Real Estate Legal Due Diligence for Companies in Vietnam

For a company, every real estate transaction — buying land for a factory, leasing land long-term in an industrial park, acquiring a project — is a major financial decision with commitments stretching over decades. Unlike ordinary civil transactions, real estate is tightly bound to planning, land use purposes, financial obligations to the State, and a host of specific legal conditions. A defect overlooked at the negotiation stage can turn into a major loss when the project cannot be implemented.

Legal due diligence is the process of comprehensively reviewing the legal status of the asset and the counterparty before the company commits funds. This article presents the due diligence framework that FLAT LAW FIRM applies for corporate clients, particularly foreign-invested enterprises in Vietnam.

Why legal due diligence cannot be skipped

Vietnam’s real estate legal framework changes rapidly: the Land Law 2024 (No. 31/2024/QH15, effective from 01/08/2024) comprehensively replaced the 2013 Land Law, alongside the Housing Law 2023 and the Law on Real Estate Business 2023 taking effect at the same time. Many transaction practices formed under the old laws no longer fit, and assets once considered “clean” may develop issues when viewed through the new regulations.

The goal of due diligence is not to find reasons to reject a transaction, but to draw an honest risk picture so the company can decide with full information: which risks can be eliminated by contract terms, which require conditions precedent before payment, and which are so serious that the deal should be abandoned. A good due diligence report always comes with solutions, not just a list of problems.

The certificate: what to read beyond the owner’s name

The Certificate of Land Use Rights and Ownership of Assets Attached to Land (the new name under the Land Law 2024, replacing the “red book” and “pink book”) is the first document to check — but reading it correctly matters more than merely confirming “a certificate exists”. Verify: whether the land user and asset owner match the party in the transaction; the area, land category, land use purpose, and land use term; the origin of land use (allocation with land use levy, lease with one-off or annual payment); and the notes and changes recorded on the supplementary pages.

Commonly overlooked details: whether the remaining land use term is sufficient for the long-term investment plan; whether the purpose stated on the certificate matches the intended purpose; land leased with annual payment carries significantly more limited rights to transfer or mortgage than land leased with one-off payment. Each detail directly affects the value and exploitability of the asset.

Planning and land use purpose

An asset with a valid certificate can still be “stuck” if it lies in an area planned for roads, public works, or is inconsistent with the locality’s land use planning. Due diligence must check planning information with the local land and construction planning authorities, including provincial land use planning (land use quotas allocated to each commune-level administrative unit under the two-tier local government model from 01/07/2025; district-level planning approved before that date remains valid during the transition period), detailed zoning plans, and any related land recovery decisions.

For land intended for conversion of use purpose — for example from agricultural land to production/business land — assess the likelihood of approval: consistency with planning, the commune-level annual land use plan (replacing the district-level plan from 01/07/2025, when the district level was abolished under the two-tier local government model; see Decree 151/2025/ND-CP); the financial obligations arising; and the expected timeline for procedures. Many “buy agricultural land and wait for conversion” deals collapse because the buyer assumes conversion is a mere formality, when in reality it depends entirely on planning and the policies of each locality in each period.

Legal status: disputes, mortgages, enforcement, transfer restrictions

In addition to the certificate, due diligence must verify whether the asset is subject to a dispute, mortgaged to a credit institution, seized for judgment enforcement, or subject to measures restricting transfer (at the request of investigative agencies or courts). Information is checked with the land registration office, the secured transactions registration center, enforcement agencies, and relevant courts.

A mortgaged asset is not an impossible transaction — the law permits transfer with the mortgagee’s consent — but a payment mechanism is needed to ensure the loan is settled simultaneously with the title transfer.

Land origin and financial obligations

The origin of land use rights determines the outstanding financial obligations: whether the land use levy has been fully paid, up to what point land rental has been paid, and whether any land-related taxes or fees remain owed. Due diligence checks receipts for land use levy and land rental payments, tax notices, and confirmations of no outstanding land-related financial obligations.

Typical risks: land allocated with a land use levy where the seller has paid only part of it; land originating from past encroachment or allocation by an incompetent authority. Unfulfilled financial obligations can “follow” the asset to the new owner in various forms, so verification must be thorough.

Transaction conditions for foreign-invested enterprises

Land law applies different conditions to foreign-invested economic organizations than to domestic ones, particularly regarding the acquisition of land use rights by transfer. As a general principle, FDI enterprises are leased land by the State to implement investment projects, while acquiring land use rights by transfer from domestic organizations and individuals is subject to certain restrictions under the Land Law 2024 and investment laws.

Because detailed provisions are scattered across many legal instruments and may be guided differently in each locality, FDI enterprises should not assume they can buy land like domestic companies. Every acquisition plan by an FDI enterprise should be reviewed separately by a lawyer before negotiations.

Land in industrial parks: specific points

Most manufacturing FDI enterprises lease land in industrial parks, and due diligence then targets not only the land parcel but also the infrastructure developer: the legal establishment and operation of the park, the State’s land allocation and lease decisions to the developer, the state of completed infrastructure, and whether the developer’s subleasing rights are complete and still valid.

The sublease contract needs parallel review: whether the sublease term matches the investment project’s term; the rental unit price and adjustment mechanism over the years; early termination conditions for each party; the sublessee’s rights if the developer encounters financial difficulties. Environmental and fire prevention conditions of the industrial park should also be checked — prerequisites for the factory to commence operations. Where an FDI project terminates operations, leased land and assets on the land are handled under a separate mechanism — see the article on land and factories upon termination of an FDI project.

Ready-built factories and assets attached to land

When the transaction includes ready-built factories or warehouses, due diligence extends to construction legality: the construction permit, as-built dossiers, acceptance records for putting the works into use, and whether ownership of the assets has been registered on the certificate. Unpermitted, non-conforming, or unaccepted works are a major risk: the company may not be licensed to conduct production there.

For leased factories, clearly distinguish which assets belong to the lessor, which were additionally invested by the lessee, and the handling mechanism when the lease ends. Many handover disputes originate from the original lease’s failure to specify the fate of machinery and production lines installed by the lessee and attached to the factory. This issue is analyzed in detail in the article on terminating factory leases and handover of premises.

Counterparty due diligence: who the seller or lessor is

A clean asset with a problematic counterparty is still a risky transaction. Due diligence must verify the legal standing of the seller or lessor: the Enterprise Registration Certificate, the legal representative, signing authority (whether a resolution of the members’ council or general meeting of shareholders is needed for a large transaction), and operational status (operating normally or undergoing dissolution or bankruptcy).

Where the seller is an individual, marital status must be verified to determine joint versus separate property — a transaction of a couple’s joint property missing one spouse’s signature may be void. Where the seller is a household, all members holding land use rights must be identified. These seemingly “administrative” matters cause no small number of disputes dragging on for years after the transaction.

What a legal due diligence report contains

A professional due diligence report typically follows this structure: a summary of the transaction and the scope of review; a description of the asset; findings for each issue group (certificate, planning, legal status, financial obligations, counterparty standing); a risk matrix by severity (critical, moderate, low); and most importantly — recommended solutions for each risk: conditions precedent before signing, protective contract clauses, a mechanism to retain part of the purchase price, or a recommendation to walk away.

The report should state which documents were reviewed and the limits of the review scope (information inaccessible because the seller did not provide it), so the company understands the reliability of the conclusions. Due diligence is not absolute insurance against every risk, but a decision-making tool based on the fullest information obtainable.

Red flags: when to walk away

FLAT LAW FIRM recommends particular caution when encountering these signs: the seller refuses to provide the original certificate for comparison or only provides blurred copies; information on the certificate does not match the actual site; the asset is in dispute which the seller conceals; the asking price is abnormally low versus the market without a convincing reason; the seller pressures for an urgent deposit or payment claiming “someone else is waiting”.

Another less-noticed sign: the seller is not the party named on the certificate and only presents a “full power of disposal” authorization. Current law tightens the use of authorizations to disguise transfer transactions, and buyers in such structures face very high risk in disputes. When red flags appear, the wise course is to pause for thorough verification rather than proceed out of fear of “missing the opportunity”.

FAQs on real estate legal due diligence