The new laws under Decree 2/2022, requires the real estate developer to make numerous public disclosures on the real estate projects he works on. In particular, the following information must be made available on the developer’s website:
At the headquarter of project management board (in case of investment project of doing real estate business),
At real estate trading floor (in case of doing real estate business via trading floor):
Information as to real properties made available for sale;
Information as to mortgage of house, construction works, and real properties made available for sale (if any);
Information as to quantity, type of (1) real properties available for sale, (2) real properties that have been sold, transferred, leased, and remaining real properties available for trading; and any change to the above information.
Rules regarding the capital for the Project:
- Under Decree 2/2022, the real estate developer must have its own capital for the implementation of the real estate project equal to at least 20% of the total investment in case of project using less than 20 hectares of land; or to at least 15% of the total investment in case of project using 20 hectares of land or more. This requirement seems to expand the requirement of Decree 43 implementing the Land Law 2013 on financial capacity of investors being selected as developer of real estate project and leasing land from the Government. This is because the requirement under Decree 2/2022 seems to apply to all types of real estate developers regardless of the sources of land use rights of such developers. For example, a real estate developer who subleases land from another developer (e.g., an industrial zone developer) will also have to comply with this requirement.
- Decree 2/2022 also introduces methods for determining the investors’ satisfaction of financial capacity requirement. In particular, with respect to the developer being existing enterprise, the minimum threshold of investment capital owned by the developer will be determined based on result of its latest audited financial statements or result of latest independent audit report which was formulated in the current year or previous year; and
- with respect to the developer being newly incorporated enterprise, the minimum threshold of investment capital owned by the investor will be the actual charter capital contributed by the founding stakeholder(s) in accordance with law.
Model contracts for transaction involving real properties
Decree 2/2022 now requires the transactions involving real properties must be established in accordance with the model contracts scheduled to Decree 2/2022.
It provides for the following types of model contracts:
- Apartment sale and purchase contracts.
- Private house sale and purchase contracts.
- Condotel, and officetel apartment sale and purchase contracts.
- Residential house or construction work leasing contracts.
- Land lease/sub-lease contracts.
- Real estate project transfer contract.
Conditions of transferring contract for sale and purchase/lease and purchase of real properties
Decree 2/2022 imposes some new conditions for transfer of contract for sale and purchase/lease and purchase of off-plan residential house and contract for lease and purchase of existing construction works. In particular,the transferring party must have a contract for sale and purchase/lease and purchase which is established in accordance with the regulated model contract, unless the contract was signed before 1 March 2022;
there is no dispute, claim arising from the contract for sale and purchase/lease and purchase; and the house or building under the contract is not seized or is the subject of a mortgage to secure performance of obligations in accordance with law, unless the mortgagor agrees otherwise.
If the purchaser of the contracts discussed above is another real estate developer, then the purchaser being another real estate developer must notify such transfer of contracts in writing to local housing authority. The notice must include the information about name, address of real estate project, the transferor of contract, the number of contracts being transferred and the number of houses, buildings under such transferred contracts. This is a new requirement which seems to allow the authorities to get more information about sale of real estate products in the market.
Procedures for transfer of real estate project
Under Decree 2/2022, transfer of a part or entire of real estate projects may need to follow two separate set of legal procedures. In particular, with respect to real estate projects of which (1) the developers have been approved, or (2) the investment registration certificates (IRC) have been issued in accordance the Investment Law 2020, the transfer of such real estate projects will follow the procedures for transferring investment project of the Investment Law 2020; and with respect to real estate projects which are not fall within the cases mentioned above, the transfer of such real estate project will follow the procedures contemplated under Decree 2/2022.
Regarding the transfer of real estate projects under Decree 2/2022, Decree 2/2022 requires the transferring investor to submit the following additional documents to competent authorities when it applies for such transfer of the real estate project:
- A draft of contract for transferring a part or whole of the real estate which is established in accordance with the prescribed form under Decree 2/2022.
- Documents evidencing completion of land clearance work.
- Documents evidencing completion of construction of infrastructure works in accordance with the schedule of the project in case of transferring entire infrastructure construction projects.