The short answer: yes. When the buyer refuses to enter into or perform the contract, the seller may keep the entire deposit — this is the forfeiture rule in Clause 2, Article 328 of the 2015 Civil Code. However, this right only arises when all conditions are met, and there are three important exceptions to know before keeping the money.
1. The forfeiture rule under Article 328 of the 2015 Civil Code
Under Clause 1, Article 328 of the Civil Code 2015, a deposit is the act of one party delivering to the other party a sum of money or other valuable property for a fixed term to secure the conclusion or performance of a contract.
Clause 2, Article 328 sets out two-way legal consequences:
- The depositing party breaches: if the depositing party refuses to conclude or perform the contract, the deposited property belongs to the deposit-receiving party — i.e., the buyer loses the entire deposit and the seller keeps it.
- The deposit-receiving party breaches: conversely, if the deposit-receiving party refuses to conclude or perform the contract, it must return the deposited property plus an amount equivalent to the value of the deposited property to the depositing party (commonly called a “double deposit penalty”), unless otherwise agreed.
So in an ordinary sale transaction (buyer places a deposit with the seller), when the buyer is the breaching party — for example, changing their mind and no longer buying, failing to pay on time, or failing to sign the transfer contract on schedule — the seller may keep the deposit under this rule.
2. Three exceptions: when the seller may NOT keep the deposit
Exception 1 — The parties agreed otherwise. Article 328.2 applies “unless otherwise agreed”. If the deposit contract states that when the buyer breaches only part of the deposit is forfeited, or the seller must refund it — that agreement takes priority.
Exception 2 — The payment is an “advance payment”, not a “deposit”. An advance payment (paying part of the price in advance) is not a security measure; when the contract cannot be performed, the advance must be refunded. Distinguishing a deposit from an advance depends on the agreement: whether it clearly states the purpose of securing the conclusion or performance of a contract.
Exception 3 — The main contract is void. If the sale contract is void (for example, the asset may not be transacted), the deposit agreement — as a security for that contract — does not take effect as a security measure; the parties must return to each other what they received.
3. The 5% deposit cap for off-plan real estate
For off-plan real estate projects, Clause 5, Article 23 of the 2023 Law on Real Estate Business provides that developers may collect deposits of no more than 5% of the sale price, and only when the houses or construction works have met all conditions for being put on the market. Buyers should carefully check the deposit amount and collection conditions before signing.
4. The prerequisite: correctly identifying the breaching party
The forfeiture rule only applies once it is clearly established which party breached. In practice, disputes often arise when both sides claim they are right. A seller wishing to keep the deposit needs evidence proving the buyer breached: written notices demanding performance, meeting minutes recording the buyers refusal or failure to appear and sign on time, overdue payment records. Without proof that the buyer breached, keeping the deposit may be treated as unlawful retention.
5. Recommendations when drafting a deposit contract
- State the deposit amount and the purpose of the deposit (securing the conclusion/performance of which specific contract).
- State the performance deadline, place, and subsequent payment method.
- State the consequences of each partys breach (forfeiture / double penalty) to avoid later disputes.
- For off-plan real estate: check the conditions for market entry and comply with the 5% cap.
Frequently asked questions
The buyer only partially breaches (a few days late in payment) — may the seller keep the whole deposit?
Article 328.2 applies when the depositing party “refuses to conclude or perform the contract”. Whether a delay counts as a breach serious enough to forfeit the deposit depends on the contract terms (for example, a clause stating that “delay beyond X days is deemed a refusal to perform”). The contract should therefore set this threshold from the outset.
The seller already kept the deposit, then both parties agree to cancel — what happens?
If the parties agree to terminate the deposit contract and reach a new agreement on handling the deposit, the new agreement applies.
Legal bases
- Article 328 of the 2015 Civil Code (deposit).
- Clause 5, Article 23 of the 2023 Law on Real Estate Business (No. 29/2023/QH15, effective 01/8/2024) — 5% deposit cap for off-plan real estate.
Need help drafting or reviewing a deposit contract, or handling deposit disputes in sale transactions? Reach FLAT Law Firm via the Contact page.
The information above is for reference only and does not constitute legal advice.
Transparency note: This article was drafted by FLAT Law Firms AI content production system and reviewed by the internal review board (AI Legal Council QA). It has not been reviewed by a human lawyer.