Buying off-plan housing: sale conditions and bank guarantees
Buying off-plan housing (a house “on paper”) carries the biggest risks when the developer lacks capacity or the project stalls. The 2023 Real Estate Business Law (effective 1 August 2024) builds three layers of buyer protection: strict sale conditions, mandatory bank guarantees, and caps on deposits and payments.
This article details the conditions buyers must check before paying.
1. Sale conditions: missing one means violation
Under Article 24 of the 2023 Real Estate Business Law, off-plan houses may be marketed only with all of the following:
- Land-use-right documents (the developer’s land-use rights for the project land);
- A construction permit (where required);
- A written notice from the provincial state authority for real estate business confirming the houses qualify for sale;
- The bank’s written approval to guarantee the developer’s financial obligations.
Selling without meeting the conditions — “selling green rice” — is a violation, putting buyers at risk of losing deposits and advance payments.
2. Bank guarantee: mandatory, not optional
Under Article 26 of the 2023 Real Estate Business Law, before selling off-plan houses, the developer must obtain approval from a domestic commercial bank or a lawfully operating foreign bank branch in Vietnam to guarantee the developer’s financial obligations to buyers if the developer fails to hand over houses as committed.
The guarantee covers: amounts the developer received in advance from buyers plus other sums agreed in the contract payable to buyers upon non-delivery. The bank sends its commitment letter to the developer, and the developer must give buyers a copy of this commitment when signing the contract — buyers have the right to review it before signing.
3. Maximum 5% deposit — blocking “reservations” and “bookings”
Under Article 23.5 of the 2023 Real Estate Business Law, developers may collect a deposit of no more than 5% of the sale price, and only when the houses already qualify for sale.
This blocks “reservation”, “booking” and “goodwill” money collected before the project qualifies — a long-standing source of buyer risk.
4. Progress payments: 70% cap before handover
Payments for off-plan houses follow construction progress within these limits:
- First payment not exceeding 30% of the contract value;
- Subsequent payments matching construction progress;
- Total payments before handover not exceeding 70% of the contract value;
- The balance payable upon handover and completion of ownership-certificate procedures for the buyer.
5. Buyer checklist before paying
- Ask to see the Department of Construction’s (provincial authority’s) notice of eligibility for sale;
- Ask for a copy of the bank’s guarantee commitment letter;
- Check the construction permit and project land-use documents;
- Do not pay deposits or sign “reservation agreements” before the project qualifies — regardless of broker promises of discounts;
- Read carefully the handover schedule, penalty and force-majeure clauses in the sale contract.
6. Frequently asked questions
Q: I paid a 10% deposit before the project qualified — can I get it back?
A: Collecting above 5% or before qualifying is a violation; buyers may demand return of the unlawfully collected portion and may complain to the state authority or sue if needed.
Q: With a bank guarantee, am I certain to recover money if the project dies?
A: The bank guarantee is important protection, but its scope follows the commitment letter and guarantee agreement. Buyers should read the commitment copy (provided by the developer at signing) to know the exact scope and trigger conditions.
Q: What should I watch when buying a transferred purchase slot (contract assignment)?
A: Check whether the original contract is assignable, whether the developer confirms, and the remaining financial obligations. “Slot” deals via private papers carry major legal risks.
Planning to buy off-plan housing and need a legal check of the project? Contact us for advice.
This article was prepared by the FLAW AI Legal Council. The content is pending QA Council review before submission for approval; it is for reference only and does not replace legal advice for your specific situation.