on the customer’s side. Many investors misappropriate deposits, seriously affecting the interests of customers. Experts and agencies directly managing the real estate market believe that the above variations arise from gaps in current law.
Reality is full of chaos and gaps in the law
The deposit relationship is governed mainly by the provisions of the 2015 Civil Code and Decree 21/2021/ND-CP.
The current Law on Real Estate Business does not regulate the management of capital mobilization through deposit deposits or mention contracts and written agreements that investors are entitled to sign with customers before the deadline. Real estate qualified for business.
The Housing Law (Articles 69, 70) and Decree 99/2015/ND-CP (Article 19.2) have regulations referring to deposit relationships but integrated into regulations on capital contribution and investment cooperation activities. business cooperation, joint venture, association. Accordingly, commercial housing developers are not allowed to apply capital mobilization to divide housing products or to prioritize registration, deposit, enjoy the right to buy housing or to divide use rights. land in the project to the party receiving capital, except in the case of contributing capital to establish a new legal entity to be assigned by the State as an investor in a housing construction project. If this type of transaction is performed, it may be invalidated, the investor will be fined and must compensate for losses to capital contributors.
The Housing Law (article 63.4) also has regulations on deposits to ensure the obligation to sign a social housing lease contract. Accordingly, the law clearly stipulates three issues: (i) conditions for the investor to sign a deposit contract; (ii) maximum value of deposited assets; (iii) objects and conditions of the customer’s rental.
Taking a look at the current status of the current law, it can be seen that the housing law currently has regulations that partly resolve the turbulence of practice, at least within the scope of capital mobilization for housing development. commercial and social housing rentals. However, on the general level of the real estate market, current laws still lack measures to prevent and handle the situation of real estate businesses taking advantage of deposits or similar forms to mobilize capital. illegal.
Lawmaker’s proposed solution
The agency in charge of drafting (amending) the Law on Real Estate Business is also fully aware of market realities and the current legal situation. Following the progress of the Law on Real Estate Business (amended) up to now, it can be seen that lawmakers are trying to design solutions for the housing business and construction projects to take shape. in the future and focus on two main aspects:
First, stipulate the conditions that the investor must meet if they want to sign a deposit contract with the customer. Accordingly, there are two times being considered: (i) when the housing or construction project has met all conditions for being put into business or (ii) before this time.
Second, stipulate the maximum value of the deposit compared to the value of the sales contract.
When will I receive a deposit?
The 2015 Civil Code does not have any explicit regulations on the conditions for parties to sign a deposit contract. This leads to inconsistent perceptions in trial practice in courts.
A deposit contract may be declared invalid if, at the time of signing the deposit contract, the deposit recipient is not ready with the conditions to sign a sales contract. For example, in the case where the parties make a deposit to secure the conclusion of a contract to transfer land use rights, but at the time of deposit, that plot of land is mortgaged at the bank, the deposit contract will be declared invalid. . But also with a case of similar nature, the opinion of another court is opposite (1).
Therefore, clearly defining the conditions for investors to sign deposit contracts in the Law on Real Estate Business (amended) is necessary to ensure cognitive consistency in judicial practice.
Furthermore, real estate market reality also shows the necessity of setting conditions to ensure the legality of the project as well as preliminary appraisal of the investor’s project implementation capacity. This regulation will avoid the situation of “catching the enemy with nothing” and “drawing ghost projects” to defraud customers, contributing to screening investors as well as protecting customers.
So when is the right time? To answer this question, it is necessary to clarify what is the purpose of signing a deposit contract? From a theoretical perspective, a deposit is a measure to ensure the performance of contractual obligations. Therefore, there is a view that, “at the time of the deposit agreement, the real estate to be formed in the future must be eligible and a sale and purchase contract can be signed but to allow the parties time to prepare (documents). , money), then sign a deposit agreement and set a date to sign the sales contract” (2).
However, from the perspective of doing business in a specific field such as real estate, signing a deposit contract has a great effect in exploring the market’s tastes and needs for the project’s products. judgment. Information obtained from this activity has important value for the investor’s business decisions. In some countries, this information is one of the conditions for banks to decide whether to finance investors or not (3).
Therefore, to balance the interests of the parties, the writer supports the option of allowing investors to sign deposit contracts with customers before the project is eligible to be put into business but only after the project is fully qualified. Legal conditions for starting construction.
2%, 5%, 10% or 30%?
The 2015 Civil Code (Article 295) stipulates that the value of the collateral may be greater than, equal to, or less than the value of the secured obligation. From this regulation, it is inferred that the provisions of the current Civil Code do not interfere with the ratio of the value of the deposited property to the value of the sales contract.
However, based on concerns that if the value of the deposited property is too high, it will increase the investor’s incentive to appropriate it for project development or other purposes, lawmakers have introduced come up with a plan to limit the maximum percentage of the value of deposited assets. In the draft dated July 27, 2023, this limit is 2% of the selling price, rental purchase of houses and construction works. However, there are also opinions that the 2% level is too low and should be considered at 5%, 10%, 15% or 30%.
Actually, this idea is not new or unique. Even in the current Housing Law, in Article 63.4, there is also a regulation that limits the maximum deposit amount for renting social housing in the future to 12 months of temporarily calculated rent.
In other countries, regulations on maximum limits on the value of deposited assets are also quite clear. For example, in China, Article 587 of the Civil Code of this country stipulates that the deposit “must not exceed 20% of the level of the main contract object”, the excess will be invalid. Or in Australia, the maximum deposit for buying and selling land that is not eligible for transfer (off-plan) is not more than 10% of the value of the land lot (4).
The writer believes that as a security asset for contractual obligations, the deposit should be limited to a certain percentage to avoid confusion with payments according to project progress.
This rate should not be too low because it will lead to the risk of the parties easily breaking the agreement and accepting to give up the deposit when the real estate price rate fluctuates higher than the deposit rate. This ratio should not be too high because it will create a burden for customers and also not maximize economic efficiency from the transaction because the deposit is in principle “frozen” and cannot be transferred. put to use. According to the experience of some countries mentioned above, you can choose the option of 10% or 20%.
However, although this solution is necessary, it is not the solution to the problem of limiting the risk of investors misappropriating deposits. According to the provisions of Decree 21/2021/ND-CP, the deposit recipient has the following obligations: (i) preserve and preserve deposited assets; (ii) do not establish civil transactions, exploit or use deposited assets without the consent of the depositor and (iii) can only own the deposited assets in case the depositing party violates its commitment to enter into a contract.
With the above regulations, using the investor’s deposit for any purpose without the depositor’s consent is considered misappropriation and a violation of the law. However, the core issue lies in how to control whether the investor properly implements its rights and obligations as a deposit recipient. Both the current law and the solution being designed in the draft Law on Real Estate Business (amended) are leaving this issue open.
Therefore, adding regulations on the mechanism for preserving and preserving deposited assets in this case is the most important key to solving the difficult problem that reality is posing. Circular 16/2023/TT-NHNN has provided a quite good solution and can be chosen as a solution for the Law on Real Estate Business (amended). Accordingly, “in case of lending to pay money to ensure the performance of obligations, there must be measures to block the disbursement amount of loan capital at the lending credit institution in accordance with the provisions of law and the agreement of the parties at the loan agreement until the termination of the security obligation.
Referencing foreign experience, the writer also found a similar solution. Accordingly, deposits for future asset purchase and sale contracts must be kept by the related party (usually a real estate agent) in a trust account or deposit account approved by the relevant party (usually a real estate agent). Control throughout the deposit contract period.