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Resort Project Transfer Blocked by Planning: Case Study

11 min readFLAT LAW FIRM
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Transferring a Resort Project Entangled in Planning Issues: Case Study

A resort project transfer is often viewed as a pure asset transaction: the seller needs an exit, the buyer needs clean land bank to develop. But advisory practice shows that "clean on paper" and "clean in law" are two entirely different concepts — and the gap between them is usually one word: planning.

This case study is compiled and anonymised from real matters handled by our lawyers, about a coastal resort project transfer that nearly collapsed over planning issues, and how the parties restructured the deal to reach a successful close. All names, places and figures have been changed; the legal substance of the matter is preserved.

Contents

1. Case background (anonymised)

The seller, Company S, owned a coastal resort project in a central Vietnamese province — about 15 hectares, including a 200-room hotel partially in operation and a condotel block under construction. Licensed in 2018, the project held a land allocation decision and land-use-right certificates for the entire area.

The buyer, Company B, a foreign-invested enterprise in hospitality, was seeking coastal land bank to expand its chain. After preliminary negotiations, the parties agreed on a price for the whole project and signed a memorandum of understanding (MOU), giving the buyer 45 days of legal due diligence before signing the definitive transfer contract.

The starting point looked favourable: the project had land titles, a land allocation decision, largely completed infrastructure and a partially operating, cash-generating component. But the legal due diligence report uncovered three issues — and one of them nearly killed the deal.

Issue 1: The 1/500 detailed plan no longer conformed. The project's 1/500 detailed plan had been approved in 2018. Since then, the area's master plan was adjusted: a roughly 2-hectare coastal strip inside the project now fell within a green-park zone and coastal protection corridor under the higher-level plan. The result was a current 1/500 detailed plan in conflict with the new master plan — and as a matter of principle, a detailed plan must conform to the master plan.

This was the most serious issue because Article 40 of the 2023 Real Estate Business Law requires a transferred project to "have a detailed plan approved in accordance with construction and urban planning law". A detailed plan conflicting with the higher-level plan cannot be treated as satisfying this condition — the competent authority would refuse the transfer approval, and even if transferred, the buyer could not build on the conflicting area.

Issue 2: Outstanding land financial obligations. The seller had paid only part of the land-use fees; the balance was in arrears with late-payment charges accruing. Under Article 40(3) of the 2023 Real Estate Business Law, the transferor must "have fulfilled the project's land financial obligations, including land-use fees, land rents and related land taxes, fees and charges". Owing land-use fees meant the transfer conditions were not met.

Issue 3: The project was mortgaged to a bank. All land-use rights and attached assets were mortgaged to secure the seller's loan. Article 40 requires release of the mortgage where the project is mortgaged. This issue had a clear resolution path but needed the bank's cooperation — a third party not party to the MOU.

The three issues raised the central question: how should the deal be restructured to protect the buyer while giving the seller a chance to remedy, instead of unilaterally terminating the MOU with each side bearing losses (the seller losing its exit, the buyer losing diligence costs and the investment opportunity)?

3. The solution

3.1 Options considered

Option A: Switch to buying the project company's shares (share deal). Instead of a project transfer (asset deal), the buyer would acquire all shares of Company S — the investor legal entity stays the same, so no project-transfer approval is needed. The advantage was sidestepping the procedural barrier; the downside was the buyer inheriting all of Company S's legal and financial risks (tax debts, latent disputes, bank obligations) — and it still did not solve the planning problem, since the project company still could not build on the conflicting land. This option was rejected because it did not address the root cause.

Option B: Discount the price and let the buyer remedy after transfer. The seller discounts the price by the estimated remediation cost, and the buyer takes the transfer "as is", then adjusts the planning, pays the land-use fees and releases the mortgage itself. This was rejected on principle: a project not meeting the transfer conditions cannot be approved for transfer — there is no "buy first, fix later" when the approval procedure is a contractual condition precedent.

Option C: A two-stage structure with conditions precedent. The parties sign a binding framework agreement under which the obligation to sign the definitive transfer contract arises only when the seller completes three conditions precedent: (i) completing the 1/500 detailed-plan adjustment to conform to the master plan; (ii) fulfilling all land financial obligations; (iii) releasing the project's bank mortgage. The buyer places a secured deposit to show commitment, and the seller gets a defined remediation period.

3.2 The chosen option and why

Option C was chosen because it respects the law's logic: the Article 40 transfer conditions are mandatory legal conditions that cannot be contracted away. The two-stage structure turns the "issues" into time-bound, sanction-backed "conditions precedent" — the seller has the incentive and the time to remedy, and the buyer is protected because the main payment obligation only arises once the conditions are met.

The key structural points agreed were as follows. First, planning adjustment: the seller bears responsibility and cost for the 1/500 detailed-plan adjustment, with the buyer's documentary support; a 6-month deadline from the framework agreement date; if missed, the buyer may extend or terminate and recover the deposit plus penalty. Second, land financial obligations: both sides reconcile the arrears figures with the tax authority; the seller commits to full payment before the definitive contract; the buyer's deposit is blocked at a bank and released only to help the seller pay land-use fees under a controlled three-party mechanism. Third, mortgage release: the bank is brought to the negotiating table from the framework-agreement stage; the plan is simultaneous release with the first payment instalment after transfer approval, backed by the bank's written commitment. Fourth, transfer approval: once the three conditions are met, the seller files the transfer-approval dossier with the provincial People's Committee; the parties sign the definitive transfer contract only after the written approval.

Another important clause was a flexible pricing mechanism: the final transfer price adjusts with the planning-adjustment outcome (the residential/construction land area recognised after adjustment), avoiding disputes when the new plan changes the project's land-use mix.

4. The outcome

After 5 months, the seller completed the 1/500 detailed-plan adjustment (the 2-hectare coastal strip was converted to green-park land per the master plan, while the project received an increased floor-area ratio for the remainder within permitted limits), paid the outstanding land-use fees and late charges in full, and reached a mortgage-release agreement with the bank.

The provincial People's Committee approved the project transfer. The parties signed the transfer contract, registered the land change and handed over the project. The buyer continues investment per the approved project contents, with the Article 40(2) commitment to continue investment, construction and business per the approved project contents.

The deal took about 4 months longer than originally planned, with remediation costs borne by the seller — but both sides achieved their goals: the seller exited successfully, and the buyer received a legally "clean" project with clarified planning — something a rushed deal could never deliver.

5. Lessons learned

Lesson 1: Planning is a survival condition, not a formality. "Having an approved detailed plan" under Article 40 means more than the existence of an approval decision — it means the plan still conforms to the current planning system. Plans can become "outdated" when higher-level plans change — a distinctive risk for long-licensed projects.

Lesson 2: Legal diligence must come before the final price commitment. Had the parties locked a firm price in the MOU before diligence, the buyer would have lost negotiating leverage when issues surfaced. A flexible pricing mechanism tied to remediation outcomes is the buyer's most effective protection.

Lesson 3: Do not try to "work around" mandatory legal conditions. The share-deal route or "buy first, fix later" cannot overcome Article 40's logic. When transfer conditions are mandatory, the only path is to satisfy them — smart deal structuring turns compliance into the seller's time-bound obligation rather than seeking evasion.

Lesson 4: Bring the bank to the table early. Without the bank's involvement from the start, every mortgage-release plan for a mortgaged project is theoretical. Banks have an incentive to cooperate when they see the deal repaying the loan.

Lesson 5: Conditions precedent need sanctions and exits. Conditions precedent without deadlines, termination rights and a deposit-return mechanism are just promises. Each condition needs a specific deadline, consequences for non-completion, and the buyer's options.

6. Prevention checklist from this case

From this matter, enterprises intending to buy or transfer a real estate project should check the following before negotiating price:

  1. ☐ The 1/500 (or 1/2000) detailed plan is still valid and conforms to the current master and zoning plans — obtain written confirmation from the planning authority, not just the old approval decision.
  2. ☐ The investment in-principle approval/acceptance and the investor recognition documents are still valid; the project is within its implementation term.
  3. ☐ All land financial obligations are fully discharged — reconcile with the tax authority; do not rely on the seller's oral assurances.
  4. ☐ Mortgage, seizure and dispute status of the land-use rights — search at the land registration office.
  5. ☐ The project is not suspended or terminated; no land recovery decision exists; all administrative sanction decisions (if any) have been complied with.
  6. ☐ Compensation, site clearance and resettlement are complete.
  7. ☐ The transferee meets investor conditions and has a plan to implement per the approved project contents.
  8. ☐ The deal structure (asset deal vs share deal) is chosen after diligence results — never locked in before.

7. Frequently asked questions

Can a project without a conforming 1/500 detailed plan be transferred?

No. Article 40 of the 2023 Real Estate Business Law requires a transferred project to have an approved detailed plan. If the old detailed plan no longer conforms to the higher-level plan, the planning adjustment procedure must be completed before transfer.

How does a project transfer differ from buying shares in the project company?

A project transfer is an asset deal: the transferee becomes the project's new investor and must satisfy Article 40 of the 2023 Real Estate Business Law and obtain competent-authority approval. A share or capital-contribution purchase is an equity deal: the investor (legal entity) stays the same, only the owner changes — but the buyer inherits all of the project company's legal risks, so diligence must be broader.

Can a project mortgaged to a bank be transferred?

Yes, but the mortgage must be released before or simultaneously, as agreed with the mortgagee bank (Article 40 of the 2023 Real Estate Business Law requires release where the project is mortgaged). In practice, release is often structured simultaneously with the first payment instalment, with the bank's participation and confirmation.

Which authority approves a real estate project transfer?

The transferring investor submits the transfer-approval dossier to the provincial People's Committee of the project's location. Only after approval do the parties sign the transfer contract and register the land change.

What conditions must the project transferee satisfy?

Under Article 40 of the 2023 Real Estate Business Law, the transferee must satisfy the conditions of a real estate project investor (Article 9(1) and (2)) and commit to continue investment, construction and business per the approved project contents; project-content changes follow Article 39(3).

8. Facing a similar situation?

Every real estate project transfer has its own "planning file" — and risk usually hides where routine diligence reports do not look: whether the detailed plan still conforms to higher-level plans, whether land financial obligations remain unpaid, or whether a mortgage has not been clarified. Spotting these three issue groups early, before locking the price, can save an enterprise months of renegotiation and the risk of a collapsed deal.

FLAT Law Firm conducts comprehensive legal due diligence on real estate projects for buyers and sellers: multi-level planning review, land financial obligations, mortgage and dispute status, deal structuring (project transfer vs equity purchase), drafting framework agreements with conditions precedent and flexible pricing, and representing clients before competent authorities on transfer approval. Contact hotline 0988424851 to discuss your deal.

References

  1. Real Estate Business Law No. 29/2023/QH15, effective 01/8/2024 (brought forward by Law No. 43/2024/QH15).
  2. Land Law No. 31/2024/QH15, effective 01/8/2024.
  3. Investment Law No. 143/2025/QH15, effective 01/3/2026.
  4. Planning Law No. 21/2017/QH14, as amended.