*Lawyer Nguyen Thi Huyen Trang – Phong & Partners Law Firm, replies:

Over recent weeks, following the news of a potential merger between Da Nang City and Quang Nam Province - with the new administrative center expected to be located in Da Nang City, a land-price frenzy has swept across both the central and suburban areas of the city. To limit risk and avoid disputes arising after making a deposit, Ms. Nhu shall consider to the following advice:

First, verify the legal capacity of the deposit recipient

Pursuant to Point a, Clause 1, Article 117 of the Civil Code 2015, regarding the conditions for a valid civil transaction, the parties must have legal capacity and civil act capacity appropriate to the transaction.

In addition, please note that the deposit recipient must be the person named on the land-use right certificate for the plot (hereinafter referred to as “the land parcel”), which may be an individual, organization, married couple or household, cooperative group, etc. If a representative or any unrelated person accepts the deposit, they must hold a power of attorney in accordance with legal provisions. Therefore, when making a deposit, the buyer should carefully verify the recipient’s status and rights.

Second, carefully verify the legal status and current condition of the land parcel

Clause 1, Article 45 of the Law on Land 2024 provides that a land user may transfer, assign, lease, sublease, inherit, or gift land-use rights; or mortgage or contribute land-use rights as capital when the following conditions are met: they hold a certificate of land-use rights; the land is free from disputes or any disputes have been resolved by competent state bodies, court judgments, or arbitration awards with legal effect; the land-use rights are not under enforcement measures; the land remains within its term of use; and the land-use rights are not subject to urgent temporary measures of Law on Enforcement of Civil Judgments.

Accordingly, we should keep in mind:

• Accurately determing the boundary markers, boundaries, area, and any disputes with neighboring households. A land parcel intended for deposit may have been used for many years, making it difficult to identify its exact markers, boundaries, or area visual inspection alone. Therefore, before making a deposit, physically inspect the land to ensure that its the actual markers, boundaries, and land area match the land-use right certificate. Moreover, to reduce the risk of disputes with neighbors, consult with adjacent households and nearby residents to learn about its origin, usage history, and any neighbor disputes (if any). If markers, boundaries, or area are uncertain or disputed, require the deposit recipient to resolve these issues before accepting any deposit.
• Checking for any third-party mortgages, deposits, transfers, or enforcement guarantees; whether the land parcel is included in planning; and whether its term of use remains valid. To ensure the contract’s validity and avoid unintended transactions with third parties who may conceal information, it is essential to verify the parcel’s full legal status: whether it is eligible for transfer; whether any mortgages, deposits, or transfers exist with third parties; whether it is under enforcement; or whether it falls within a planned area. This can be done by contacting local authorities and consulting relevant electronic information portals.

Third, put in writing the basic rights and obligations of the parties to avoid disputes during contract signing

In practice, many deposit agreements fail to document key terms in writing - such as how to retrieve the certificate if it is mortgaged to a bank, the payment schedule, which party bears taxes and fees, and the notarization date. When disputes arise, the depositor often suffers most, since “the money is already in someone else’s pocket”.

From the above analysis, it is clear that many issues must be considered to minimize risks and disputes, especially for the depositor. Therefore, to minimize risk and feel more secure when making a deposit and signing the transfer contract, Ms. Như should seek a lawyer’s assistance.