VIETNAM Law and Practice Contributed by: Tran Thai Binh and Duong Thi Minh Han, LNT & Partners
ing the use of a property, if these restrictions are not contrary to the law, particularly in the case of land or factory leasing in industrial parks, where tenants must observe the regulations on environmental protection. 6.14 Tenant’s Ability to Alter and Improve Real Estate The tenant is permitted to alter or improve the real estate, but always subject to the consent or approval of the landlord, even if such maintenance and improve - ment increases the value of the property. If the leased property is depreciating, not due to any fault of the tenant, and the landlord fails to act on the notice given by the latter, the tenant may carry out alterations or improvements to the leased real estate in the absence of consent by the landlord, but is usually required to submit the alteration plan and design to the landlord for approval. In addition, the tenant must have a secu - rity bond or amount paid to the landlord, such as a deposit, for compensation of damages caused to the landlord or the building. 6.15 Specific Regulations Apart from the general rules above, specific regula - tions may apply, subject to the category of real estate into which the leased property falls. Residential hous - es subject to a lease must satisfy various requirements stipulated by the law on housing, including: • not being subject to any encumbrances – ie, any dispute, claim or petition on the ownership; • not being distrained from any enforcement of effec - tive judgment or administrative order of the com - petent authority; or • not being subject to any decision on land revoca - tion, notice on clearance or destruction by the competent authority. Industrial property is subject to compliance with reg - ulatory requirements on construction, environmental protection, firefighting and prevention, public security and order, labour safety and hygiene, and corporate ethics. 6.16 Effect of the Tenant’s Insolvency Generally, in a contract, the landlord is entitled to ter - minate the lease on the insolvency of the tenant – ie, failure to fulfil its debt liability within three months of
the due date as provided by the laws on bankrupt - cy. At that point, and always subject to agreement between the parties: • the deposit money (if any) will be forfeited by the tenant; and • the landlord can take back the leased property. The landlord would be required to return the amount of rent corresponding to the remaining lease period if the rent for the entire lease term was made in a lump- sum payment. If the tenant is subject to a decision on the initiation of a bankruptcy process, any settlement of payables (including basic rent) incurred before would be stalled and would only be made subject to the statutory level of priority of payments after the decision on the dec - laration of bankruptcy by the relevant court. 6.17 Right to Occupy After Termination or Expiry of a Lease Upon the termination or expiry of a lease, the tenant is required to reinstate the premises in the condition agreed by the parties. Any further occupation will be subject to hold-back charges pro rata to the basic rent. The landlord has the right to re-enter the property without prior notice and change the locks or to take any necessary measures to take back the real estate. 6.18 Right to Assign a Leasehold Interest The contractual rights and obligations of commercial leases can be assigned and novated to an assignee prior to the expiry of the lease term by which the lease held by the tenant will be terminated. In the assign - ment of rights, written notice of the same is required to be served to the landlord. The novation requires the prior consent of the landlord. Any commercial sub - lease must have prior agreement or written consent from the landlord. The leasehold interest in land under Vietnamese law cannot be understood as in the common law system. The land is leased out to a land user by the state, usually for a defined term, to develop an investment project, and the land-use rental is incurred by the land user (either paid annually or in a lump sum). Generally, any transfer of leasehold title in land-use right is con -
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