Mr. Hung paid a deposit of VND 150 million for a townhouse in Ho Chi Minh City, with the deposit agreement stating that the parties would sign a notarized sale contract within 45 days. Two weeks before the scheduled notarization, a check at the Land Registration Office revealed that the house was the subject of ongoing litigation before the People’s Court — the case was being heard and no judgment or decision had taken legal effect. The seller kept pressing him to sign the sale contract as normal. In this situation, can Mr. Hung recover his deposit, and how?
Short answer: there are legal grounds to recover the deposit
A buyer has legal grounds to recover the deposit upon discovering that the house is under litigation (with no effective judgment or decision yet), based on two main grounds:
- Article 328 of the Civil Code 2015 — where the deposit recipient (the seller) cannot enter into or perform the contract due to the property’s defective legal status (a fault attributable to the seller), the seller must return the deposit plus an amount equal to the deposit value, unless otherwise agreed.
- Point b, Clause 1, Article 45 of the Land Law 31/2024/QH15 — land under unresolved court litigation does not meet the conditions for transfer; the sale contract risks being declared void for violating a statutory prohibition (Article 123 of the Civil Code 2015), with the consequence that the parties return to each other what they received (Article 131).
1. Ground one: the deposit rules (Article 328, Civil Code 2015)
At the deposit stage, no sale contract has been signed yet. Under Article 328 of the Civil Code 2015, a deposit is property handed over within a time limit to secure the entry into or performance of a contract. Clause 2 provides: if the deposit recipient refuses to enter into or perform the contract, that party must return the deposit and pay an additional amount equal to the deposit value, unless otherwise agreed.
In Mr. Hung’s case, the house cannot lawfully be transferred because it is under litigation — an obstacle arising from the seller’s side (the seller failed to ensure the property’s legal status). The buyer therefore has grounds to demand the return of the deposit plus an equal amount, unless the deposit agreement provides otherwise.
Important caveat: the law does not guarantee the buyer double the deposit in every case. The actual amount depends on the parties’ agreement and the allocation of fault — Article 328 expressly states “unless otherwise agreed.”
2. Ground two: disputed land does not meet transfer conditions
Point b, Clause 1, Article 45 of the Land Law 31/2024/QH15 requires, as a condition for land use right transfer, that the land be “free of disputes, or where disputes have been resolved by a competent state authority, a court judgment or decision, or an arbitral award or decision that has taken legal effect.”
A house under ongoing court proceedings, with no effective judgment or decision, fails this condition. If the parties still sign a sale contract, it risks being declared void for violating a statutory prohibition under Article 123 of the Civil Code 2015.
The consequences of a void transaction are set out in Article 131 of the Civil Code 2015: the transaction creates no rights or obligations; the parties restore the original state and return to each other what they received; the party at fault for any damage must compensate. Where the seller concealed the litigation when taking the deposit, the seller is the party at fault and must compensate the buyer.
3. Administrative penalties against the seller (Decree 123/2024/ND-CP)
Transferring land use rights without meeting the statutory conditions — including disputed land — may attract administrative sanctions. Under point c, Clause 3, Article 17 of Decree 123/2024/ND-CP:
- VND 30–50 million for individuals;
- Organizations face double the individual fine, i.e. VND 60–100 million (Article 5 of Decree 123/2024/ND-CP);
- Remedial measures: the transferee must return the land and disgorge unlawful gains.
These sanctions apply to the transfer act itself; at the deposit stage, the buyer can cite them to strengthen negotiations with the seller.
4. New development taking effect soon: Resolution 03/2026/NQ-HDTP
Resolution 03/2026/NQ-HDTP of the Judicial Council of the Supreme People’s Court, guiding the resolution of deposit disputes, takes effect on 15 October 2026 — at the time of writing (14 October 2026), it is not yet in force. Key provisions to know:
- Article 2: forms of deposit;
- Article 6: handling of deposit penalties — courts consider each party’s fault and objective obstacles; where the agreed penalty exceeds the contract value at first-instance trial, the penalty is capped at the contract value;
- Article 7: territorial jurisdiction;
- Article 8: limitation periods — claims for deposit penalties and damages are subject to a 3-year limitation under Article 429 of the Civil Code; claims to declare voidness follow Article 132; a claim for return of the deposit property is not subject to any limitation period under Clause 2, Article 155 of the Civil Code;
- Article 9: the Resolution does not apply retroactively to judgments or decisions that took legal effect before 15 October 2026.
On jurisdiction: deposit disputes over real estate fall to the People’s Courts (district or provincial level depending on the dispute value and foreign elements); territorial jurisdiction follows points a and b, Clause 1, Article 39 of the Civil Procedure Code 2015.
5. Points that cannot be stated with certainty
Case law on deposits for litigated houses still contains some unsettled points:
- Whether the court will declare the deposit agreement void (applying Article 131 consequences) or only order return plus deposit penalty under Article 328 — this depends on evidence of fault and the agreement’s terms;
- Where the litigation has no provisional urgent measures (no seizure, no transfer ban), a notarized sale contract may in practice still be notarized — it cannot be stated with certainty that notarization will be refused;
- Whether the deposit agreement is void in whole or only in the violating part — two views exist, with no settled conclusion.
6. Exception: the buyer knew about the dispute but still paid the deposit
If the buyer already knew the house was under litigation yet voluntarily paid the deposit, the allocation of fault changes: the court will assess each party’s fault, and the buyer may lose the right to the deposit penalty. Buyers should therefore check the property’s legal status before paying any deposit.
7. Practical steps for the buyer
- Gather evidence: the deposit agreement, payment records, and documents proving the house is under litigation (case acceptance notice, the Land Registration Office’s reply on the parcel’s legal status).
- Send a written demand to the seller for return of the deposit plus an equal amount, with a clear deadline, citing Article 328 of the Civil Code and point b, Clause 1, Article 45 of the Land Law 2024.
- Negotiate: if the seller cooperates, record the repayment agreement in signed minutes.
- File a lawsuit with the competent People’s Court if negotiation fails. Note the 3-year limitation for deposit penalty and damages claims (Article 429 of the Civil Code); a claim for return of the deposit property is not subject to limitation (Clause 2, Article 155).
8. Note on deposit caps
Clause 5, Article 23 of the Law on Real Estate Business 29/2023/QH15 caps deposits collected by project developers at 5% of the sale price of future-formed houses or construction works that meet business conditions. This cap applies only to developers — for ordinary private house and land transactions, the law sets no deposit cap. (Note: the current Law on Real Estate Business is 29/2023/QH15, effective 1 August 2024.)
Frequently asked questions
Can I unilaterally cancel the deposit agreement after discovering the dispute?
Yes. Where the property cannot lawfully be transferred due to the seller’s fault, the buyer has grounds to terminate the deposit arrangement and demand return of the deposit plus an equal amount under Article 328 of the Civil Code 2015 (unless otherwise agreed).
What is the limitation period for suing to recover the deposit?
Claims for deposit penalties and damages are subject to a 3-year limitation under Article 429 of the Civil Code (further guided by Article 8 of Resolution 03/2026/NQ-HDTP from 15 October 2026). A claim for return of the deposit property itself is not subject to any limitation period under Clause 2, Article 155 of the Civil Code.
What if the buyer knew about the dispute before paying the deposit?
Fault allocation shifts against the buyer: the court will weigh each party’s fault and the buyer may lose the deposit penalty. Always verify the property’s legal status before paying.
If the seller is a company, what is the administrative fine for transferring disputed land?
Organizations face VND 60–100 million (double the VND 30–50 million individual fine) under point c, Clause 3, Article 17 and Article 5 of Decree 123/2024/ND-CP, plus land return and disgorgement of unlawful gains.
Legal sources
- Civil Code 91/2015/QH13 (effective 1 January 2017): Articles 123, 131, 132, Clause 2 Article 155, Article 328, Article 429 — in force.
- Land Law 31/2024/QH15 (fully effective 1 August 2024 under Law 43/2024/QH15): point b, Clause 1, Article 45 — in force.
- Law on Real Estate Business 29/2023/QH15 (effective 1 August 2024): Clause 5, Article 23 — in force.
- Decree 123/2024/ND-CP: point c, Clause 3, Article 17; Article 5 — in application.
- Resolution 03/2026/NQ-HDTP of the Judicial Council of the Supreme People’s Court: Articles 2, 6, 7, 8, 9 — effective from 15 October 2026 (not yet in force at the time of writing, 14 October 2026).
- Civil Procedure Code 92/2015/QH13: points a, b, Clause 1, Article 39 — in force.
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Contact FLAT Law Firm for advice on deposit disputes and real estate transactions.
Note: This article is for general reference only based on the law in force at the time of writing (14 October 2026) and does not constitute legal advice for any specific case. Legal provisions may change; specific cases require a lawyer’s opinion.
Transparency note: This article was drafted by FLAT Law Firm’s AI content production system and is undergoing internal review (AI Legal Council QA and owner approval before publication). It has not been reviewed by a human lawyer.
