Principles When Conducting Real Estate Business Today

Principles When Conducting Real Estate Business Today activities are established to create a transparent, professional, and safe transaction environment. Mastering and complying with these standards not only helps enterprises optimize transaction processes and limit risks but also contributes to enhancing reputation and competitiveness in the market. In the article below, Long Phan Consulting provides Clients with information on the core principles that bring direct benefits to their investment and business activities.

Principles of compliance with real estate business conditions

To conduct real estate business, the entities participating in the transaction and the real estate put into business must comply with conditions prescribed by law. Compliance is not only a mandatory requirement but also a screening mechanism to limit risks, protect the rights of parties, and improve the stability of real estate business activities.

Conditions regarding real estate properties to be put into business.

Based on Clause 2, Article 4 of the Law on Real Estate Business 2023, real estate and projects put into business must meet specific conditions.

Accordingly, existing housing and construction works put into business must meet the conditions prescribed in Article 14 of the Law on Real Estate Business 2023 as follows:

• Having a Certificate of housing ownership and residential land use rights or documents recording ownership of housing and construction works;
• Not being subject to a dispute regarding land use rights attached to the housing/construction works, or disputes regarding ownership that are being notified, accepted, or resolved by competent authorities; in case of a dispute, it must have been resolved by a legally effective judgment, decision, or ruling;
• Not being under distraint to ensure judgment enforcement;
• Not being subject to cases where transactions are prohibited by law;
• Not being under suspension or temporary suspension of transactions according to the law;
• Having been publicly disclosed according to Article 6 of the Law on Real Estate Business 2023.

Housing and construction works in real estate projects put into business by the investor must ensure the following additional conditions:

• The project must meet the requirements prescribed in Article 11 of the Law on Real Estate Business 2023;
• Having documents determining that the housing/construction works have been accepted and put into exploitation/use according to construction laws;
• The project investor has fulfilled financial obligations regarding land (land use levy, land rent, taxes, fees) to the State;
• Having a Certificate of land use rights regarding the land attached to the housing/construction works.

For construction floor area within construction works sold or lease-purchased by the investor, additional conditions include:

• The construction work is created under an investment project according to investment and construction laws; eligible for asset ownership registration for the buyer/lease-purchaser;
• The floor area has a specific use function, is separated from other areas in the work according to the approved project, and is clearly shown in the design dossier for independent management and use;
• The work is designed correctly and complies with specialized standards/regulations applicable to that type of work and its function;
• The floor area must have determined land use rights (form, term, common/private use area) attached to it;
• Financial obligations regarding land for the specific floor area must be clearly determined and stated in the sales/lease-purchase contract;
• The work must be built on land allocated by the State with land use levy collection or leased land with one-off rental payment for the entire lease term.

Subject conditions

Organizations and individuals must meet conditions under Article 9 of the Law on Real Estate Business 2023:

• Establishment: Must establish an enterprise or cooperative with a real estate business line, except for:
  • Individuals conducting small-scale real estate business (must declare and pay taxes).
  • Organizations/individuals selling/leasing assets not for business purposes or below the small-scale threshold (must declare/pay taxes; individuals selling/leasing-purchasing must perform notarization/certification).
• Individuals: Must be adults (18+) with full civil act capacity.
• Enterprises:
  • Not prohibited or suspended from operation by Court or state decisions.
  • Ensure the ratio of credit debt/bond debt to owner’s equity.
  • Equity Capital: For project-based business, equity must not be lower than 20% of total investment for projects under 20 ha, and not lower than 15% for projects of 20 ha or more. Must ensure equity allocation if executing multiple projects simultaneously.

>>> See more: What conditions do individuals doing real estate business need to meet?

Principles of information transparency in real estate business.

Information transparency is a mandatory obligation under Clause 1, Article 4 of the Law on Real Estate Business 2023. Before putting real estate into business, enterprises must disclose full, truthful, and accurate information on the housing and real estate market information system and the enterprise’s website.

Information about the real estate project

• Investment policy decisions; Land allocation/lease decisions; Approved detailed planning (1/500); Model contracts used in transactions.

Information about housing and future construction projects.

• Type, location, scale, progress, function; Basic design/Construction permit; Notice of commencement; Infrastructure acceptance documents; Foundation acceptance documents (for apartments/mixed-use buildings); Land use right documents; Guarantee agreements; Notice of eligibility for sale from competent authorities; Restrictions on ownership/use (mortgages).

Information about available housing and construction projects.

• Certificates of ownership/land use rights; Relevant land area certificates (for project investors); Restrictions/Mortgages.

Information regarding land use rights for land with existing infrastructure within a real estate project.

Certificates of land use rights; Documents on eligibility for transfer for individual housing construction; Documents on infrastructure completion; Documents on fulfillment of financial obligations; Restrictions/Mortgages.

>>> See more: Conditions for Land Subdivision for Real Estate Projects 

The principle is to conduct business with only the types of real estate that are permitted to be traded.

Based on Article 5 of the Law on Real Estate Business 2023, permitted types include:

• Existing housing and future-formed housing.
• Existing and future-formed construction works (education, health, sports, culture, office, commercial, service, tourism, lodging, industrial, and mixed-use).
• Construction floor area within existing or future-formed construction works.
• Land use rights with technical infrastructure in real estate projects.
• Real estate projects.

Principle of protecting the legitimate rights and interests of customers.

Recorded in Clause 1, Article 4, this principle balances interests as customers are often the weaker party regarding information.

• Transactions must ensure legal ownership/use rights for the buyer.
• Customers have the right to request documents, monitor progress, and refuse handover if quality/safety (fire safety, utilities) is not met.
• Model contracts and general transaction conditions must be registered to eliminate terms disadvantageous to customers.

Principles for concluding and performing contracts in accordance with the law.

Real estate business contracts must comply with form and content regulations (Clause 1, Article 4).

• Content: Detailed info on assets, price, payment method, handover deadline, warranty, and penalties.
• Prohibitions: Terms to evade taxes, conceal true value (dual-price contracts), or exclude seller’s basic liabilities are prohibited.
• Consequence: Violation of prohibitions or forms leads to invalid contracts, causing financial disruption and waste of time.

The principle of freedom of business, but within the framework of the law.

Entities have the right to freely negotiate prices and partners based on “respecting the lawful rights and interests of parties.” This encourages market flexibility. However, this freedom is limited by law and social ethics. Investors cannot transfer projects without fulfilling financial obligations or arbitrarily change public work functions for profit.

The principle of equality and fair competition in the market.

This principle ensures equal access to land and capital resources. It strictly prohibits monopolistic collusion, price manipulation, hoarding to create artificial scarcity, or spreading false information.

• Implementation: Public auctions of land use rights and bidding for investor selection ensure the most capable investors are chosen.
• Significance: Helps regulate prices to true value and prevents real estate “bubbles.”

Principle of legal liability for risks and breaches

Entities must bear consequences for violations or risks they cause.

• Civil Liability: Compensation for actual damages (Article 360 Civil Code).
• Administrative/Criminal Liability: Fines, license revocation, or imprisonment for serious consequences (fraud, land use violations). Legal representatives may face personal liability.

The principle of linking real estate business with sustainable development.

Real estate business must align with urban planning, environmental protection, and social security.

• Compliance: Strict adherence to construction density, green space ratios, and waste treatment.
• Impact: Limits rampant land plotting that breaks planning or “concretization” causing flooding/congestion. Encourages green buildings and smart cities.

Long Phan Consulting’s real estate brokerage and consulting services.

Long Phan Consulting provides advisory services for enterprises and individuals in real estate brokerage. We support clients in establishing operational processes to optimize efficiency and ensure compliance.

Our Services Include:

• Consulting on establishment and operational conditions compliance.
• Drafting and reviewing model contract systems.
• Advising on terms to protect the enterprise’s financial interests.
• Supporting procedures for establishing real estate brokerage service enterprises.
• Representation in administrative procedures with competent state authorities.

Frequently Asked Questions

Below, Long Phan Consulting provides some frequently asked questions related to the principles of conducting real estate business today. We invite interested clients to refer to this information:

Is it mandatory for real estate business enterprises to disclose information before opening for sale, and where? 

Yes. Information disclosure is a mandatory condition. The project investor must disclose full and accurate information on the housing and real estate market information system AND on the enterprise’s website. This must be done before putting the real estate into business and updated upon changes. (Legal basis: Clause 1 Article 4 and Article 6, Law on Real Estate Business 2023).

What is the liability if the investor fails to hand over the house on the committed schedule? 

The seller must compensate the customer for damages and pay a penalty for breach as agreed in the contract. Additionally, the customer has the right to unilaterally terminate or cancel the contract, and the seller must refund the money received plus compensation (if any). (Legal basis: Clause 3 Article 48, Law on Real Estate Business 2023 and Article 360 Civil Code 2015).

Do individuals conducting small-scale real estate business have to establish an enterprise? 

No. Individuals conducting small-scale real estate business do not have to establish a real estate business enterprise but must declare and pay taxes according to the law. The Government will detail the criteria for determining small-scale business. (Legal basis: Clause 3 Article 9, Law on Real Estate Business 2023).

What constitutes prohibited fraudulent or deceptive acts in real estate business?

 Prohibited acts include: Forging documents, intentionally falsifying information about real estate/projects; Failing to disclose, or disclosing incomplete/incorrect content about the project; Fraud, deception, or scamming in real estate business harming lawful rights of organizations/individuals. (Legal basis: Article 8, Law on Real Estate Business 2023).

What principles regarding customer rights apply to the transfer of the whole or part of a project? 

The transferor investor must notify customers and related parties timely, fully, and publicly. Most importantly, the transferee investor must inherit all rights and obligations of the transferor investor towards customers, ensuring customer rights are not affected or interrupted. (Legal basis: Clause 3, 4 Article 39, Law on Real Estate Business 2023).

Conclusion

Mastering and adhering to current real estate business principles is the key for clients to manage risks and optimize profits in an increasingly competitive environment. To ensure all transactions are safe, lawful, and rights are maximally protected, please contact Long Phan Consulting via Hotline 1900636389 for timely and professional support.