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Case study: recovering a deposit when the seller delays handover — lessons on receipts and deposit penalties

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Case study: recovering a deposit when the seller delays handover

A buyer pays a deposit for a house; the seller keeps postponing handover — promising this month, then next month, then silence. This is a common scenario in property transactions, and the real pain point is often not the delay itself but a thin deposit receipt that leaves the buyer unsure how to recover the money. This guide sets out the legal framework for recovering deposits under Article 328 of the Civil Code 2015 and Decree 21/2021/ND-CP, illustrated with a hypothetical scenario, plus a checklist for staying out of trouble.

The illustrative scenario in this article is hypothetical, constructed to clarify the legal issues — it does not describe any real case and states no real names, amounts or outcomes.

Contents

1. Deposits vs advance payments: the line that decides the money's fate

This is the crux deciding "how much can be recovered":

  • Deposit (Article 328, Civil Code 2015): a security for entering into or performing a contract. If the depositor refuses to proceed → loses the deposit; if the deposit-taker refuses → must return the deposit plus an equal sum (the deposit penalty), unless otherwise agreed.
  • Advance payment: merely a prepayment of part of an obligation. If the contract is not entered into/performed, the sum is refunded without any penalty.

The trap lies in Article 37 of Decree 21/2021/ND-CP: where parties agree on payment of a sum but it is unclear whether it is a deposit or an advance payment, the sum is treated as an advance payment. In other words, a receipt that merely says "deposit money" without expressing the security function and the penalty exposes the buyer to the risk of the sum being classified as an advance payment — the money can be recovered but the penalty right is lost.

First lesson: the deposit document must state "deposit securing the entry into the house sale contract", each party's duties and the consequences of each party's breach.

A seller's failure to hand over the house by the committed date is a breach of contractual obligation. Two forms matter:

  • Late performance: the seller still intends to hand over but is late — the buyer may demand continued performance plus agreed breach penalties (if any).
  • Refusal to perform: the seller declares the sale off, or uses prolonged stalling tactics until the buyer gives up — grounds for applying the deposit penalty and/or terminating the contract.

In practice, sellers rarely say outright "I won't sell"; they stall: promises, postponements, changed phone numbers. Legally, "stalling" becomes "refusal to perform" only when the buyer fixes a breach date in writing — for example, sending a demand requiring performance within a final reasonable deadline (15–30 days); expiry without performance evidences refusal. Without a written deadline-fixing document, the dispute bogs down with no clear legal anchor.

3. Buyers' rights when the seller delays handover

When the seller breaches the handover obligation, the buyer may consider:

  1. Demand continued performance: compel handover as committed, plus agreed breach penalties.
  2. Terminate the contract: where termination grounds exist under the agreement or the law.
  3. Recover the deposit plus penalty: if the sum qualifies as a deposit and the deposit-taker refuses to perform, the buyer recovers the deposit and an equal sum (Article 328, Civil Code), unless otherwise agreed.
  4. Claim damages: e.g. temporary rental costs while waiting — but actual loss and causation must be proved.

Note: these rights do not always cumulate; the right strategy depends on the agreement's terms, the evidence and the buyer's practical goal (wanting the house vs wanting the money back).

4. A four-step path to recovering the deposit

Step 1: Strengthen the evidence before acting. Don't escalate while the file is thin. Systematise: the receipt, bank transfer records, all message exchanges (searching for language showing deposit/penalty intent), witnesses to the handover.

Step 2: Send a formal written demand. Drafted by counsel or by the buyer, stating: the agreement's content, the seller's delays, a demand to sign/hand over within a final specific deadline (e.g. 15 days), and a warning of legal consequences — expiry without performance will be treated as refusal, triggering Article 328. This step fixes the breach date.

Step 3: Negotiate from the built legal position. When the seller sees a well-prepared file and clear legal grounding, settlement prospects (refund, partial compensation) improve markedly. Every settlement must be documented in signed minutes stating the amount, payment deadline and consequences of non-payment.

Step 4: Litigate or arbitrate. If negotiation fails, sue in the competent court or arbitrate under an arbitration clause (if any). Watch the limitation period: 3 years for contract disputes. During proceedings, consider interim measures (asset preservation) where the seller may dissipate assets.

5. Evidence checklist

  • The original deposit receipt/document.
  • Bank transfer records (statements, transfer orders) — transfer notes should read "deposit for the house at address … per receipt dated …".
  • All messages, emails and call recordings (keep originals, unedited).
  • The written demand and proof of sending (postal receipts, confirmed emails).
  • Loss evidence: rental contracts, rent payment records.
  • Witness information (if any).

6. Common mistakes

  • "The receipt saying 'deposit money' is enough." Wrong. Without the security function and penalty, Article 37 of Decree 21/2021 looms — the sum may be classified as an advance payment.
  • Oral promises of "signing soon". No specific date means no fixable breach date.
  • Cash payments without proper receipts. In a dispute, the buyer can barely prove payment happened.
  • Rushing to sue on a thin file. Early litigation on sketchy documents risks losing at the deposit-vs-advance classification stage — court fees and time wasted.
  • The opposite: sitting still. The longer the seller stalls, the lower the recovery prospects (assets may be moved). Act on a plan; don't wait indefinitely.

7. Illustrative hypothetical scenario

Suppose buyer A pays seller B a deposit for a house; the receipt merely says "deposit money received" without stating the security function or penalty; B repeatedly promises handover then stalls. Applying the framework above:

  • Issue 1: deposit or advance payment? Under Article 37 of Decree 21/2021, unless A proves deposit intent through other evidence (messages, witnesses, transaction context), the sum risks classification as an advance payment.
  • Issue 2: does B's "stalling" count as refusal? Only once A has sent a written final-deadline demand that B fails to meet.
  • Approach: A should strengthen evidence → send a deadline-fixing demand → negotiate → sue if needed, rather than suing immediately on a thin file or waiting passively.

This illustrates the method of analysis; each real case has its own evidence and circumstances, and outcomes depend on the dispute resolution body's assessment.

8. Settlement minutes: making agreements enforceable

Many deposit disputes end not in court but in a negotiated settlement — and the settlement document decides whether the agreement actually delivers. A proper settlement minutes should record: the parties, the facts acknowledged, the agreed amount (distinguishing refund, penalty and damages), the payment schedule with specific dates, the consequences of late or non-payment (e.g. the full penalty revives), and the dispute-resolution clause for the settlement itself.

Where settlement is reached through court-annexed mediation, the Civil Procedure Code provides for recognition of successful mediation results — a recognised settlement carries the enforceability of an effective judgment. Parties should understand this option before signing private minutes.

Two practical cautions. First, agree the allocation order for partial payments (principal first, then penalty, then interest) — silence breeds the next dispute. Second, never sign settlement minutes under time pressure without counsel reviewing: a hasty signature can waive penalty rights or accept an unrealistic payment schedule that collapses months later. Third, have each party initial every page and keep at least two signed originals — a single unsigned copy is a weak exhibit when the other side later denies the terms.

9. FAQs

The seller keeps delaying handover — can the buyer recover the deposit? Yes, there are grounds. Under Article 328 of the Civil Code 2015, a deposit-taker refusing to enter into or perform the contract must return the deposit plus an equal sum, unless otherwise agreed.

The receipt only says "deposit money" with no penalty clause — can the penalty still be claimed? This is a major risk point. Article 37 of Decree 21/2021/ND-CP provides that where it is unclear whether a sum is a deposit or an advance payment, it is treated as an advance payment. The buyer must prove through other evidence that the parties intended a deposit.

How does an advance payment differ from a deposit? A deposit secures entry into/performance of a contract and carries the deposit penalty; an advance payment is merely prepayment of part of an obligation, refunded without penalty if the contract is not concluded.

What should a buyer do as soon as the seller starts stalling? Send a written demand for performance by a deadline, fix a final deadline, preserve all transaction evidence and consult counsel before declaring termination or suing.

Facing a similar situation?

Each deposit case has its own evidence and circumstances — how the document was worded, how the money changed hands and how far the stalling went all shape the strategy. FLAT Law Firm advises and represents buyers in deposit and advance-payment disputes over house sales: from reviewing documents and drafting demands to negotiation and litigation/arbitration. Call our hotline 0988424851 for advice on your specific situation.

Language versions

References

  • Civil Code 2015 (No. 91/2015/QH13), Article 328.
  • Decree 21/2021/ND-CP implementing the Civil Code on security for performance of obligations, Articles 37–38.