SUPPORTING SERVICES FOR REAL ESTATE TRANSACTIONS 2025

PROTECTING THE RIGHTS OF REAL ESTATE BUYERS ACCORDING TO THE LAW ON SUPPORTING SERVICES FOR REAL ESTATE TRANSACTIONS – FROM THE PRACTICE IN HỒ CHÍ MINH CITY

Trần Văn Hoàng

Lawyer, Đông Phương Luật LLC

ABSTRACT

This article presents and analyzes the legal regulations and practical implementation of the law on supporting services for real estate transactions (brokerage, consulting, exchange, property management) from the practice in Hồ Chí Minh City. Based on that, the author points out the existing shortcomings and obstacles to propose improvements to protect the rights of real estate buyers when using these services.

Keywords: protection of rights, real estate buyers, brokerage, consulting, exchange, property management.

I. INTRODUCTION

The 2023 Law on Real Estate Business (2023 LREB) has a regulatory role, helping the real estate market operate stably, with the aim of establishing a foundation and legal basis for the real estate market in general and supporting services for real estate transactions in particular to develop sustainably. Therefore, the protection of the rights of real estate buyers (REB) is important. However, in practice in Hồ Chí Minh City, many enterprises providing supporting services for real estate transactions show signs of violating the law, aiding investors in selling real estate in projects that do not meet the conditions for business operations as prescribed, and raising capital through agreements for deposit or escrow to receive money from REB.

These actions significantly reduce the trust of REB in these enterprises, infringing on the rights of REB. Therefore, the protection of the rights of real estate buyers according to the law on supporting services for real estate transactions, including brokerage, consulting, exchange, and property management, from the practice in Hồ Chí Minh City is extremely urgent.

II. THE LAW ON SUPPORTING SERVICES FOR REAL ESTATE TRANSACTIONS

About real estate brokerage

According to Clause 2 and Clause 11, Article 3 of the 2023 Law on Real Estate Business, real estate brokerage is a type of real estate service business, acting as an intermediary for parties in the purchase, transfer, lease, sublease, or lease-purchase of real estate. Accordingly, when engaging in this service business, it is necessary to comply with the legal regulations on conditions of operation, content, and scope of activities.

Regarding business conditions, according to Article 61 of the 2023 Law on Real Estate Business, entities wishing to engage in real estate brokerage must establish an enterprise in accordance with the Law on Enterprises or a cooperative, cooperative union under the Law on Cooperatives (collectively referred to as “enterprise”); must have operational regulations, physical and technical facilities; must have at least one individual with a real estate brokerage certificate; before commencing operations, they must send information about the enterprise to the management agency where the enterprise is headquartered for public disclosure.

Unlike the 2014 Law on Real Estate Business, the 2023 Law on Real Estate Business does not allow individuals to practice independently (Trần Văn Hoàng, 2024); when practicing, they must have a practicing certificate and operate at a brokerage enterprise, receiving brokerage fees and commissions from the brokerage enterprise according to agreement. It is assessed that not allowing individuals to practice independently is appropriate because, in reality, some brokers do not register or declare taxes as required, leading to revenue loss for the state budget (Trần Văn Hoàng, 2023).

Regarding brokerage activities, according to Article 62 of the 2023 Law on Real Estate Business, the brokerage party supports the party being brokered in finding partners to participate in negotiating and signing real estate purchase contracts; receiving authorization to perform tasks related to real estate transactions and providing information, supporting the parties in negotiating and establishing real estate transactions.

About real estate consulting

According to Clause 2 and Clause 12, Article 3 of the 2023 Law on Real Estate Business, real estate consulting (REC) is a real estate service business activity, tasked with advising on issues related to real estate business as required by the parties. Accordingly, when engaging in this service business, it is necessary to comply with the legal regulations on real estate business related to principles, conditions, and scope of business.

Regarding business principles, Point a, Clause 1, Article 66 of the 2023 Law on Real Estate Business stipulates that individuals directly providing consulting must have degrees and certificates in the field they directly consult.

Regarding the scope of business, Clause 2, Article 66 of the 2023 Law on Real Estate Business stipulates that entities engaged in REC are only permitted to advise on investment and establishment, real estate business, real estate finance, real estate pricing, and real estate business contracts; they are not allowed to advise on other issues.

Regarding conditions of entities, according to Article 67 and Clause 5, Article 9 of the 2023 Law on Real Estate Business, entities engaged in consulting activities must establish an enterprise; before commencing operations, they must send information about the enterprise to the provincial-level state management agency where the enterprise is established for posting on the housing and real estate market information system.

About real estate exchanges

According to Clause 2 and Clause 10, Article 3 of the 2023 Law on Real Estate Business, real estate exchange is a real estate service business activity, where real estate transactions take place, established and operated according to regulations. Accordingly, when engaging in this service business, it is necessary to comply with the legal regulations on real estate business related to principles, conditions, and scope of business and activities.

Regarding organizational and operational principles, compliance with Article 53 of the 2023 Law on Real Estate Business is required, specifically:

First, real estate exchanges must comply with the principles stipulated in Article 4 of the 2023 Law on Real Estate Business.

Second, the operation of real estate exchanges must be public and transparent, following operational regulations and issued transaction procedures; providing real estate transaction services through the exchange, earning remuneration as prescribed and under contracts signed with service requesters.

Third, information about real estate exchanges must be posted on the housing and real estate market information system.

Fourth, when signing contracts with individual real estate brokers, these individuals must meet the conditions specified in Clause 2, Article 61 of the 2023 Law on Real Estate Business.

Fifth, real estate exchanges conduct both direct and electronic transactions (if any); in the case of electronic transactions, they must comply with the regulations of the 2023 Law on Real Estate Business, the Law on Electronic Transactions, and relevant legal provisions.

Regarding establishment and registration of operations, compliance with Article 54 of the 2023 Law on Real Estate Business is required. Entities providing real estate exchange services must establish an enterprise; the name of the enterprise may be chosen freely but must comply with the Law on Enterprises, include the phrase “real estate exchange,” and not duplicate or cause confusion with the names of other real estate exchange enterprises already registered; before commencing operations, real estate exchanges must submit their application to the provincial-level state management agency in charge of real estate business where the real estate exchange’s headquarters are located to obtain an operating license.

Regarding conditions of operation, according to Article 55 of the 2023 Law on Real Estate Business, managers and operators of real estate exchanges must have the right to manage enterprises in Vietnam as prescribed by the Law on Enterprises and must complete training courses in the management and operation of real estate exchanges, receiving a certificate of course completion from a training institution; must establish an enterprise and comply with the establishment and registration requirements under Article 54 of the 2023 Law on Real Estate Business;

must issue and publicly disclose real estate transaction procedures through the real estate exchange; must register a fixed location for operations and have the necessary physical and technical infrastructure to ensure the implementation of the activities of the real estate exchange.

Regarding the content of activities, according to Article 56 of the 2023 Law on Real Estate Business, real estate exchanges are responsible for checking the legality and conditions for business of real estate properties transacted through the exchanges; listing and providing information on real estate properties eligible for business; providing services, supporting, and supplying information to real estate buyers (REB) to find and select real estate properties; providing brokerage services, supporting the parties in negotiating and transacting real estate properties.

Real estate brokerage activities within real estate exchanges must meet conditions and comply with the regulations on real estate brokerage; providing services, supporting the parties in drafting and signing real estate transaction contracts; providing services, supporting the parties in payment, handing over documents, papers, and real estate properties (if any) for transactions conducted through real estate exchanges; storing information, documents, and papers on real estate properties and real estate transactions conducted through real estate exchanges; providing services, supporting other related content concerning transactions conducted through real estate exchanges; confirming transactions conducted through real estate exchanges; providing information on transactions conducted through real estate exchanges to the provincial-level state management agency in charge of real estate business.

About real estate management

According to Clause 2 and Clause 13, Article 3 of the 2023 Law on Real Estate Business, real estate management (REM) is a real estate service business activity, involving the implementation of one, some, or all activities related to managing, exploiting, and disposing of real estate properties under the authorization of owners of housing, construction works, or land users. Accordingly, when engaging in this service business, it is necessary to comply with the legal regulations on real estate business.

Regarding business principles, according to Point b, Clause 1, Article 66 of the 2023 Law on Real Estate Business, the managed real estate properties must be legal.

Regarding the scope of business, compliance with Clause 3, Article 66 of the 2023 Law on Real Estate Business is required. Organizations and individuals are permitted to sell, transfer, lease, sublease, lease-purchase real estate properties under the authorization of owners of housing, construction works, construction floor area, or land users; organize the provision of services ensuring the normal operation of real estate properties; organize the maintenance and repair of real estate properties; manage and supervise the exploitation and use of real estate properties by real estate buyers according to contracts; fulfill rights and obligations towards real estate buyers and the State under the authorization of owners of housing, construction works, construction floor area, or land users.

Regarding business conditions, Article 67 and Clause 5, Article 9 of the 2023 Law on Real Estate Business stipulate that organizations and individuals engaged in real estate management services must establish an enterprise. In the case of providing apartment building management services, mixed-use buildings with housing must meet the conditions prescribed by the Law on Housing. Before commencing operations, organizations and individuals engaged in real estate management services must send information about the enterprise to the provincial-level state management agency in charge of real estate business where the enterprise is established to be posted on the housing and real estate market information system.

III. PRACTICE OF SUPPORTING SERVICES FOR REAL ESTATE TRANSACTIONS IN HỒ CHÍ MINH CITY AND SHORTCOMINGS

As presented in section 2, although the law has provided strict regulations to protect the rights of real estate buyers when using supporting services for real estate transactions, many limitations and shortcomings still exist in practice and legal regulations, specifically:

Practice in Hồ Chí MinhCity

In practice, in Hồ Chí Minh City, many enterprises registered to provide supporting services for real estate transactions do not comply with the regulations. These entities do not sign consulting or brokerage contracts but provide services through signing agreements to assist investors in transferring real estate properties and illegally raising capital.

According to press information, there are currently three projects invested by No Va Real Estate Investment Group Joint Stock Company (Noavaland Group), including NovaWorld Ho Tram (Bà Rịa-Vũng Tàu), NovaWorld Phan Thiet (Bình Thuận), and Aqua City (Đồng Nai), all of which are sold through agreements. These projects are exclusively distributed, brokered, and consulted by real estate buying support enterprises based in Hồ Chí Minh City.

However, in their business operations, they do not sign “Brokerage and Consulting Contracts” with real estate buyers but sign “Agreements” to receive money labeled as agreements and then transfer nearly VND 19,531 billion to the investor (Hải Băng 2024). These real estate projects are not eligible for business, but the investor still signs brokerage contracts with individuals and organizations to advise and broker with customers.

If they signed simple brokerage contracts, receiving brokerage fees and commissions, there would be no debate. However, many brokers exploit these shortcomings to provide brokerage services in the form of signing agreements, investment documents, and framework agreements to receive deposits from customers, the essence of which is the transfer money for real estate properties.

Limitations and shortcomings in legal regulations

First, the liability for damages among the 2023 Law on Real Estate Business, the 2015 Civil Code, and the 2005 Commercial Law is overlapping and inconsistent in terms of the basis for determining liability. The 2023 Law on Real Estate Business stipulates “fault” as a mandatory element, while the 2015 Civil Code and the 2005 Commercial Law have removed the element of fault. This inconsistency has caused difficulties in determining the basis for liability for damages, directly affecting the legitimate rights and interests of parties in disputes.

Second, the 2023 Law on Real Estate Business, the 2015 Civil Code, and the 2005 Commercial Law do not stipulate the limits of compensation for non-material damages in the regime of compensation for damages due to breach of contractual obligations. This creates difficulties for the courts in resolving disputes over liability for damages in contracts, leading to differing judgments on compensation amounts, as the assessment of compensation value is subjectively perceived by the judges with the authority granted to them by law.

Third, the 2023 Law on Real Estate Business has stipulated that “real estate must meet certain conditions as prescribed by law to be eligible for business,” while brokers have the right to choose to accept or refuse real estate not yet eligible for business for brokerage without clear regulations on whether real estate for brokerage must meet business conditions as prescribed. The lack of clear regulations allows brokers to provide brokerage services at any time they desire, leading to numerous disputes in practice.

Fourth, the 2023 Law on Real Estate Business has added Point d, Clause 1, Article 64, allowing brokers to refuse real estate not eligible for business. The author finds this regulation inappropriate, as it permits brokers to choose to accept or refuse real estate not yet eligible for business. The author’s view is that the law should “prohibit” brokers from brokering projects that are not eligible for business to limit disputes arising from brokers handling projects not approved for business.

Fifth, the 2023 Law on Real Estate Business stipulates that individuals wishing to practice brokerage must participate in activities at enterprises providing real estate brokerage services or real estate exchanges. However, this regulation does not clearly state the form of participation in these enterprises, whether it is through collaboration or signing labor contracts. The form of participation also plays a role in determining their legal liability when faults cause damages to the brokered parties.

Sixth, the 2023 Law on Real Estate Business prohibits individuals from practicing independent brokerage. This regulation implicitly allows only brokerage enterprises to provide brokerage services based on existing contracts, and when they violate obligations causing damage to the brokered parties, they must compensate. It is unclear whether individuals practicing brokerage must compensate when they violate obligations, as the law does not have a specific regulation on this matter. This issue arises because individuals do not provide brokerage services directly to brokered parties but only practice at brokerage enterprises based on assigned tasks.

Limitations and shortcomings in the practical implementation of the law

First, some individuals and organizations practicing brokerage are not well-trained, lack expertise and legal knowledge, and are unprofessional in providing brokerage services. Particularly, their poor ethics drive them to prioritize profit regardless of consequences and deny responsibility when causing damage to the brokered parties.

Second, in practice, many individuals have been practicing brokerage freely without brokerage certificates before the 2023 Law on Real Estate Business came into effect. They have received money from numerous customers but failed to achieve brokerage results, leaving unresolved disputes.

Third, some real estate exchanges providing brokerage services collude with each other to “hoard,” “stockpile,” “manipulate prices,” and “inflate prices,” causing “artificial fever” to profit from price differences, disrupting the real estate market.

Fourth, many real estate projects are not eligible for business, but investors still sign brokerage contracts with individuals and organizations to advise and broker with customers. If they signed simple brokerage contracts, receiving brokerage fees and commissions, there would be no debate.

However, many brokers exploit these shortcomings to provide brokerage services in the form of signing agreements, investment documents, and framework agreements to receive deposits from customers, the essence of which is the transfer money for real estate properties. Examples of such projects include “The Sailing Bay” in Phú Quốc, Kiên Giang Province; “Aquacity” in Biên Hoà City, Đồng Nai Province; “Ocean Valley” in Bình Thuận Province; and “Senturia An Phú” in Thủ Đức City, Hồ Chí Minh City, among many other projects with similar practices.

IV. RECOMMENDATIONS FOR IMPROVEMENT

First, regarding the provision that “fault” is one of the factors for determining liability for damages according to Point d, Clause 1, Article 65 of the 2023 Law on Real Estate Business. To achieve consistency in legal regulations between the 2015 Civil Code, the 2005 Commercial Law, and the 2023 Law on Real Estate Business, particularly to protect the legitimate rights and interests of parties receiving brokerage services, the author suggests eliminating the element of “fault.” Accordingly, Point d, Clause 1, Article 65 of the 2023 Law on Real Estate Business should be amended as follows: “Compensation for damages caused by oneself” instead of “Compensation for damages caused by one’s fault.”

Second, regarding the regulation on the limits of compensation for non-material damages in the regime of compensation for damages due to breach of contractual obligations. We can apply the determination of these limits similarly to how we determine non-contractual damages according to Clause 2, Article 592 of the 2015 Civil Code and Resolution No. 02/2022/NQ-HĐTP.

The author suggests:

(i) The Supreme People’s Court should issue guidelines on the analogous application of law in determining liability for damages due to breach of contract, similar to how non-contractual damages are determined. Specifically, applying the limits of compensation for non-material damages in the regime of non-contractual damages as stipulated in Clause 2 of Articles 590, 591, and 592 of the 2015 Civil Code; or

(ii) In the future, there will be “case law” for the provision in Clause 3, Article 419 of the 2015 Civil Code in determining the value of non-material damages due to breach of contract.

Third, to limit disputes arising in practice and address the shortcomings presented by the author in the previous section. Therefore, the author believes that along with the regulations on the conditions of future housing and construction works being put into business, it is necessary to have regulations on “conditions for introducing and distributing real estate for individuals and organizations providing real estate brokerage services.” Thus, the following regulations need to be amended and supplemented:

Add Clause 9 to Article 24 of the 2023 Law on Real Estate Business: “Organizations providing real estate brokerage services and real estate exchanges offering real estate brokerage services are only allowed to sign real estate brokerage service contracts when future real estate properties are put into business and meet the conditions specified in Clauses 1, 2, 3, 4, 5, 6, 7, and Clause 8 of this Article.”

Fourth, similarly, the author proposes that there should be a regulation prohibiting individuals and organizations from using real estate not yet eligible for business as brokerage products, instead of including it in their rights as “refusal,” as this would limit the negative risks analyzed above. Therefore, the following regulations need to be amended and supplemented:

Add Clause 9 to Article 8 of the 2023 Law on Real Estate Business: “Prohibit individuals and organizations from using real estate not eligible for business as prescribed in Article 24 of this law.”

Fifth, the 2023 Law on Real Estate Business needs to stipulate obligations or prohibit “Individuals and organizations engaged in real estate brokerage services from receiving money or other benefits, except brokerage fees and commissions.” We understand that with the advancement of science and technology, accessing customers in need of buying or lease-purchasing real estate is very easy.

Therefore, exploiting these issues to demand, condition, or suggest customers give money or other benefits to brokers is problematic. Brokers may sign legal documents or transactions to receive money or other benefits from customers. The current law on real estate business does not stipulate obligations or prohibit individuals and organizations providing brokerage services from receiving money or other benefits besides brokerage fees and commissions.

“The law on real estate business only stipulates that individuals and organizations providing brokerage services cannot simultaneously act as brokers and a party to a contract in a real estate business transaction” (Clause 3, Article 62 of the 2014 Law on Real Estate Business). This regulation effectively prohibits investors from authorizing individuals and organizations to sign real estate business contracts, but it does not prohibit brokers from independently conducting real estate transactions according to the Civil Code. Therefore, brokers sign agreements to receive deposits from customers, which essentially are real estate business contracts.

Thus, the following regulations need to be amended and supplemented:

(i) Add Clause 3 to Article 65 of the 2023 Law on Real Estate Business: “Enterprises providing real estate brokerage services, individuals practicing real estate brokerage are not allowed to receive money or other benefits from customers in any form, except brokerage fees and commissions.”

(ii) Add Clause 10 to Article 8 of the 2023 Law on Real Estate Business: “Enterprises providing real estate brokerage services, individuals practicing real estate brokerage who receive money or other benefits from customers in any form, except brokerage fees and commissions, are prohibited.”

V. CONCLUSION

Enterprises providing supporting services for real estate transactions have development opportunities in Vietnam and are an attractive field. Therefore, legal regulations on these activities play an extremely important role. However, to develop brokerage activities transparently and professionally, it is necessary to improve the field of supporting services for real estate transactions to contribute to ensuring the legitimate rights of parties participating in real estate transactions in the market. This is a development step for the law on real estate business services in Vietnam in the context of the country’s deeper integration into the global economy.

REFERENCES

Civil Code 2015.
2014 Law on Real Estate Business. 2023 Law on Real Estate Business. 2023 Law on Cooperatives.
Decree No. 16/2022/ND-CP dated January 28, 2022.
Hải Băng. (2024). Novaland (NVL) “burning hands” when holding the deposit of VND 19,531 billion from customers, retrieved from https://nguoiquansat.vn/novaland-nvl-bong-tay-khi-cam-khoan-coc-19-531-ty-dong-tu-khach-hang-130907.html, accessed June 27, 2024.
Trần Văn Hoàng. (2023). Perfecting the law and digital transformation solutions for real estate brokerage in the context of integration and the digital era, Proceedings of the Youth Scientific Conference, Đà Nẵng Publishing House.
Trần Văn Hoàng. (2024). Administrative and criminal liability of real estate brokers under the 2023 Law on Real Estate Business, Conference Proceedings, University of Economics and Law, Hồ Chí Minh City.
Agreement (2021) No. NA/SV1-07.17/2021/AG/NVE-TDMD signed on January 1st, 2021, between real estate buyers and Novareal JSC.
Agreement (2024) No. SV1-10.04/2024/AG/NVH-NTH-NTML between real estate buyers and Nova Real Estate Business JSC.

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