Signing a land lease or purchase contract before holding the investment registration certificate is betting deposit money on a legally non-existent project: the investor has no project implementation standing yet, the project company is not formed, and every land commitment can still lose its basis to the investment dossier itself — amended or refused. In reality, tasks of the Signing Land Leases and Purchases Before the IRC type sit in the incorporation stage, when a company has the least experience in Vietnam yet must make the decisions with the longest-lasting effects, from capital accounts and seals to accounting structure alike.
Short answer
In short: risks include deposits locked into a transaction for a project that may not be licensed at exactly that location — scale, a contract in the wrong party name (an individual or the parent instead of the project company), land conditions arising during investment appraisal making the signed contract unfit, and a weak negotiating position when amendments or termination are needed. An in-principle contract conditioned on IRC issuance is the practically accepted safe tool.
On Signing Land Leases and Purchases Before the IRC, one principle should be stated upfront: the authorities recognise only written evidence, and oral agreements or email exchanges cannot substitute for formal documents.
Detailed analysis
On timing, three document types must be distinguished: in-principle agreements — letters of intent — conditional deposit minutes designed to await investment approval; formal land leases with industrial park infrastructure developers — a document type often required as part of the investment dossier itself to prove the location; and land lease — land use right transfer contracts from outside organisations or individuals — transactions fully subject to land law conditions on parties and use purposes. The danger is signing the third type as if the project were certain, with large deposits and heavy penalty clauses, while investment appraisal has not even started.
When the project is later asked to change location, change scale or is refused, the investor faces three simultaneous damages: disputed deposits, project time burned on an unusable location, and a broken relationship with the lessor exactly when renegotiation is needed most. The safe design exists and costs little: every pre-IRC land commitment carries the condition precedent of the project being licensed at that location, a deposit refund clause if the condition fails, the investor as signing party with a contract assignment mechanism to the project company after formation, and a commitment validity period matching the expected appraisal schedule.
Framework: land user rights and conditions, land lease and land use right transfer transactions under Land Law 31/2024/QH15 (effective 1 August 2024); project recording and implementation location on the investment registration certificate under Investment Law 143/2025/QH15; deposits and conditional contracts under Civil Code 91/2015/QH13. This article does not claim every pre-IRC contract is void — the analysed issues are party, condition and deposit risks, depending on the specific document structure.
Risks and practical notes
In Signing Land Leases and Purchases Before the IRC, the biggest risk is not the fine itself but the chain effect: an error at this step can stall capital contribution, invoicing, labour contracts and even the first tax inspection.
The specific risk: the land deposit is the first large cash amount leaving the investor hand in the whole setup journey, and it leaves at the moment of least information — before any authority has appraised the project; a wrong structure at this step turns the most serious investment money into the earliest disputed money.
Action checklist
- Sign only conditional in-principle documents before the IRC, never a formal land contract as if the project were approved
- Attach the IRC-at-that-location condition precedent to every commitment with a deposit refund clause
- Have the investor sign with an assignment mechanism to the project company after formation
- Keep the pre-approval deposit ratio at the minimum needed to hold the location
- Check the lessor — transferor land legality at the in-principle stage, not at the formal contract
Frequently asked questions
What are the risks of signing a land lease or purchase before having the IRC?
The four main risks: deposits locked or disputed if the project is not licensed at that location; a contract in a party name other than the project company requiring assignment — renegotiation; conditions arising in investment appraisal making the signed content unfit; and penalty — deposit forfeiture duties under the contract even when the breakdown cause lies outside investor will. Each risk size depends on the condition structure of the signed document.
Is a deposit paid before the IRC recoverable?
It depends on the deposit clauses in the signed document: with an IRC-issuance condition precedent plus a refund commitment if the condition fails, the investor has grounds to reclaim; with an unconditional deposit carrying forfeiture on non-performance, recovery must go through negotiation or civil dispute with uncertain outcome. This is why the refund condition must be written before money leaves the hand.
Which contracts can be signed before the IRC?
In-principle and conditional documents can be signed: an in-principle location agreement with the industrial park (often a component of the investment dossier itself), letters of intent, reservation — conditional deposit minutes. Their common trait is holding the location without locking the investor into duties of an unrecorded project.
What is the safe sequencing?
The safe chain is: a conditional in-principle location agreement, filing and receiving the IRC recording that location, forming the project company through the ERC, then the project company signing the formal land contract (or taking assignment of the in-principle contract) and performing the corresponding land procedures. Each step locks the party and conditions of the next.
FLAT Law Firm accompanies investors
The FLAT Law Firm helps foreign investors build a dedicated compliance calendar for each project, tracking capital contribution progress, tax filing milestones and sub-licences, and weaving in the handling rhythm of Signing Land Leases and Purchases Before the IRC so that overseas management always knows the legal status in Vietnam. If internal headcount is limited, the FLAT Law Firm’s accompaniment service can follow up monthly on incorporation-stage obligations, reporting progress regularly and flagging upcoming deadlines in advance.
This article has been quality-reviewed by the FLAW AI Legal Council