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Everything You Need to Know About Deposit Agreement in Vietnam

Oct 26, 2021

Everything You Need to Know About Deposit Agreement in Vietnam

Are you buying or selling a house? Get ready for the tons of paperwork and procedures coming your way. Yet, there is no need to feel daunted; we are here to help. Getting to know the deposit agreement will give you a head start.

This article will provide essential information about the first type of contract you will encounter when buying or selling real estate: the deposit contract.

What is a deposit contract? How do you efficiently digest it? Whether you are a first-time homebuyer, seller, or real estate agent, this article is for you.                                                                                                                                                

What is a deposit contract or deposit agreement in Vietnam?

When a person intends to buy a property from a seller, they need to guarantee that purchase with an advance payment. This transaction is a deposit - An important component of lease agreements in Vietnam.

The deposit payment is made before the formal contract is signed. This amount is usually 10% of the house value. Both parties sign the deposit agreement, and the potential buyer loses the deposit if they break the deal.

According to current legislation, the deposit contract does not have to be notarized; a handwritten agreement is still legitimate. However, to protect both parties, you should still notarize the deposit contract. This action helps to solve any future conflict or dispute.

Structure of a deposit agreement

We will go through the contents of this example deposit agreement. In general, most deposit contracts follow a similar format.

             

On the first page of this deposit contract, you will see the following information.

1. Contract number

A contract number is a unique set of letters and numbers used to encrypt and store data, making it simple to locate the deposit contract when needed.

Tip: the contract number isn't critical information; this field can be blank.

2. Deposit recipient information

The deposit recipient would be the person or company that owns real estate. This section contains their:

The real estate owner can allow another person to act as the deposit recipient should the owner not be available - in these situations, the deposit contract will reflect this arrangement.

3. Depositor information

Similar to the section above, this section contains the depositor’s information, including their:

The depositor can also allow another individual to make this deposit on their behalf with a POA.

4. The broker or witness

Many real estate transactions are conducted not directly by the buyers and sellers but through a third-party broker. The broker's role is to witness and support the parties when negotiating and closing sales contracts. While the broker’s details are not vital for the deposit agreement in Vietnam, this section can include the broker’s details:

Note that the broker or witness cannot have any rights or duties towards the buyer or seller.
   

On pages 2 and 3, the contract shows the type of property on sale (e.g., a house, land, etc.), along with its location, size, and selling price.  

1. Property information

Here you will find key details of the property. This part includes the property’s name, address, number of the building(s), number of floors, apartment/unit/house numbers, map sheets, and details of the land lot, etc.

Top tip: Avoid potential future conflicts by reading this section in detail and confirming all the information.

2. Pink book issuing date

Every property will have documents, papers, and contracts showing its ownership and usage rights. For apartments, this is a SPA with the developer, and the pink book. The government or the developer issues this certificate.

3. Pink book record number

The district-level People's Committees issues certificates starting with "CH,” followed by a five-digit ordinal number.

The provincial-level People's Committees or Department of Natural Resources and Environment issue certificates starting with "CT,” followed by a five-digit ordinal number.

The Department of Natural Resources and Environment issues certificates to households, individuals, residential communities, or overseas Vietnamese. On these, you will see the letters "CS," followed by a five-digit ordinal number.

4. Property selling price

The property selling price is the agreed-upon price between the buyer and the seller. You must write this price in both letters and numerical form in Vietnam’s currency (VND). Whether this amount is inclusive or exclusive of additional items should be clearly stated. Some examples include whether the price consists of furniture or whether the buyer would be obliged to pay any remaining developer fees.

5. Related fees  

The property selling price may not include all payable fees; other fees may consist of:

General terms and conditions of a Deposit Agreement in Vietnam

1. Date and time to sign the SPA

The period between the deposit and full payment dates is usually 30 days on the market, but this can be longer or shorter.

2. Authorization/ Power of Attorney (POA)

Should the buyer or seller find themselves unable to be physically present to complete the transaction, they are permitted to nominate someone else to act on their behalf. You can learn more about the Power of Attorney here.

Note that the authorized person might charge transaction service fees.

3. Property handover

After the buyer has paid in full for the property, the seller must hand it over to the buyer. The buyer then receives related documents, including:

4. Payment method

The buyer and seller may agree to split the deposit into multiple installments, especially for high-value properties. The deposit contract will detail precisely when and how much each installment will be.

The buyer can make the payment in cash or via bank transfer. If it is a cash transaction, be sure to receive documents after each installment with the seller’s signature confirming that they have received the agreed-upon amount.

If the buyer fails to make the down payment by the deadline, the seller may charge interest on the late amount.

                   

5. What to do in the event of a contract breach

This section details the actions that state what will happen if one of the parties breaks the agreement.

If the seller breaches the contract, they will lose an amount equal to the total deposit or the agreed penalty amount.

The buyer breaches the contract; they will lose the entire deposit amount or incur a penalty as agreed.

   

What happens after paying the deposit, and are there any other agreements?

1. Payment for the total amount after deposit:

After making the deposit, the buyer will pay the remaining amount leftover from the selling price. This amount could be paid all at once or in installments. Note that you will write this amount in both letters and numerical numbers in VND.

2. Other agreements

When it comes to buying or selling real estate, many things can go awry. As a first-time buyer or seller, it would be advisable to list all your rights and responsibilities.

Some examples include:

Do note that the deposit contract will take effect as soon as it is signed and notarized.

   

Last but not least, the signatures.

Top tip: In addition to signing the contract, the parties could add their fingerprints to the document for further authenticity.

                 

We are here to help

It is crucial to have a deposit contract whenever you decide to buy or sell a house. Homebase is here to help you through the entire process with our vast experiences in real estate transactions, deposit agreements in Vietnam, and foreign ownership. You can reach us easily by phone/Zalo/WA at (+84) 964 245 404 or email at contact@gethomebase.com.

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