Mandatory Disclosure of Guarantee Agreements for Future Housing

Mandatory Disclosure of Guarantee Agreements for Future Housing is mandatory prior to the sale or lease-purchase of housing. Under the Law on Real Estate Business, enterprises must fully meet financial and legal standards before launching products to the market. Transparent guarantee information helps prevent risks associated with delayed project handover. The following article by Long Phan Consulting Company will provide information on investor obligations and the guarantee implementation process under current regulations.

Is it mandatory for developers to disclose the guarantee agreement when selling properties under construction?

Real estate developers must publicly disclose guarantee information to maintain market transparency. This obligation prevents project delivery risks and protects buyer capital.

• Legal Basis: Article 6 of the Law on Real Estate Business 2023 and Decree 96/2024/NĐ-CP require developers to post guarantee agreements on their corporate websites and at project headquarters.
  • Long Phan Consulting Company verifies the legal validity of the bank’s commitment letter.
  • Our experts analyze the financial capacity of the guaranteeing commercial bank.
  • We evaluate the specific terms within the signed guarantee agreement for potential loopholes.
• Issuance Process: Domestic commercial banks or foreign bank branches must approve the guarantee for the developer’s financial obligations.
  • Consultants review the commitment document affirming the bank will issue individual certificates to each buyer.
  • Long Phan Consulting Company supports clients in verifying the authenticity of the developer’s copy of the bank commitment.
  • We ensure the developer provides this document during the contract signing phase.
• Buyer’s Right of Refusal: Article 26 allows buyers to opt-out of the financial guarantee during contract negotiation.
  • Our legal team advises on the implications of waiving guarantee rights.
  • We draft written waiver agreements that comply with statutory standards.
  • Long Phan Consulting Company assesses the cost-benefit ratio of paying guarantee fees versus taking project risks.

>>> See more: What regulations must be met to trade future-formed housing?

Conditions for future housing units to be eligible for purchase and sale transactions

Future housing must meet strict criteria before entering the commercial market. Law on Housing 2023 and Decree 95/2024/NĐ-CP dictate these essential conditions.

• Legal Status: The property must not be under distraint, administrative seizure, or subject to temporary emergency measures by the Court.
  • Long Phan Consulting Company conducts due diligence on the land recovery status of the project.
  • We check for clearance or demolition notices from competent state agencies.
  • Our experts confirm the project is not involved in ongoing litigation or disputes.
• Developer Eligibility: Developers must obtain written confirmation from provincial state management agencies regarding the project’s eligibility for sale.
  • We verify the technical construction progress against the approved investment plan.
  • Long Phan Consulting Company inspects the completion of foundation work for apartment buildings.
  • We audit the developer’s adherence to capital mobilization regulations.
• Financial Capacity: The guaranteeing bank evaluates the developer’s ability to repay substituted amounts.
  • Consultants analyze the developer’s civil legal capacity and credit history.
  • We ensure the guaranteed obligation is a legitimate financial liability.
  • Long Phan Consulting Company provides financial modeling to assess project liquidity and debt coverage.

>>> See more: Guarantees for housing formed in the future

Conditions for developers to be granted guarantees for future housing projects

According to Article 13 of Circular 61/2024/TT-NHNN, commercial banks and branches of foreign banks shall consider and decide to grant guarantees to investors when the following conditions are met:

1. The investor meets all the requirements stipulated in Article 11 of Circular 61/2024/TT-NHNN (except in cases where a commercial bank or branch of a foreign bank guarantees the investor on the basis of a counter-guarantee). Specifically:

• Possess full civil legal capacity and civil capacity as prescribed by law;
• The guaranteed obligation is a legitimate financial obligation;
• The guarantee is assessed by the credit institution or foreign bank branch as having the ability to repay the amount that the credit institution or foreign bank branch is obligated to pay on its behalf when fulfilling the guarantee obligation.

The investor has received a document from the provincial state management agency for real estate business responding to the investor regarding whether the housing units are eligible for sale or lease-purchase.

Therefore, in order to be granted a guarantee for housing projects under construction, developers must meet the above conditions as stipulated by law.

Procedure for obtaining a guarantee for housing under construction

The procedure for guaranteeing housing under construction is carried out according to the provisions of Clause 2, Article 13 of Circular 61/2024/TT-NHNN, which stipulates:

• Based on the request of the investor or the counter-guarantor, commercial banks and branches of foreign banks will review, assess, and decide whether to grant a guarantee to the investor;
• The guarantor and the investor sign a guarantee agreement in accordance with Article 26 of the 2023 Law on Real Estate Business and the provisions of Clause 12, Article 3, and Article 15 of Circular 61/2024/TT-NHNN;
• Based on the guarantee agreement, the guarantor issues a written commitment to issue a guarantee letter to the investor, who then sends a copy to the buyer upon signing the housing purchase or lease-purchase contract.
• After signing a housing purchase or lease-purchase contract, which stipulates the financial obligations of the developer, the developer sends the housing purchase or lease-purchase contract to the guarantor to request the guarantor to issue a guarantee letter to the buyer;
• The guarantor, based on the housing purchase/lease-purchase contract, the guarantee agreement, and the commitment letter to issue the guarantee letter, issues the guarantee letter and sends it to the investor to provide the guarantee letter to the buyer.

What are the rights and obligations of the guarantor and the developer in guaranteeing future housing projects?

Based on Clauses 8 and 9 of Article 13 of Circular 61/2024/TT-NHNN, the rights and obligations of the guarantor and the investor in guaranteeing future housing projects are clearly stated as follows:

Rights and obligations of the guarantor

The guarantor has the right to:

• Refusing to issue a guarantee letter to the buyer if the housing purchase or lease-purchase contract does not comply with relevant legal regulations or after the guarantee agreement has been terminated;
• Refusal to fulfill the guarantee obligation for amounts not included in the investor’s financial obligations, or amounts paid by the buyer exceeding the percentage stipulated in Article 25 of the 2023 Law on Real Estate Business, or if the buyer fails to present the guarantee letter issued by the guarantor to the buyer.

The guarantor has the following obligations:

• Issue a guarantee letter before the deadline for handover of the house as stipulated in the house purchase or lease-purchase contract upon receipt of a valid house purchase or lease-purchase contract and send it to the investor;
• In the event that the guarantor and the investor terminate the guarantee agreement before its expiration, no later than the next working day, the guarantor must publicly announce on its website and notify in writing the provincial housing management agency in the area where the investor’s housing project is located. 
• Fulfilling the guarantee obligation with an amount payable corresponding to the investor’s financial obligations, determined based on the guarantee request documents provided by the buyer, in accordance with the guarantee conditions stipulated in the guarantee letter.

Rights and obligations of the investor

The investor has the right to: Request the guarantor to issue a guarantee letter for all buyers who choose to have a guarantee for the future housing project under guarantee, within the validity period of the commitment to issue the guarantee letter;

The investor has the following obligations:

• Send the guarantee letter issued by the guarantor to the buyer after receiving it from the guarantor as stipulated in Clause 6, Article 26 of the 2023 Law on Real Estate Business;
• In the event that the guarantor and the investor terminate the guarantee agreement before its expiration, no later than the next working day, the investor must publicly announce on the investor’s website (if any) and notify in writing the provincial housing management agency in the area where the investor’s housing project is located about the guarantor’s termination of the guarantee for the investor. The investor must stop providing buyers with the written commitment to issue the expired guarantee letter when the guarantee agreement between the investor and the guarantor expires;
• Accurately notify the guarantor of the amount of advance payments received from each buyer and any other amounts (if any) within the agreed timeframe as stipulated in point c, clause 7, Article 13 of Circular 61/2024/TT-NHNN.

>>>See more: Documents informing that future housing is eligible for purchase and sale

Real estate consulting services at Long Phan Consulting Company

Long Phan Consulting Company offers professional expertise in handling complex property transactions and guarantee disputes. We provide technical solutions to secure your real estate investments.

Long Phan Consulting Company comprehensive consulting and support services include:

• Legal advice on housing and land: conditions for transferring, buying, selling, gifting, and inheriting land use rights and housing according to current legal regulations.
• We provide consulting services for buying, selling, renting, and lease-purchasing real estate, especially properties under construction, apartments, and commercial housing.
• Drafting, reviewing, and advising on real estate contracts such as deposit agreements, sales contracts, land use rights transfer contracts, and real estate lease/rental agreements.
• Real estate project consulting: project implementation conditions, capital mobilization, project transfer, legal procedures related to the investor.
• Consulting on administrative procedures related to land: issuance of land use right certificates, mandatory disclosure of guarantee agreements for future housing, registration of changes, land consolidation, land subdivision, and change of land use purpose.

Some frequently asked questions about mandatory disclosure of guarantee agreements for future housing

Below, Long Phan Consulting Company provides some frequently asked questions regarding mandatory disclosure of guarantee agreements for future housing and the procedures for publicly disclosing future housing guarantee agreements. We invite interested clients to refer to this information:

Without a bank guarantee, can a developer sell houses that are still under construction?

Based on Article 26 of the 2023 Law on Real Estate Business, which regulates guarantees in the sale and lease-purchase of housing units under construction:

• Accordingly, before selling houses under construction, real estate project developers must obtain approval from domestic commercial banks or branches of foreign banks legally operating in Vietnam (hereinafter referred to as banks) to provide a guarantee for the developer’s financial obligations to the buyer in case the developer fails to deliver the house as committed in the future housing purchase contract.
• Furthermore, when signing a contract for the purchase of a house under construction, the buyer has the option of whether or not to have a guarantee for the developer’s financial obligations to them.

Therefore, before selling houses under construction, real estate project developers must obtain a guarantee from a qualified commercial bank to cover the developer’s financial obligations to customers in case the developer fails to deliver the houses on schedule as committed.

Buying a house under construction: Does the contract need to be notarized or authenticated?

According to Article 44 of the 2023 Law on Real Estate Business, housing under construction is defined as housing that is still under construction and has not yet been inspected and approved for use (according to Clause 24, Article 2 of the 2023 Housing Law), but is still considered a type of housing. Therefore, contracts for the purchase and sale of housing under construction must be notarized in the following cases:

• Contracts for the sale of future-built housing between parties where at least one party is a real estate business must be notarized upon request.
• For contracts to purchase housing units under construction where the developer is an individual, the contract between the real estate project developer and the buyer must be notarized or certified in accordance with the law.

What is the validity period of a guarantee agreement?

According to point a, clause 3, Article 13 of Circular 61/2024/TT-NHNN, the guarantee agreement is effective from the time of signing until the guarantee obligations of all guarantee letters to the buyer terminate in the following cases:

• The obligations of the guaranteed party have ended.
• The guarantee obligation has been fulfilled in accordance with the guarantee commitment.
• The guarantee may be cancelled or replaced by another security measure by agreement between the guarantee recipient and the guarantor, and other relevant parties (if any).
• The guarantee commitment has expired.
• The beneficiary of the guarantee waives the guarantee obligation for the guarantor.
• By agreement of the parties.
• The guarantee obligation terminates in other cases as prescribed by law.
• All obligations of the investor to the guarantor under the guarantee agreement have been fulfilled; except in cases where the parties agree to terminate the guarantee agreement before its expiration.

Do customers have to pay a bank guarantee fee?

Yes, according to Article 19 of Circular 61/2024/TT-NHNN, credit institutions and branches of foreign banks agree on the guarantee fee with customers and related parties (if any) and must publicly display the guarantee fee. The parties may agree to adjust the guarantee fee.

Where and when must the developer publicly disclose the guarantee agreement?

According to regulations, the investor must publicly disclose information about the guarantee on the company’s website and at the project’s headquarters. This disclosure must take place before the signing of the purchase or lease-purchase contract for future housing units, as stipulated in Article 6 of the 2023 Law on Real Estate Business, and guided by Article 4 of Decree 96/2024/ND-CP. This disclosure aims to ensure transparency and provide customers with sufficient data to assess the financial capacity and safety of the project.

Conclusion

Mandatory disclosure of guarantee agreements for future housing is the primary factor in ensuring financial safety when trading future housing. Buyers should carefully examine individual guarantee certificates before making any payments to the developer. If any legal obstacles or procedural doubts arise, contact Long Phan Consulting Company via hotline 1900636389  for professional authority and technical support.