1. What are the risks involved in real estate acquisition?

A real estate purchase is a significant transaction with numerous risks if thorough due diligence is not conducted. Buyers may face issues such as: acquiring real estate that differs from the descriptions, real estate involved in dispute, or subject to enforcement measures. Buyers often suffer losses due to unclear information or incomplete transfer contracts. These mistakes may result in financial loss, inability to register ownership, or prolonged litigation. Therefore, understanding these risks is crucial for ensuring a secure transaction and protecting your legal rights.

 2. What are common risks in real estate acquisition?

• Risk of multiple deposits accepted by the seller: Some sellers intentionally accept deposits from several buyers, which can lead to disputes. In such cases, buyers may lose their deposits or be forced to engage in prolonged litigation to reclaim their rights.
• Risk of forged real estate documents: Buyers may receive counterfeit Certificates of Land Use Rights (commonly known as “red books” or “pink books”) or other legal documents from sellers. This invalidates the transaction, prevents the buyer from proceeding with the ownership transfer, and potentially results in losing all payments made.
• Risk of disputed real estate: Some real estate may be subject to ownership disputes, court-imposed transfer restrictions, or enforcement proceedings. Without thorough verification before depositing funds, buyers may be unable to sign the transfer contract or proceed with the ownership transfer.
• Risk of acquiring real estate under planning or clearance: Real estate located in planning or clearance areas is often restricted from transfer. If a transfer contract is still signed, the buyer may be unable to construct, renovate, or resell the property. In some cases, the real estate may be reclaimed without adequate compensation, causing significant financial loss.
• Risk of inaccurate real estate information: Some agents or sellers may provide misleading information, concealing defects such as a smaller actual area than stated, structural deterioration, or a less favorable location. This can impact the real estate's actual value and cause losses for the buyer.
• Risk of mortgaged real estate: The real estate might be under mortgage at a bank, with unsettled tax obligations or other financial liabilities. If not properly verified, the buyer may become liable for financial obligations that should have been borne by the seller.
• Risk of poorly drafted deposit and transfer contracts: Deposit and transfer contracts lacking essential clauses, such as real estate value, rights and obligations of the parties, handover timeline, and penalty for breach of contract. Buyers may forfeit deposits or become involved in prolonged legal disputes.
• Risk of real estate freeze after signing purchase contracts: This risk may arise when the buyer has already signed a deposit or transfer contract or initiated ownership transfer procedures, and the real estate is then frozen by court order during the resolution of a dispute involving the real estate or its owner. The real estate may also be frozen by the Civil Judgment Enforcement Agency to secure the enforcement of a court judgment or decision.

3. What essential information should be verified before acquiring real estate?

Verifying property information before acquiring real estate is a crucial step to ensure a secure transaction and avoid potential legal, financial, or practical risks in the future. Failure to do so may result in acquiring an illegitimate asset, restricted ownership rights, or real estate that fails to meet practical needs, resulting in irreparable losses. Therefore, buyers should pay close attention to the following key information:

• The Certificate of Land Use Rights (commonly known as “red books” or “pink books”) to confirm the legal status of the real estate and its owner;
• The planning status to avoid purchasing land subject to recovery;
• The mortgage status, seizure, or ongoing dispute, to ensure the transfer is legally executable;
• The actual area and current condition of the real estate for comparison with official documents;
• The location, infrastructure, and potential natural disaster risks to assess long-term usability.

4. How to manage risks when acquiring real estate?

To ensure a safe transaction and minimize legal and financial risks, buyers should adhere to the following risk management measures:

Thoroughly verify the legal status of the property

• Requesting the seller to provide the original Certificate of Land Use Rights to confirm legitimate ownership. Transactions should not proceed if the real estate does not have a valid certificate. Additionally, verify the authenticity of all documents at the Land Registration Office or the Notary Office.
• Conducting a planning status check with the local branch of the Land Registration Office to avoid acquiring real estate under planning or clearance.
• Verifying whether the real estate is currently mortgaged at a bank via the Land Registration Office or the Notary Office.
• Verifying whether the real estate is frozen or at risk of being frozen during the transfer process by:
  • Contacting the Commune or Ward People’s Committee where the real estate is located to check whether it has ever been subject to dispute mediation.
  • Verifying at the People’s Court and the Judgment Enforcement Agency whether the real estate is involved in dispute or if the seller is subject to enforceable judgments related to the real estate.
  • Verifying at the Notary Office to confirm whether the seller is authorized to receive a deposit or has delegated such authority to a third party.

Verifying the current condition of the real estate

• Conducting an on-site survey to ensure the real estate is not subject to encroachment, disputes, or structural issues.
• Evaluating the surrounding environment, infrastructure, and amenities to ensure they match the seller’s description.

Verifying the ownership information

• Ensuring that all co-owners (if any) consent to the transfer.
• Assessing whether the seller has full civil capacity to enter into the transaction.

Executing a legally valid deposit and transfer contract

• All contracts must be notarized: According to Vietnamese law, real estate transfer contracts must be notarized to be legally binding.
• The contract's content must be explicit, specifying essential terms such as the parties’ information, sale price, payment method, handover timeline, rights and obligations of each party.

5. What is the safe process for acquiring real estate?

Acquiring real estate requires a careful and systematic process to ensure legal compliance and avoid risks. Below are four essential steps to help you safely proceed with a real estate transfer:

Step 1: Surveying the real estate and verifying its legal status

• Conducting an on-site survey:
  • Verifying the real estate’s location, size, and infrastructure to ensure they match the seller’s description.
  • Assessing the surrounding environment, including security, traffic, and public utilities, to determine the real estate’s actual value.
• Verifying the legal status
  • Requesting the seller to provide all legal documents, including the Certificate of Land Use Rights (commonly known as “red books”), mortgage contracts (if any), etc.
  • Verifying the authenticity of these documents at the competent state authorities, such as the Department of Natural Resources and Environment or the Land Registration Office.
  • Verifying whether the property is involved in any disputes, mortgaged, seized, or frozen.

Step 2: Negotiating the price and terms in the deposit and transfer contract

Once the legal status is verified, both parties negotiate the price and other contractual terms. This step is crucial to protect both parties’ interests and avoid future disputes.

The following terms must be clearly agreed upon:

• Transfer value: The sale price must be clearly stated in the contract to avoid future disputes.
• Payment method and schedule: Agree on the timing of full or installment payments, and define an appropriate payment method (cash, bank transfer, deferred payment, etc.).
• Handover timeline: The parties should agree on the specific date for the transfer of property rights and the handover of all relevant legal documents.
• Tax and fee responsibilities: Clarify which party will be responsible for personal income tax, registration fees, and other related costs under the law.

Step 3: Drafting and signing the deposit and transfer contract

After agreeing on the price and other contractual terms, the parties must execute contracts to ensure legal validity. This typically involves two phases: signing a deposit contract and then the official transfer contract.

(i) Deposit contract

The deposit contract secures the parties' commitments under the preliminary terms. It should specify:

• Parties' details: Full name, address, ID/Passport number, tax code, and bank account information of both parties;
• Real estate details: Address, size, land classification, usage purpose, legal status (e.g., red book, construction permits, planning status), and any attached assets (if any).
• Deposit amount: Typically ranges from 10% to 30% of the total real estate value, depending on the agreement.
• Deposit duration: Specify the timeline for completing the next steps (e.g., notarizing the transfer contract, payment, real estate handover).
• Commitments and penalties: In case either party breaches the agreement, the contract must stipulate the compensation responsibilities and the legal handling of the deposit according to the law.

(ii) Real estate transfer contract

After fulfilling all legal conditions and completing the deposit phase, the parties proceed to sign the official real estate transfer contract. This contract must be in writing and notarized under Vietnamese law. It should include:

• Parties' details: Full name, address, ID/Passport number, tax code, and bank account information of both parties;
• Real estate details: Address, size, land classification, usage purpose, legal status (e.g., red book, construction permits, planning status), and any attached assets (if any).
• Transfer value and payment method: Specify the total transaction amount, amount already paid (as deposit), remaining amount, payment method (cash, bank transfer, etc.), and payment deadline.
• Parties’ obligations: The seller’s commitment to timely handover, relevant tax obligations, and assistance with the ownership transfer;
• Dispute resolution mechanism and mutual commitments.

Step 4: Carrying out the ownership transfer at the competent state authority

After signing the transfer contract and completing all payments, the parties must carry out the ownership transfer process at the Land Registration Office — the competent state authority. This step confirms the buyer’s ownership and completes the transaction under Vietnamese law. The procedure includes:

(i) Submitting ownership transfer application: The required documents include:

• The notarized transfer contract;
• The red book (or pink book) of the real estate;
• ID/Passport number of both the buyer and the seller;
• Tax and fee documents, such as tax receipts and registration fee payment slips.

(ii) Carrying out transfer tax procedures: Before the transfer is finalized, the seller must settle all financial obligations, including:

• Personal income tax (if applicable);
• Non-agricultural land use tax;
• Registration fee.

Once the application is approved and financial obligations are fulfilled, the Land Registration Office will transfer ownership from the seller to the buyer and update the Certificate of Land Use Rights accordingly.

6. How can a lawyer help control risks during the real estate acquisition process?

In the process of acquiring real estate, risk management is a critical factor to ensure that the transaction is conducted safely and legally. The role of a professional lawyer not only helps protect the client’s interests but also ensures that all legal procedures are properly carried out, thereby minimizing potential risks. Specifically, a lawyer can provides support in the following aspects:

• Legal due diligence and advisory services: The lawyer assists clients in thoroughly understanding the legal regulations governing real estate transactions and identifying potential risks associated with real estate transfer. With their professional expertise and established connections, lawyers can verify the legal status of the real estate. This helps the buyer recognize risks effectively and choose a secure transaction strategy.
• Contract review and negotiation support: A well-drafted and comprehensive sale and purchase agreement is key to mitigating risks in a property transfer. The lawyer will thoroughly review the entire contract to ensure that all terms related to the price, payment timeline, real estate handover, and the rights and obligations of both parties are clearly defined. Additionally,  they assist in negotiations to reach a fair and balanced agreement between the parties involved.
• Assistance with ownership transfer procedures: The lawyer assists in preparing and submitting documents to the Land Registration Office or its branches when processing the ownership transfer. This ensures that all documents are complete and legally compliant, allowing the ownership transfer to proceed efficiently and minimizing risks during the transaction.
• Dispute resolution: In the event of any dispute arising during the transfer process, the lawyer will act as the client’s representative, providing legal consultation, guiding them through resolution procedures, and ensuring the maximum protection of the client’s rights and interests.

7. What are typical cases where buyers face risks after deposits, contract signing, or payment in real estate transactions?

Below are several real-life cases reported by reputable Vietnamese news outlets that highlight the disputes buyers may face during real estate transactions:

Case 1. Eight-year legal struggles following the seller’s breach of contract

Case summary: In 2017, Ms. Nguyen Hong Son (70 years old) sold all her assets in the Mekong Delta to purchase 780m² of land in Cu Chi for 960 million VND from Mrs. Phan and her husband. Ms. Son paid 660 million VND upfront and moved in, but after Mrs. Phan obtained a new Certificate of Land Use Rightsshe refused to transfer ownership and sought to cancel the contract and requested a refund.

In 2019, the People’s Court of Cu Chi District recognized the contract as valid and ordered Ms. Son to pay an additional 706 million VND based on market value. On appeal, the Ho Chi Minh City People’s Court reduced the additional payment to 450 million VND. Despite fulfilling her financial obligations, Ms. Son’s ownership transfer application was not accepted, as a new dispute arose between Mrs. Phan and a third party (Mr. Tuyen). As a result, the procedure to subdivide the land stalled, and Ms. Son has been unable to reclaim the real estate for over eight years. [Full article available]

Case 2. Twenty-year land dispute without resolution

Case summary: Since 1996, Mr. Nguyen Dang Ly has owned 28,000m² of land in Suoi Rao Commune, acquired via a handwritten agreement. In 1999, he was granted the Certificate of Land Use Rights for 24,000m². Upon discovering that 3,500m² remained uncertified, he applied for a certificate but was denied due to a dispute with Mr. Pham Hung Dung. Mr. Ly had continuously used the land since 1996 for planting and building.

Mr. Dung asserted that the disputed land had been owned by his family since the 1980s and had been leased to others. In 2014, when he applied for a Certificate of Land Use Rights, he discovered that Mr. Ly was also applying for a Certificate of Land Use Rights for the same land.

After multiple interventions, in 2017, the Provincial People’s Committee recognized Mr. Dung’s land use rights and rejected Mr. Ly’s claims. In 2019, Mr. Dung was granted the Certificate of Land Use Rights. However, lawyers suggested that Mr. Ly may initiate legal proceedings if he can provide sufficient evidence that the issuance of the Certificate of Land Use Rights violated legal procedures. [Full article available]

Case 3. Land dispute via handwritten agreement through three trials without resolution

Case summary: A seven-year land dispute in Buon Ma Thuot City, Dak Lak, between Mrs. H. and Mr. Trinh Ngoc Lam arose from Ms. O. selling the same piece of land to both parties.

In 2013, Ms. O sold 125m² of land to Mrs. H. and her husband via a handwritten agreement, then Ms. H.  built a house on it. In 2017, Ms. O subdivided the parcel and sold the entire plot No. 392 (including Ms. H.'s portion) to Mr. Lam for 1.95 billion VND. Mr. Lam was granted the Certificate of Land Use Rights and used it to secure a 2 billion VND loan.

Mrs. H. filed a lawsuit seeking to invalidate the contract between Ms. O and Mr. Lam, while requesting recognition of her contract with Ms. O. The first-instance court upheld Ms. H.'s contract and annulled part of Mr. Lam’s contract. However, the appellate court declared Ms. H.’s contract void and upheld Mr. Lam’s contract as valid.

The Supreme People's Court found overlapping claims and insufficient legal grounds to valid either contract. The Court emphasized the need to clarify the applicable legal provisions at the time of the transactions. Consequently, both prior judgments were annulled, and the case was remanded to the Dak Lak People’s Court for retrial. [Full article available]

8. FAQ

(1) How to verify land information before receiving a transfer?

Before proceeding with any real estate transaction, the buyer must verify the property's legal status, zoning information, and land use rights to avoid risks. The following are common methods of verification:

Online verification: Verifying real estate information on the official websites of provincial or city land information portals where the real estate is located.

For instance:

• Da Nang City: https://ttdd.tnmt.danang.gov.vn
• Ho Chi Minh City: https://thongtinquyhoach.hochiminhcity.gov.vn
• Hanoi City: https://qhkhsdd.hanoi.gov.vn/datdai
• Mobile applications such as Guland.vn, Meeymap.com, Thongtin.land, and Onland.vn can also be used to check zoning details, land area, legal status, and map-based location of the land plot.

Direct verification at competent state authorities: This method involves directly verifying with competent state authorities such as the Land Registration Office, its branches, or the Commune People’s Committee. Buyers can submit a request for land data and pay the applicable fee to receive official land data. This approach offers a comprehensive overview in a single inquiry, assisting the buyer in making informed decisions and minimizing risks.

(2) Is purchasing real estate through a handwritten agreement legally valid?

According to Clause 3, Article 27 of the Land Law 2024, transactions such as land transfers, gifts, mortgages, and capital contributions involving land use rights must be notarized or authenticated.

However, not all handwritten transactions without notarization or authentication are automatically invalid. According to Clause 1, Article 42 of Decree No.101/2024/NĐ-CP, there are three exceptions where such transactions may still be recognized and can proceed with  Land Use Rights Certificates without notarized contracts:

• Acquiring land before July 1, 2014, without any land use rights documents, as provided in Article 137 of the Land Law 2024.
• Acquiring land before August 1, 2024, with land use rights documents, as provided in Article 137 of the Land Law 2024.
• Inheriting land use rights under Clause 4, Article 45 of the Land Law 2024.

Except for the above three cases, all real estate transfers must be notarized to be legally valid.

(3) What are the risks of paying the seller in advance to release the certificate of land use rights (red book) from the bank before signing a transfer contract?

In several real estate transactions, the red book is still mortgaged at a bank. Sellers may ask buyers to make an upfront payment to release it before proceeding with the transfer procedures. However, this practice entails considerable legal and financial risks:

• Risks of seller breach
  • After receiving the money, the seller may fail to retrieve the red book or intentionally delay the process, making it difficult for the buyer to recover the upfront amount.
  • The seller may use the funds for other debts or personal purposes without prioritizing the satisfaction of the mortgage or the transfer of ownership.
  • After clearing the mortgage and retrieving the red book, the seller might change their mind or delay the transfer.
• Risks of ongoing mortgage or disputes
  • Even after being released from the bank, the real estate could still be involved in other disputes or mortgaged elsewhere.
  • The seller may owe the bank more than the buyer’s advance, making it impossible to complete the satisfaction of the mortgage or the transfer of ownership.
  • If the contract isn’t signed immediately after the satisfaction of the mortgage, the real estate may be disputed, frozen, or seized for enforcement actions.

Solutions to minimize risk:

• Requesting an official debt confirmation letter from the bank: The buyer should ask the seller to liaise directly with the bank to disclose exact debt information.
• Pay directly to the bank: The buyer should make payment directly to the bank and receive the red book immediately upon the satisfaction of the mortgage, then proceed to sign the transfer contract.
• Seeking assistance from a lawyer or reputable intermediary: Buyers should consult a lawyer and consider involving a trustworthy real estate broker to ensure legal protection throughout the transaction.