Regulations on Responsibilities of Real Estate Project Investors

The Regulations on Responsibilities of Real Estate Project Investors is a core legal aspect that determines the transparency, safety, and sustainability of the real estate market. Long Phan Consulting Company systematically analyzes the current legal regulations below to help Clients apply them correctly and prevent legal risks.

The concept and requirements of a real estate project according to the law.

Based on Clause 3, Article 3 of the Law on Real Estate Business 2023, a real estate project is defined as a construction investment project to trade housing, constructions, or land use rights with technical infrastructure approved by competent state agencies.

A project may only be implemented and traded when it meets the requirements under Article 11 of the Law on Real Estate Business 2023, including:

1. Conformity with land use planning and plans.
2. Conformity with planning approved under construction and urban/rural planning laws.
3. Adherence to investment procedures regarding planning, investment, land, construction, and housing.
4. Compliance with construction permits (where required).
5. Investment and construction according to the schedule, planning, and design approved by competent authorities.
6. For housing projects, meeting requirements under the Law on Housing.

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Detailed regulations on the responsibilities of the project owner.

Currently, under Article 17 of the Law on Real Estate Business 2023, the specific responsibilities of the investor include:

1. Implementation & Management: Invest, construct, manage, and exploit the project according to the law; perform obligations of the investor; appraise and approve the project under construction laws.
2. Financial Assurance: Ensure financial sources to implement the project according to the approved schedule.
3. Certificate Issuance (Pink Book): Within 50 days from the handover date or the date the hire-purchase tenant pays in full, the investor must submit the dossier requesting the competent authority to grant the Certificate (LURC) to the buyer, unless the buyer voluntarily handles the procedure.
4. No Authorization for Signing: The investor must not authorize any other organization or individual to sign deposit, sales, transfer, or hire-purchase contracts for housing/constructions or land use rights in the project.
5. Legal Compliance: Ensure that buyers are granted Certificates (LURC) for the purchased assets.
6. Construction Compliance: Build housing and infrastructure according to detailed planning, approved designs, and construction permits; comply with construction standards.
7. Handover: Hand over housing according to the Law on Housing.
8. Rough Construction: If handing over rough construction (not apartments) to buyers, the investor must complete the entire exterior of that house.

>>> See more: Outdoor Advertising Permit for Real Estate: A Guide

Conditions for organizations and individuals engaging in real estate business.

According to Article 9 of the Law on Real Estate Business 2023:

1. Enterprise Establishment: Organizations and individuals conducting real estate business must establish an enterprise or cooperative/union of cooperatives with real estate business lines, except:

• Individuals conducting small-scale business (must declare tax).
• Organizations/individuals selling not for business purposes or below small scale (must declare tax; individuals must notarize contracts).

2. Financial Conditions for Enterprises: Enterprises must meet the following conditions:

• Not be banned, suspended, or ceased from operation by a court or competent authority.
• Ensure the ratio of credit debt and corporate bond debt to equity.
• Equity Requirements:
  • Project scale < 20 ha: Equity not lower than 20% of total investment capital.
  • Project scale ≥ 20 ha: Equity not lower than 15% of total investment capital.
  • Note: If implementing multiple projects simultaneously, equity must be sufficient to allocate the above ratios for each project.

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Real estate project investment consulting services at Long Phan Consulting

The complexity of the legal system requires consultation from experienced experts. Long Phan Consulting Company provides comprehensive legal solutions:

• Legal Appraisal: Assessing project legality and investor conditions.
• Capital Structure Advisory: Advising on financial capacity conditions and equity ratios.
• Licensing Support: Assisting with investment policy approval and construction permits; explaining to state agencies.
• Contract Drafting: Drafting and reviewing contracts for sales, transfer, hire-purchase, investment cooperation, and deposit agreements.
• Risk Management: Advising on handling legal risks during project implementation.
• Dispute Resolution: Representing clients in disputes related to contracts and housing handover.

Frequently Asked Questions

Below are some frequently asked questions regarding the regulations on the responsibilities of real estate project developers; please refer to them:

Can the investor authorize a Real Estate Trading Floor to sign deposit contracts?

No. The investor cannot authorize other organizations or individuals (including trading floors) to sign deposit, sales, or transfer contracts. All contracts must be signed directly by the investor’s legal representative. (Legal Basis: Clause 4, Article 17, Law on Real Estate Business 2023).

What is the minimum equity for a 25-hectare project?

For projects with a land use scale of 20 hectares or more, the enterprise must have equity of not less than 15% of the total investment capital. (Legal Basis: Point c, Clause 2, Article 9, Law on Real Estate Business 2023).

What is the deadline for the investor to apply for the Pink Book for buyers?

The investor is responsible for submitting the dossier for the Certificate within 50 days from the handover date or full payment date (for hire-purchase), unless the buyer does it voluntarily. (Legal Basis: Clause 3, Article 17, Law on Real Estate Business 2023).

How is equity determined if implementing 3 projects simultaneously?

The enterprise must have enough equity to allocate the required ratio (20% or 15%) for each project. The same equity source cannot be used to prove capacity for multiple projects exceeding actual capability. (Legal Basis: Point c, Clause 2, Article 9, Law on Real Estate Business 2023).

What is the maximum first payment for future-formed housing?

The first payment (including deposit) must not exceed 30% of the contract value. Subsequent payments follow construction progress, but the total pre-handover payment must not exceed 70% (or 50% if the investor has foreign investment capital). (Legal Basis: Clause 1, Article 25, Law on Real Estate Business 2023).

Conclusion

Mastering legal responsibilities helps investors operate efficiently and avoid disputes. Long Phan Consulting Company is ready to assist clients in resolving legal obstacles. Please contact Hotline 1900636389 for direct expert advice.