Conditions  for guarantee housing formed in the future

Guarantees for housing formed in the future are important measures to protect the interests of real estate buyers. Guaranteed conditions help ensure that the buyer will receive the house on schedule to committed standards, and avoid financial risks if the investor encounters difficulties. This article will analyze the conditions, procedures and important notes when guaranteeing future housing.

When is it necessary to issue a guarantee for housing formed in the future?

Pursuant to the provisions of Article 26 of the Law on Real Estate Business 2023, the investor of a real estate project, before selling or leasing to buying housing formed in the future, must obtain approval from a domestic commercial bank or bank branch. Foreign companies operating legally in Vietnam agree to issue guarantees for the investor’s financial obligations to the house buyer or lease-purchaser when the investor does not hand over the house as committed in the purchase contract. Sell, rent and buy housing formed in the future.

According to regulations, investors must have documents on land use rights, project documents, and construction permits. For apartment buildings, a record of acceptance of the completed foundation is required. The investor must also notify the provincial housing management agency about the housing’s eligibility for sale or lease purchase.

In addition, before signing a purchase or lease purchase contract with a customer, the investor must have their financial obligations guaranteed by a commercial bank. This is to ensure the interests of the buyer when the investor does not hand over the house on schedule.

The role of guarantee for housing formed in the future

Guarantees for housing formed in the future play an important role in protecting the rights of home buyers and creating confidence in the real estate market. This mechanism is stipulated in the Law on Housing 2023 and related legal documents.

• First, guarantees help reduce financial risks for home buyers. When the investor cannot hand over the house on time or does not refund the money received, the guarantee bank will perform the financial obligation on behalf of the investor. This ensures the buyer does not lose money when the project runs into problems.
• Second, the guarantee creates motivation for the investor to complete the project on schedule. Having a bank guarantee forces the investor to commit more closely to the progress and quality of the project, avoiding the situation of the project being abandoned or prolonged.
• Third, this mechanism contributes to transparency of the real estate market. The bank’s participation as a guarantee helps screen projects, eliminating those that are not qualified or lack feasibility.

Regulations on conditions for implementing housing guarantees to be formed in the future

The implementation of guarantees for housing formed in the future must comply with strict conditions as prescribed by law. Real estate project investors, before selling or leasing future housing, must be approved by a domestic commercial bank or foreign bank branch legally operating in Vietnam to issue a guarantee for the investor’s financial obligations to the housing buyer or lease-purchase party when the investor does not hand over the housing as committed in the housing formed in the future purchase or lease-purchase contract.

For investors, they must meet the following conditions:

• Have full civil legal capacity and civil act capacity.
• The guaranteed obligation must be a legal financial obligation.
• Assessed by the credit institution or foreign bank branch that issued the guarantee as capable of refunding the amount of money that the credit institution or foreign bank branch must pay on behalf of when performing the guarantee obligation.

On the project side, it needs to meet the requirements of the Law on Real Estate Business 2023:

• Have valid land use rights documents.
• Have approved project documents and construction drawing designs.
• Have a construction permit in cases where a construction permit is required.
• There is a record of acceptance of the completed foundation for the case of an apartment building.

The bank providing the guarantee must be a commercial bank with full capacity according to the regulations of the State Bank of Vietnam. They need to carefully evaluate the financial capacity and reputation of the investor before granting a guarantee.

Reference content: Article 11 of Circular No. 11/2022/TT-NHNN; Article 26 of the Law on Real Estate Business 2023.

Housing guarantee procedures will be established in the future

Procedures for guaranteeing housing formed in the future are specifically regulated. This process includes many steps, requiring the participation of the investor, guarantee bank and home buyer.

Step 1: Based on the request of the investor or counter-guarantor, the commercial bank reviews, appraises and decides to grant a guarantee to the investor;

Step 2: The commercial bank and the investor sign a contract to guarantee future housing according to the provisions of Article 56 of the Law on Real Estate Business 2023 and the provisions of Clause 13, Article 3, Article 15 of Circular No. 11/2022/TT-NHNN;

Step 3: After signing a contract to purchase or hire-purchase a house, which stipulates the financial obligations of the investor, the investor shall send the contract to the commercial bank to request the commercial bank to issue a letter of guarantee to the buyer;

Step 4: The commercial bank, based on the housing purchase and lease purchase contract and the contract for the guarantee of housing formed in the future, issues a letter of guarantee and sends it to each buyer or to the investor to provide the letter. Guarantee for the buyer according to the agreement.

Reference content: Clause 4, Article 13, Circular No. 11/2022/TT-NHNN.

Consulting services on guarantees for housing formed in the future in Long Phan

Choosing in-depth consulting and support services will help customers clearly understand legal regulations, thereby shortening time and minimizing risks in guaranteeing housing formed in the future. Our team of experienced experts has a deep understanding of the Law on Housing 2023, the Law on Real Estate Business and regulations related to real estate guarantees. Long Phan is committed to providing professional and dedicated consulting services on housing guarantees to be formed in the future.

Long Phan’s consulting services include:

• Analyze the legality of the housing guarantee application to be formed in the future, represent the customer to explain the application to the commercial bank;
• Guide investors to complete documents requesting guarantees at commercial banks;
• Consulting on the rights and obligations of the parties during the guarantee process;
• Support in drafting and reviewing guarantee contracts and housing purchase and sale contracts;
• Answer questions and handle problems that arise during the guarantee implementation process.

Guarantee for the purchase of future housing is an important mechanism, protecting the interests of buyers and promoting a transparent real estate market. For customers who need detailed advice on the guarantee process, please contact Long Phan via Hotline: 0906735386. Our team of experts will help customers understand their rights and conduct safe and effective transactions.