Deposit agreement for buying real estate and important notes

31-05-23 MTParners

Based on Article 328 of the Civil Code 2015, deposit is the act of one party (called the depositing party) delivering to the other party (called the receiving party) a sum of money or precious metals, precious stones or other valuable objects (hereinafter collectively referred to as deposit property) within a period of time to guarantee the conclusion or performance of a contract.

In case the contract is concluded, performed, the deposit property shall be returned to the depositing party or deducted to perform the obligation to pay money; if the depositing party refuses to conclude, perform the contract, the deposit property belongs to the receiving party; if the receiving party refuses to conclude, perform the contract, it must pay to the depositing party the deposit property and an amount of money equivalent to the value of the deposit property, unless otherwise agreed.

It can be said that deposit is a common and familiar transaction for all individuals and legal entities in Vietnam, especially deposit in transactions of sale and purchase, transfer of houses, land use rights (called real estate sale and purchase).

This article summarizes the important issues when depositing real estate (excluding future-formed houses) in order to provide you with some useful knowledge when you need to carry out real estate sale and purchase transactions.

  1. Deal with the actual owner of the real estate: The depositing party should limit transactions with the authorized person, individual or brokerage company when depositing to buy real estate. Because in any case, working directly with the owner of the real estate is the safest, most legitimate and fastest; limiting disputes or disagreements that may arise between the owner and other third parties.
  2. Check the consistency between the personal information of the owner of the real estate and the legal documents of the real estate (Certificate of house ownership, land use rights).
  3. Check the status of the real estate being disputed by one or all of the following methods: (1) check with the notary office, notary office to see if the real estate is being blocked from buying and selling transactions (meaning there is a dispute), (2) check with the land administration, justice office at the ward level where the real estate is located.
  4. Check the current situation and location of the real estate in accordance with the legal documents of the real estate by one or all of the following methods (1) request a planning certificate from the urban management agency of the district People’s Committee, district city (2) contact and ask for assistance from land administration staff at ward level where the real estate is located to locate boundaries and land marks according to coordinates stated in legal documents of real estate.
  5. The depositing party should not deposit a large amount of money (the deposit should be within 5-10% of the transaction value) and the deposit period should be as short as possible, unless the depositing party has other wishes.
  6. The depositing party needs to pay attention to taxes and fees that may arise from buying and selling real estate (1) Notarization fee, (2) Personal income tax of the seller of real estate, (3) Registration fee when registering changes in real estate, (4) Annual non-agricultural land use fee for real estate sold.

In addition to paying attention and negotiating the above issues, the deposit agreement between the parties should (1) be made at a notary office, notary office operating legally in the area where the real estate is sold, and (2) show as much detail as possible the information of the expected sale and purchase transaction: the sale and purchase value on the notarized contract, tax obligations, information of the real estate and legal documents, notarization period.

At the same time, the depositing party should consult individuals or organizations with expertise and knowledge in the field of law to get assistance before entering into a real estate sale and purchase transaction.

MT&Partners hope that the article will bring useful knowledge to our readers.