VIETNAM Law and Practice Contributed by: Tran Thai Binh and Duong Thi Minh Han, LNT & Partners
vent the title transfer. According to the law on notari - sation, the parties to a real estate transfer transaction are required to sign the document(s) in person, wit - nessed by a notary officer. E-signatures are not yet accepted. However, the transferor or transferee may have their representative execute such document(s) or conduct title registration by power of attorney. In general, the principal is responsible for any act by the representative in relation to the transfer transaction which complies with that described under the respon - sibilities of power of attorney. 2.4 Real Estate Due Diligence Due to its complex nature, buyers, who are either indi - viduals or corporate entities investing in real estate projects, should conduct due diligence with the engagement of legal, technical and finance experts in respect of the land and investment property. Legal due diligence usually includes checking: • the legal capacity of the seller/transferor; • the legal status of the land of the real estate; • the valid title of the property/investment project and the land on which the property/investment project stands; • the validity of the LURs and compliance to the real estate development; and • any encumbrances on the real properties, including zoning restrictions, title disputes, current collateral with the properties, and/or unpaid financial obli - gations by the seller/transferor and/or third-party rights to the LUR. 2.5 Typical Representations and Warranties In real estate transactions, buyers require sellers to make representations and warranties (R&W) accord - ing to which: • the seller is duly incorporated or has full power and capacity to transact; • the seller owns the valid title to the land and/or project investment; • the seller is granted the proper investment and development rights in the real estate project, including development approvals, construction licences, environmental assessments and others (if the seller is a developer);
• the real estate is not subject to encumbrances, restrictions, disputes, foreclosure, a court order enforcement, or an urban zoning order; • the real estate of an investment project and the land are clear from any administrative penalties in accordance with the laws on land, investment, construction, planning and zoning, and tax; and • the real estate and the land are not subject to any prohibition order from transaction made by compe - tent authority. However, the concept of R&W is conceived in the common law system; it is not expressly regulated by civil law. A legal adviser in the field may enforce these R&W by obliging the seller to ensure R&W are true and remain so. Depending on the agreement drafting techniques, a misrepresentation or an incorrect warranty can lead to invalidity or cancellation of the agreement, or breach by the party making the misrepresentation or having an incorrect warranty. It is the responsibility of the par - ties to include clauses on the survival period of the R&W. There are several remedies for buyers and sellers under Vietnam contract law – eg, specific perfor - mance, penalty, performance suspension, contract cancellation, unilateral termination and/or damage compensation. These depend on what the parties agree in the document, and/or subject to the law. Any breach of the R&W constitutes breach of a con - tract. In breach of R&W, the aggrieved party may be entitled to seek remedy and compensation for dam - ages actually incurred by them. While R&W insurance is not common in this jurisdiction, it is nevertheless gaining in popularity for sellers in most high-value M&A transactions. If certain conditions as represented by the seller are not met, the contract may even be deemed void (ie, the seller is not duly incorporated under the relevant laws). 2.6 Important Areas of Law for Investors With respect to purchasing real estate, investors are required to closely observe the laws on land and real estate trading governing specific aspects of purchase transactions and the laws on companies and on
945 CHAMBERS.COM
Powered by FlippingBook