VIETNAM Law and Practice Contributed by: Tran Thai Binh and Duong Thi Minh Han, LNT & Partners
the procedure to be prolonged. It also takes time to find the appropriate buyer to acquire the property at a reasonable price. Generally, the expected range of time to successfully enforce and realise on real estate security is approximately six to 12 months or more. In order to be effective against third parties, the col - lateral as real estate must be registered with the Land Registry Office to take priority over unsecured obli - gations. In respect of other secured obligations on the same collateral, the priority order is based on the chronological order of establishment. Regular valua - tion of collateral is required to ensure that the prop - erty’s value is sufficient to cover the loan principal and interest in the event of the borrower’s default. 3.7 Subordinating Existing Debt to Newly Created Debt Existing secured debt will be subordinated to the new - ly created debt if the latter is properly registered while the former is not, or if the lenders/creditors agree on the change of order of priority for repayment. 3.8 Lenders’ Liability Under Environmental Laws See 2.7 Soil Pollution or Environmental Contamina- tion . 3.9 Effects of a Borrower Becoming Insolvent The effect on the security interest when the borrower is insolvent and subject to a bankruptcy case pro - cessed by a competent court is dependent on wheth - er it is subject to the business recovery plan. If not, then the secured assets will be realised in accordance with the agreement between the parties if the secured obligations fall due. If the obligation is not due, the competent court will postpone the security agreement and repayment made by realisation of the secured property if the agreement is concluded before it is subject to a bankruptcy case. If the secured property is subject to a business recov - ery plan, its realisation will be resolved by the general meetings of creditors. 3.10 Taxes on Loans The law does not provide for any taxes on loans spe - cifically related to real estate. However, lenders (either
foreign or Vietnamese incorporated entities) must bear the income tax incurred on the interest earned from such loans.
4. Planning and Zoning 4.1 Planning and Zoning Framework
Planning and zoning of regions (rural and urban are - as) and projects must be approved by the competent authority (including the People’s Committee at provin - cial and district level). The design of the building must comply with the mas - ter plan (if any) and be appraised and approved. The approved design will form the basis for the competent authority (usually the competent provincial depart - ment of construction) to issue a construction permit to the developer before the project is built. Unless exempted, any building or refurbishment that does not have a valid construction permit will be deemed to be violating the laws on construction. Parcels of real estate must be developed according to their designated use as approved by the compe - tent authority, subject to the level of planning. The provincial People’s Committee will approve planning on land use at the district level, which must comply with the planning approved by the senior authority. Any functional areas, subject to size, are required to compose the sub-zoning for development of invest - ment projects. Generally, laws on construction, (urban) planning and land are the most significant in matters of develop - ment and designated use of real estate. 4.2 Development Process, Challenges and Enforcement In developing a new real estate project, project invest - ment and investor selection approval (collectively referred to as “Investment Approvals”) are usually required under Article 23 and Article 24 of the Law on Investment 2025. Depending on the scale, social and economic effects, or national security issues, such approvals may be under the authority of the National Assembly, the Vietnam government, or the People’s Committee at provincial level. These issuing authori -
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