Lawyer in Vietnam Oliver Massmann REAL ESTATE – FOREIGNERS BUYING PROPERTY – WHAT YOU MUST KNOW: GUIDING NOTES ON ISSUES RELATING TO THE CURRENT LAW ON LAND (2013) AND ITS GUIDING REGULATIONS FOR LAND TRANSACTIONS

1. Lawyer in Vietnam Oliver Massmann REAL ESTATE – FOREIGNERS BUYING
PROPERTY – WHAT YOU MUST KNOW:
GUIDING NOTES ON ISSUES RELATING TO THE CURRENT LAW ON LAND (2013)
AND ITS GUIDING REGULATIONS FOR LAND TRANSACTIONS
1. Certification vs. notarization (C&N) of land-related contracts
For the purpose of State management, C&N is compulsorily required for some special types of
land related transactions (e.g. – basically, the transfer, donation, mortgage or capital contribution
using the land use rights or the rights to use land and assets attached to land). For other land-
related transactions, C&N is however optional.
Please also note the key difference between notarization (công chứng) and certification (chứng
thực) under Vietnamese law. Simply put, notarization, done by a licensed notary office, covers
both legal validity and authenticity (mainly the signatures) of the transactions. Meanwhile,
certification, done by the department of justice at district level/commune cpeople‟s committee
(CPC), limits to the authenticity of signatures, signing time and location. As such, a notary
public may be wholly liable for damage caused to his clients if content of the relevant contract is
concluded inconsistent with the laws.
Since 2014, the Ministry of Justice of Vietnam (MOJ) has issued a number of official letters
requesting local authorities to direct the formalization of land related contracts from the
commune people‟s committee (CPC) to the notary offices. Though such official letters are not
per se legal instruments and it stops at „a request for direction‟, many CPC has since refused to
certify land-related transactions because of the above instructions.
2. Principles for applying provisions of the Land Law
Unlike the Civil Codes of Vietnam (2005 and 2014) that adopt the negative approach (i.e. – do
whatever not expressly restricted or prohibited by the laws), the Land Law builds a „positive
approach‟ which let entities to do what exactly the laws tell them to do. Even more strictly, the
restrictions apply to both sides of a transaction. For example, if a seller has a clear right to
transfer LURs but the purchaser is not expressly permitted to receive the transfer of such LURs,
no deals can be established. Back to FIEs, they can only acquire under specific circumstances set
out by the Land Law, mostly listed in its Article 169.
Any „ultra vires‟ acts may potentially result in a declaration of invalidity of the relevant land
related transaction. This principle of applying laws should be taken into full consideration when
FIEs are about to make major decisions relating to land-related issues.
3. Land acquisition by foreign invested enterprises (FIEs)
Compared with their local counterparts, FIEs have more limited access to land. For example,
FIEs cannot receive the transfer of land use rights (LURs) with respect to agricultural land or any
types of land from households or individuals. Rather FIEs can only receive the transfer of LURs
from land users being enterprises. This may cause some difficulties for FIEs who may want to
acquire land from, for example, neighboring individual land users to expand their current
production or business sites.

2. To go around this restriction, a number of FIEs seek to employ a local nominee enterprise which
will receive the land from the individual land users and transfer back the same to the requesting
FIEs. Even so, another question may arise: Can FIEs receive land directly from, among other,
enterprises including domestic and foreign invested ones? Item #4 below discusses more.
4. Receipt of transfer of land use rights by way of purchasing investment capital
As noted in Item #2 above, it appears that FIEs‟ options to access land are limited to what
exactly the Land Law lists.
As such, without any guidance under the Land Law, FIEs can only receive the transfer of LURs
by way of acquiring investment capital from an enterprise land user. Such investment capital is
„the value of LURs which has been capitalized into the seller‟s capital (vốn hóa vào vốn của
doanh nghiệp)‟. This provision is relatively unclear and fails to correspond to other related legal
instruments. Firstly, while it is possible to carve out value of a specific investment [project]
from an accounting perspective, the transfer of such value is not provided elsewhere other than
the Land Law 2013 itself. This makes the implementation of the above machenism technically
paralyzed. Secondly, questions remains to be seen as to whether the transfer of investment
capital could be treated as transfer of „investment project‟, assets or even equity of the seller(s).
Each type of transfer would definitively lead to different legal, business and accounting
consequences.
On this, the official of MONRE said the Ministry of Finance will soon issue a detailed guidance.
It is also confirmed such „investment capital‟ transfer has been implemented in some provinces
in South Vietnam but we are not provided with more detailed information on how it is arranged
in light of the above technical obstacles.
5. Settlement of land in case of land users’ bankruptcy
The Land Law states that the settlement of LURs of insolvent and dissolved companies will be
subject to general provisions of laws. Unfortunately, these „laws‟ arguably enterprises law and,
most critically, the Law on Bankruptcy appear to refer back this issue to provisions of the Land
Law (2013) and its guiding regulations. This cross-reference, according to the official of the
MONRE, causes difficulties in dealing with land of insolvent companies.
6. Issuance of LURs for FIEs buying residential houses
Though the Law on Residential Housing (2014) allows FIEs to own some forms of residential
houses (e.g. – apartments, villas, etc.), they face problems in acquiring LURs for such houses for
many reasons.
RECOMMENDATIONS:
MONRE should actively solve issues and provide detailed guidance on all related aspects to the
licensing/acquisition process.
MONRE should work on solutions of some unclear points on land use rights for Foreign
Invested Enterprises (“FIEs”) in cooperation with (i) the Ministry of National Defense and (ii)
the Ministry of Public Affairs with respect to areas which must be secured in terms of security
and national defense in each province and therefore will not allow FIEs or foreign buyers to own
house and land there.

3. Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you
have any questions on the above. Oliver Massmann is the General Director of Duane Morris
Vietnam LLC.
THANK YOU VERY MUCH!