Guide to Identifying Legal Risks When Buying Real Estate

Legal risks when buying real estate are always a critical concern for anyone preparing to transact, especially during the pre-contract stage. If not identified promptly, these risks can directly affect the transaction’s safety and your lawful rights. In this article, Long Phan Consulting Company analyzes the key legal risks when buying real estate and provides inspection guidelines to help buyers proactively and effectively prevent them.

Check the legal status of the property

One of the most important steps to avoid legal risks when buying real estate is to carefully check the legal status of the property before entering into any transaction.

Real estate legal checks are a crucial step in eliminating legal risks when purchasing property, helping buyers assess the validity and security of the asset. Based on this, it’s necessary to thoroughly examine core legal factors such as the legality of the Certificate of Ownership and the terms of sale of the property to minimize potential risks.

Legality of the Land Use Certificate

Verifying the legality of the Land Use Certificate helps buyers minimize legal risks when buying real estate and ensure that the property has valid ownership documentation. Buyers must review crucial information to verify accuracy and identify potential issues:

• Ensure the subject named on the Certificate matches the person directly transferring the property.
• Check the issuance status (first issuance, re-issuance, or exchange) to evaluate the asset’s legal history.
• Verify technical information for accuracy and consistency, including parcel number, map sheet, area, land type, and usage purpose.
• Assess the current legal status to see if the real estate is mortgaged, distrained, or restricted from transfer.

Based on these checks, typical legal risks that may arise include:

• The Certificate is forged, erased, or altered.
• The asset is registered under a household, but the transfer lacks the signatures of all members with related rights.
• The Certificate was issued to the wrong subject or bypassed legal procedures, leading to a risk of revocation and directly invalidating the transaction.

Check the legal status of the offer conditions (if the product is a future real estate development)

When purchasing off-plan property, reviewing the legal status of the offer conditions is necessary to prevent potential legal risks when buying real estate.

For off-plan real estate, checking the developer’s legal offering conditions is the key factor in ensuring a lawful transaction and avoiding future risks. Buyers must verify that the project fully meets the conditions prescribed by real estate business laws. This involves reviewing related legal dossiers such as the validity of land use rights, construction permits, project legal records, and crucially, the written confirmation of eligibility to sell or lease-purchase issued by a competent agency. If these conditions are not guaranteed, the transaction may become void or trigger disputes, directly affecting the buyer’s rights.

>>> See more: High-End Townhouse and Villa Brokerage Services in 2026

Check the planning

Examining the planning information of the property is essential to avoid legal risks when buying real estate, particularly those related to zoning or land use restrictions.

Checking planning is a crucial step to determine the asset’s actual usability and long-term value, as not all certificated assets can be built on or exploited according to the buyer’s needs. Reviewing planning information helps buyers grasp the land use orientation and applicable legal restrictions. Specifically, check the land use planning to determine if the property is residential, public, traffic, or other land types. Simultaneously, review construction planning details like road reserves, building lines, and safety corridors (traffic, irrigation, power grids).

Without thorough checks, buyers face risks such as: the real estate falls under planning that prohibits construction or is subject to State recovery; the asset lies within a protection corridor, restricting usage rights; and in some cases, compensation upon recovery is inadequate to protect the land user’s interests.

Dispute status

Determining whether the property is involved in any disputes is a crucial step in reducing legal risks when buying real estate.

Verifying dispute status ensures the real estate is eligible for transaction and harbors no latent legal risks. In reality, many assets possess valid Certificates but are still embroiled in use right or ownership disputes, directly invalidating transfers. Buyers must proactively verify if the property is under dispute, particularly common types like boundary disputes, inheritance disputes, or joint-use disputes. This can be checked by seeking confirmation from the commune/ward People’s Committee where the land is located, combined with gathering practical information from neighbors and residential groups. Failure to check this can lead to risks such as the property being legally ineligible for transfer, or disputes arising post-transfer, leading to prolonged, costly litigation.

Field inspection

Conducting a field inspection allows buyers to detect potential issues that may lead to legal risks when buying real estate. On-site inspection is a crucial step in comparing the legal information on paper with the actual condition of the property, thereby accurately assessing its suitability and potential for development. This helps buyers promptly detect discrepancies or violations that may not be fully reflected in the legal documents.

Boundaries and current land use

Confirming the actual boundaries and current land use of the property helps prevent legal risks when buying real estate arising from inconsistencies with official records. Buyers must conduct physical measurements and compare them directly with the Certificate’s information to confirm matching areas, dimensions, and parcel boundaries. This inspection mitigates risks such as the actual area being smaller than the book area, or land encroachment issues, thereby avoiding post-transaction disputes or financial losses.

Assets attached to land

Checking the assets attached to the land is necessary to avoid legal risks when buying real estate, especially when structures or improvements are involved. For houses or structures on the land, check the legality of the construction, including the existence of a construction permit and whether the actual build matches the permitted details. Without this check, buyers face risks such as illegal or unpermitted construction being administratively fined or forced to be dismantled, and competent agencies refusing to recognize ownership of the land-attached assets.

Verify the parties involved in the transaction

Verifying the parties involved in the transaction is a crucial step to ensure that those participating in the transfer have the full legal rights and capacity to carry out the transaction. Failure to accurately identify the parties may invalidate the contract or lead to disputes regarding ownership and disposal of the property.

First, it is necessary to clearly identify whether the seller is an individual or a household to apply the appropriate legal regulations; at the same time, check whether the property is under co-ownership to ensure that all co-owners participate or have valid consent to the transaction. In cases where the transaction is conducted through an authorized representative, the legality, scope, and duration of the authorization document should be reviewed to avoid exceeding the authorized authority.

In addition, the marital status of the seller is a mandatory factor to check in order to determine whether the property is joint property of the spouses or separate property; if it is joint property and the consent of the other spouse is lacking, the transaction may be invalid and directly affect the rights of the buyer.

Legal review of contracts

Legal review of a contract is the final but crucial step in the entire real estate transaction process, as all rights and obligations of the parties are recorded and bound by the contract. Carefully reviewing the contract ensures its legality, minimizes legal risks when buying real estate, and creates a solid foundation for protecting rights should disputes arise.

Deposit contract

Pay special attention to crucial clauses such as deposit penalties, refund conditions, and the seller’s obligation to provide legal dossiers. This stage is prone to risks if clauses are drafted unfavorably, potentially leading to lost deposits or difficulties demanding refunds if the transaction halts.

Transfer contract

Ensure the contract is lawfully notarized. For off-plan real estate, the sale contract must fully meet the party rights and obligations prescribed by real estate business laws. Furthermore, the contract must reflect the actual transaction reality, especially the transfer price. Under-declaring the price to evade taxes can trigger future disputes, and contracts lacking crucial clauses make protecting your rights exceedingly difficult.

>>> See more: Selecting an Appropriate Real Estate Distribution Strategy

Real estate brokerage services by Long Phan Consulting Company

With practical experience in the real estate sector, Long Phan Consulting Company provides in-depth advisory and brokerage services, helping clients comprehensively control legal risks throughout the transaction process. Our service goes beyond mere matchmaking; we focus on legal review, asset safety evaluation, and accompanying clients from the initial inspection to the completion of transfer procedures.

Our specific consulting tasks include:

• Review and verify the legal documents of the property (Certificate of Ownership, planning documents, dispute status, transaction conditions).
• Verify the parties involved in the transaction, provide advice on legal capacity, ownership status, and issues related to authorization, joint and separate property.
• We provide consultation, drafting, and review of various types of contracts, such as deposit agreements and transfer agreements, to ensure maximum protection of clients’ rights.
• We assist with on-site inspections, comparing the current land use status with legal documents to identify discrepancies and potential legal risks when purchasing real estate.
• We assist you throughout the negotiation, notarization, and transfer of ownership process, ensuring the transaction is safe and compliant with the law.

Frequently Asked Questions about Legal Risks When Buying Real Estate

Below are some frequently asked questions about identifying legal risks when buying real estate; please refer to them:

What are the risks involved in buying a property that is mortgaged to a bank, and how should you handle it?

The biggest legal risk when buying real estate is that the seller is unable to release the mortgage to complete the notarized transfer. A safe solution is for the parties to establish a tripartite agreement (Seller – Buyer – Bank) where the buyer directly deposits the money into the bank to settle the loan and retrieve the property title.

Why is it necessary to check the marital status of the seller when dealing with real estate transactions?

Even if the land title is registered in only one person’s name, if the property was acquired during the marriage, it is still considered joint property. Without the consent of both husband and wife, the transaction may be declared invalid by the Court.

(Legal basis: Article 33 Marriage and Family Law 2014)

Is a handwritten deposit agreement that is not notarized legally valid?

Current law does not require deposit contracts to be notarized or authenticated, so handwritten documents are still legally valid if they meet the requirements regarding civil capacity and the voluntary agreement of the parties.

(Legal basis: Article 328 of the 2015 Civil Code)

What constitutes a future real estate project that is eligible for sale?

The conditions for putting housing and construction projects under construction into business include:

1. Houses and construction projects that have commenced construction in accordance with the law on construction.
2. Possess one of the following types of land use rights documents:

• Decision on land allocation;
• Decisions on land lease and contracts for the lease of land use rights are governed by land law regulations;
• Decision to permit the change of land use purpose;
• Land use rights certificate;
• Certificate of ownership of housing and land use rights;
• Certificate of land use rights, ownership of houses and other assets attached to the land;
• Other certificates regarding land use rights and ownership of assets attached to the land, as prescribed by land law.

3. The following documents are available:

• Building permits for houses and construction works, and application dossiers for building permits in cases where a building permit is required according to the law on construction;
• Notification of commencement of construction of houses and construction works, and construction design documents for houses and construction works in cases where a construction permit is not required according to the law on construction;
• Documents certifying the completion of technical infrastructure construction in accordance with relevant construction laws and project progress; in the case of apartment buildings or mixed-use buildings with residential units, documents proving the completion of foundation construction in accordance with construction laws must be provided.

4. Before selling or leasing housing units under construction, the project developer must notify the provincial-level state management agency for real estate business in writing that the housing units meet the conditions for sale or lease.

Within 15 days of receiving the notification, the provincial-level state management agency for real estate business is responsible for inspecting the conditions of the housing units to be put into business and responding in writing to the investor regarding whether the housing units are eligible for sale or lease-purchase; if they are not eligible, the reasons must be clearly stated.

5. Houses and construction works must be located within a real estate project that has been approved by a competent state agency in accordance with the law, and the approved project must include the purpose of investing in the construction of houses and construction works for sale or lease.
6. Meeting the conditions stipulated in points b, c, d, and e of Clause 1, and points a and c of Clause 2, Article 14 of the 2023 Law on Real Estate Business.
7. Information about real estate properties and real estate projects put into business has been publicly disclosed in accordance with Article 6 of the 2023 Law on Real Estate Business.
8. The floor area of ​​a construction project under construction that is put into business in the future, in addition to meeting the conditions stipulated in Clauses 1, 2, 3, 4, 5, 6 and 7 of Article 24 of the 2023 Law on Real Estate Business, must also ensure the conditions stipulated in Clause 3 of Article 14 of the 2023 Law on Real Estate Business.

(Legal basis: Article 24 of the 2023 Law on Real Estate Business)

What happens if the actual area is smaller than the area stated on the land title certificate?

When the actual area is smaller than the area recorded on the land title certificate, it is first necessary to remember and determine the cause of the discrepancy. If the boundaries of the land plot have not changed since the time the certificate was issued and there are no disputes with neighboring households, then when the land title certificate is reissued, the area will be determined according to the actual measurement (reduced to the actual area).

Conversely, if there is a change in boundary or a dispute arises, the dispute must be resolved or the boundary redefined before the certificate is issued. Additionally, in cases of discrepancies due to technical errors or inaccurate location determination, the competent authority will review and issue a new certificate to reflect the actual land use.

(Legal basis: Clause 6, Article 135 of the 2024 Land Law)

What are the potential risks of buying land with handwritten documents (without a land title certificate)?

Buying land with handwritten documents (without a land title certificate) carries significant legal risks because the transaction does not meet the conditions for legal transfer, specifically the lack of a land use right certificate, a mandatory requirement for transferring ownership. As a result, the contract may be invalid, the buyer cannot transfer ownership, and their land use rights will not be legally recognized. Furthermore, there is a risk of purchasing land that is under dispute, seized, or ineligible for transaction, without any mechanism to protect rights in case of disputes.

(Legal basis: Article 45 of the Land Law)

Conclusion

Identifying and controlling legal risks when buying real estate is the pivotal factor in ensuring transaction safety and protecting the buyer’s long-term interests. However, in reality, not everyone possesses the knowledge and experience to independently review complex legal issues. Therefore, selecting a professional consulting unit like Long Phan Consulting Company gives clients peace of mind throughout the transaction, from legal checks to finalizing procedures.

If you need detailed support, please contact Hotline 1900636389 for swift and accurate advice.

>>> See more: Property Buyer Finding Services for Real Estate Owners