A Korean enterprise signed a contract to acquire a 1.2-hectare plot near a major city for a logistics warehouse, paid a fifteen percent deposit and a further forty percent after the seller promised to complete a parcel split. Six months later the transfer filing was refused because the plot fell outside the categories a foreign investor may receive directly beyond industrial parks, while the seller had already spent the money elsewhere and kept delaying repayment. This pattern is common because deals are signed before anyone checks whether the buyer is even eligible to receive the land.
The legal framework: the 2024 Land Law channels how foreign investors access land
The Land Law No. 31/2024/QH15, effective from 1 August 2024, organises land access for economic organisations with foreign investment mainly through three channels: leasing land from the State, sub-leasing land inside industrial parks, industrial clusters and export processing zones through the infrastructure company under Article 202, and receiving transfers of land-using investment projects in cases prescribed by law. Foreign individuals are not eligible recipients of residential land use rights in the way domestic Vietnamese are. A direct “land transfer contract” signed with a domestic household or individual for production purposes outside an industrial park therefore often fails at the eligibility threshold, however genuine the plot and the price may be.
On the civil side, the Civil Code No. 91/2015/QH13 supplies the underlying institutions: deposit agreements securing the conclusion or performance of a contract, the conditions for a civil transaction to be valid, and the consequences of invalidity, under which the parties restore the original position, return what they received, and the party at fault compensates the damage caused. A land use right transfer contract must also satisfy the 2024 Land Law conditions for the plot itself: a certificate must exist, the land must be free of dispute and seizure, the use term must still be running, and the plot must not fall into a category where transfer is prohibited. Missing any one of these can see notarisation and registration of the change refused.
Applying the rules: split the dispute into three independent layers
The first layer is the validity of the contract. If the subject matter is land that the law does not allow to be transferred to a foreign investor, a court may declare the contract void for breaching a statutory prohibition, however willing both parties were. The money dispute is then resolved not under the contract penalty clause but under the restitution principle, with damages allocated according to each side fault. A seller who knew the land could not be transferred yet still took the money usually bears the greater fault; a buyer who skipped legal due diligence on a large transaction will rarely escape a share of fault either.
The second layer is the deposit and amounts already paid. If the contract remains valid and the seller simply refuses to sell, the deposit institution of the Civil Code bites: a deposit recipient who declines to conclude or perform the contract must return the deposit plus an equivalent amount, unless the parties agreed otherwise. If, however, registration failed for objective legal reasons neither side foresaw, courts tend to order mutual restitution rather than a deposit forfeiture. The third layer is consequential loss: survey and design costs, loan interest and lost investment opportunity are compensable only where actual damage, causation and the other side fault are proven with concrete documents.
Checklist when a land transfer deal collapses
A foreign enterprise caught in this kind of dispute should calmly complete the following steps before negotiating or filing suit:
- Gather the contract, annexes, deposit receipts and bank transfer records; pay nothing further until the legal status of the plot has been clarified.
- Commission an independent search at the land registration office on the plot: land type, remaining term, dispute or mortgage status and whether transfer to a foreign-invested organisation is possible under the 2024 Land Law.
- Send a formal letter requiring the seller to state the legal reason registration cannot proceed, and set a deadline for repayment if the transaction cannot continue.
- Quantify documented actual losses, including advisory, survey and design fees and financing interest, as the basis for negotiated compensation or a later claim.
- Review the dispute clause of the contract covering negotiation, mediation, arbitration or court, and check the limitation period for filing suit under the Civil Code before time runs out.
Frequently Asked Questions
How are disputes over land use right transfer contracts handled?
First determine whether the contract is valid or void by testing party eligibility and plot conditions under the 2024 Land Law. If the contract is valid and one party breaches, the aggrieved party may demand continued performance, contractual penalties and damages as agreed. If the contract is void, the parties return what they received under the Civil Code and the party at fault compensates the loss. Failing negotiation, the case goes to the court or arbitral forum chosen in the dispute clause.
What if the seller cannot complete the title transfer?
Identify the cause. If the seller lacks documents or the plot is mortgaged or disputed, the buyer may require the seller to cure the problem within a reasonable period, or unwind the deal and reclaim the money with damages. If the cause is that the law does not permit a foreign investor to receive that plot, the transaction risks being void from the start and both sides must restore each other; the enterprise should then pivot to leasing land or sub-leasing inside an industrial park under Article 202 of the 2024 Land Law.
We paid a deposit to buy land and the seller no longer wants to sell – what can we do?
Under the deposit institution of the Civil Code, a deposit recipient who refuses to conclude or perform the contract must return the deposit and pay an additional amount equal to the deposit, unless the deposit document records a different agreement. The buyer should send a written demand for performance or for repayment plus the deposit penalty, keeping the transfer records and the deposit document as evidence. If the seller will not pay voluntarily, the buyer sues to compel repayment and the penalty.
If the land transfer contract is void, what happens to the money?
When a civil transaction is void under the Civil Code, it creates no rights or obligations from the moment it was made; the parties restore the original position and return what they received in kind, or its value in money where return in kind is impossible. The party whose fault caused damage to the other must compensate it. A deposit paid under a void transaction is generally treated as an amount already paid that must be returned, rather than being subject to the deposit forfeiture mechanism that applies while a contract is valid.
This article has been quality-reviewed by the FLAW AI Legal Council
