Tag Archives: foreigner

VIETNAM- MARRIAGE AND PROPERTY/REAL ESTATE

Foreigners are better off if they do NOT marry Vietnamese nationals – what you must know:
By: Dr. Oliver Massmann and Pham Ngoc Ha

In Vietnam, there is no private ownership of land. Land is owned by the people and administered exclusively by the State. The State grants land use rights to land users being domestic organizations, domestic family households/individuals, communities of Vietnamese citizens, religious establishments, foreign organizations with diplomatic functions, Vietnamese residing overseas, foreign invested enterprises. Land users are entitled to obtain the title certificate for land use rights, so called Certificate of Land Use Rights and Ownership of Houses and Other Assets Attached to Land (LURC) or Sổ Đỏ in Vietnamese. Foreign individuals are not allowed to have land use rights, i.e., no LURC.

Whether a foreign individual married to a Vietnamese citizen can own land use rights
Given such strict prohibition in the Land Law, foreign individuals who want to have their own land plots in Vietnam, especially in Da Nang or Nha Trang with beautiful beaches, would think that marriage to Vietnamese could solve the problems.

It is a common understanding that every married couple, regardless of any nationalities, would like to make their investments, particularly in real estates, in such a manner that both spouses can be legally recognized as co-owners of the property. Vietnam Family Law has the same approach. It is provided in the law that: Common property of husband and wife includes property created by a spouse, incomes generated from labor, production and business activities, yields and profits arising from separate property and other lawful incomes in the marriage period. The land use rights obtained by a spouse after marriage shall be common property of husband and wife, unless they are separately inherited by, or given to a spouse or are obtained through transactions made with separate property. For a common property which is required by law to be registered for ownership or use, both spouses shall be named in the title certificate, unless otherwise agreed by the couple (Articles 33 and 34 of the Family Law).

One could figure that if he/she marries a Vietnamese, they could together purchase land and hence, jointly own the land. This is well backed-up by the above Family Law provision. However, there’s no such ideal scenario in Vietnam.

Family Law vs. Land Law
When the married couple finally found a perfect land plot, they would likely need to enter into a land use right transfer agreement/sale and purchase agreement and such agreement would need to be notarized to be complied with the law and ultimately for the issuance of an LURC. Here comes the issue: the Land Law will prevail the Family Law.

Even though it is provided that the land use rights obtained after marriage will be common property, it is not right in the case of marriage between a foreigner and a Vietnamese. No matter how much you contribute to buy the land, even you agree not to be a party to the transfer agreement, not to be named in the LURC, you risk losing all your money invested to buy the land.

How so?
The Land Registration Office would explain that Land Law applies in this case. Since foreign individuals are not allowed to have land use rights in Vietnam, the land purchased by the married couple could only be recognized as property of the Vietnamese spouse. In order to name only the Vietnamese spouse on the LURC, it must be the separate property.

“Separate property” in Vietnam is, among other things, property formed by the husband or wife’s separate funds. The Land Registration Office will then require a so called “Acknowledgement of Separate Property” (i.e., a Waiver of Rights) from the non-Vietnamese spouse, which generally says that the non-Vietnamese spouse acknowledges that this is his/her Vietnamese spouse’s own property which was obtained by his/her Vietnamese spouse separate funds and that the non-Vietnamese spouse will waive all rights whatsoever to such property. If you don’t agree to this Waiver, you and your Vietnamese spouse cannot get the LURC. It’s the worst case if you have paid all or most of the purchase price to the land transferor already! Take it or leave it. If you don’t agree, you will lose all; if you agree, you will lose your money but at least your Vietnamese spouse still can get the LURC. In any case, your money invested in the land is totally lost because you don’t get any consideration, legally!

Lessons Learnt
Foreign individuals should not marry Vietnamese with the main purpose to have land use rights. Do NOT marry to secure real estate – It works the other way: it’s better if you are NOT married to protect your money and rights to real estate in Vietnam. Or go the simple way: buy a condominium because foreigners can own condominiums in Vietnam on their name if they have a tourist visa. That is the golden simple way!

Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC
THANK YOU!

Lawyer in Vietnam Oliver Massmann Real Estate for Foreigners – Opportunities From New Policies

Since 1st July 2015 two new laws are in place, the Law on Real Estate Business and the Law on Residential Housing. Those laws allow foreigners to purchase, own and transfer real estate, houses and condos. On 10 September 2015, the Decree implementing the Law on Real Estate Business was adopted, shedding light on provisions of the related law. The law and its guidance have been in effect for one year and the market has witnessed positive improvement.

In general, there are two different possibilities to become owner of property in Vietnam. The first option is to make investment in construction projects of residential housing in Vietnam. The second option is to purchase the house or condo after its completion of construction.

The Law on Residential Housing provides that foreign individuals who are permitted to enter the country are allowed to own property in Vietnam. It grants even more rights to foreign individuals who are married to a Vietnamese citizen. In particular, once married to a Vietnamese, a foreigner is put in the same category with Vietnamese investors in the market and exercises the right to legally purchase and own property on a long-term basis.

Meanwhile, foreigners not married to a Vietnamese can only own houses for a duration of 50 years. After this period, the owner can require an extension of the ownership and the government will decide whether and for how long it will extend the ownership duration. Beside this 50-year limit, there are also other restrictions on the number of properties that can be owned by a foreigner according to the Law on Residential Housing.

As a result of these changes, Vietnam’s property market is heating up. According to the HCMC Real Estate Association, since the new laws were put into effect, more than 1,000 transactions were made by foreign clients to purchase properties in HCMC, while the were only 250 similar transactions made during the period of four years between 2009 and 2013 in the entire nation. Experts have predicted that 2016 would be another prosperous year for the Vietnamese real estate industry. The country is now considered to be one of the prime real estate investment locations in the world. With this development, there has never been a better time to invest in the property developments in Vietnam.

However, some problems still exist in the field. Until now, it has been announced that the Government will issue a detailed guidance on how foreign individuals become eligible to own property in Vietnam. This document is, however, not in place yet, despite the reputation of the new Housing Law and Law on Residential Housing.

Consequently, although the Vietnamese market is considerably attractive, foreigners are still hesitant to tap the opportunities from new laws as transparent guiding documents have not yet been released. In other words, the opportunities are clear but the Government has been quite delayed in materializing them for foreigners. It is reported that in the first half of the year, there are 25 new projects in real estate sector being licensed with total investment capital of more than USD600 million. In contrast with the busy M&A and new foreign investment in the sector, our own experience in dealing with our foreign client’s request to assist in the application for the red book shows that the licensing authority is still hesitant to grant such certificate. There are many reasons for this reaction, among those are lack of clear legal basis, verification of the nationality of foreigners as well as how to calculate the 50-year ownership.

Foreign investors being still cautious in searching for the market cycle, trying to conduct appropriate procedures as Vietnam is a new market for them, especially when information about the new law is limited, also explains limited transactions made by foreigners and foreign entities.

In conclusion, although the law has provided foreigners with opportunities to purchase house in Vietnam, there are still several obstacles that need to be tackled. The responsibilities lie both in the policy-makers, who are urged to create more transparent and detailed legal guidance, and the Vietnamese who are also required to create a convenient and efficient transaction system.

Please do contact the author Oliver Massmann under omassmann@duanemorris.com if you have any questions. Oliver Massmann is the General Director of Duane Morris Vietnam.

THANK YOU !

 

Vietnam Economic Times interviewing lawyer in Vietnam Oliver Massmann on impact of new laws for foreigners in Vietnam

1. In your opinion, which are the important regulations taking effect in the year of 2016 that foreigners may care about and the reasons for those?
Answer:
Note: The below answer will only address regulations that have direct impact on foreigners in Vietnam. Other regulations which do not regulate foreigners specifically in their governing scope will then be excluded.
Foreigners should be aware of the following legal documents will be in effect from January 2016 as these new laws will significantly impact their rights and obligations:
– Law on Social Insurance:
o Foreign employees with work permit or practicing certificate or practicing license issued by Vietnam’s competent authorities are now subject to compulsory social insurance.
o Accordingly, foreign employees are entitled to insurance on their sickness, maternity, labor accidents, occupational diseases, retirement and death. These entitlements are the same as what local employees currently enjoy.
o From 01 January 2016, male employees (including foreign ones) are entitled to paternity leave if the wife is on maternity.
In particular, male employees are entitled to 5 working day leave if his wife is on normal maternity. In case of operation or giving birth to an under 32-week baby, a 7-working-day leave will apply. In case of giving birth to a twin, paternity leave is 10 working days, with additional 3 working day leave for each further baby. In case the wife gives birth to a twin or more babies by operation, 14-day paternity leave applies. Please note that this paternity leave only applies within 30 days from the birth date of the baby.
o Male employees when adopting a child under 6 month old are also entitled to the same paternity treatment as in the case of female employees adopting such child.
– Decree No. 122/2015/ND-CP: in relation with the social insurance participation, foreigners should also note the following minimum regional salary, which serves as the basis to calculate payment amount of social insurance, health insurance and unemployment insurance; o Region I: 3.500.000 VND/month (increasing by 400.000 VND/month) o Region II: 3.100.000 VND/month (increasing by 350.000 VND/month) o Region III: 2.700.000 VND/month (increasing by 300.000 VND/month) o Region IV: 2.400.000 VND/month (increasing by 250.000 VND/month)
– Law on Civil Status:
o Foreigners permanently reside in Vietnam must register their civil status with the People’s Committee at ward level instead of the provincial level as previously.
o Children of foreigners born in Vietnam are allowed to register their birth with the People’s Committee at ward level where the mother or father lives.
o Foreigners residing in Vietnam wishing to register their marriage in Vietnam can do so at the People’s Committee at ward level where the wife/ husband lives. Interview is no longer required so that the total time to register a marriage is reduced by half to 15 days (compared with 25 days previously) o Foreigners wishing to apply for a Confirmation on marital status can do so at the People’s Committee at ward level where they register their permanent or temporary residence. The Confirmation on marital status is issued within 3 working days from the receipt of a valid dossier and will be valid for 6 months from the issuance date.

2. Starting January 1st, special consumption tax on cigarette, beer, wine will be raised. How will this affect the economy of Vietnam in the long-term? Also, with this, how do we expect the change in Vietnamese’s consumption habit of these commodities?
Answer: For alcohols of 20oC and above, from 01 January 2016 to 31 December 2016, the tax rate is 55%. This rate will be 60% for the whole 2017 year and 65% from 01 January 2018 onwards. The schedule for increase in special consumption tax rate for beer is the same. Meanwhile, this rate for cigarettes is higher (70% from 01 January 2016 to end of 2018 and 75% from 01 January 2019 onwards).
In my opinion, the increase of such tax rate will on its face increase the State budget. It will somehow reduce the number of people smoking and drinking alcohol, thereby protect public health and prevent negative social issues related to social orders, traffic safety and crimes related to smoking and drinking alcohol.
However, given the fact that the increase is not very high (compared with the increase in minimum regional salary), the retail price of these goods will not be much affected, leading to stagnant change in purchasing power of the products. Adults may still continue to consume these goods. Moreover, the tax increase may create more chances for smuggling which is already very complicated and hard to control in Vietnam.
Thus, together with policies of increasing special consumption tax, the Government should adopt regulations on strict control of smuggling, educate young people’s awareness on serious effects resulting from consumption of alcohols and cigarettes.

3. Starting July 1st, individuals, organizations are not permitted to send commercial information to e-addresses (including email, mobile number, personal sites and other similar means) in the cases the recipient does not accept that. How is your view on this regulation?
Answer: The spread of spam emails and text messages with advertising nature has created strong disturbance for internet and network users. While previous regulations such as the Decree and Circular on preventing spam emails and messages or Circular on managing prepaid subscribers seem to have limited impact, this new regulation is another effort of the Government to fight against the more serious and much more complicated forms of advertisment. I really doubt about whether this new regulation could bring significant positive improvement to the current situation, but highly hope that with cooperation from network operators, strong sanctioning measures from the state authorities, the situation will improve gradually.

Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Foreign ownership of houses and condominium in Vietnam is now possible

Vietnam – You are a foreigner and want to buy a House or Condominium ?
Come to us! We help you to succeed

Since 1st July 2015 two new laws are in place, the Law on Real Estate Business and the Law on Residential Housing. Those laws allow foreigners to purchase Real Estate, Houses and Condos. On 10 September 2015, the Decree implementing the Law on Real Estate Business is adopted, shedding light on provisions of the related law. The guidance will start taking effect from 01 November 2015. For other provisions that have not received any implementation guidance yet, the Ministry of Construction instructed the authorities to follow the new law and until the new implementation rules are available, the new law should be implemented according to the old implementation guidelines as long as it does not breach the new law. Details will be explained below.

1. The right to own property

The Law on Residential Housing provides that foreign individuals who are permitted to enter the country are allowed to own property in Vietnam. They should also not belong to the category who are entitled to preferential treatment rights, or diplomatic or consulate immunities in accordance to law. The Government will issue a detailed guidance on how foreign individuals could provide its eligibility to own property in Vietnam. This guidance is, unfortunately, not in place yet.

Foreign investors and organizations are allowed to purchase real estate with an investment purpose. The investor or organization will need an Investment Certificate (or Investment Registration Certificate under the new Investment Law). From a general perspective, domestic investors or foreign investors who already have existing projects in Vietnam can easily meet easily this requirement. However, it could be problematic for investors who make first time investment in Vietnam with the investment project being the transferred one.

In general, there are two different possibilities to become owner of property in Vietnam. The first option is to make investment in construction projects of residential housing in Vietnam. The second option is to purchase the house or condo after its completion of construction.

The Law on Residential Housing is granting even more rights to foreign individuals who are married to a Vietnamese citizen, whereas they have the same rights as Vietnamese citizens and have the opportunity to purchase property on a long-term basis.

2. Restrictions

It must be noted that foreigners can only own houses for a duration of 50 years. The Government puts an exemption in place and can decide itself after application if and for how long it will extend the ownership duration.

Under Article 161.2(a) of the Law on Residential Housing, foreign individuals and foreign invested enterprises are able to purchase multiple properties in a residential development project including buildings and separate landed villas/townhouses. The maximum quantity allowed to purchase is 30% of the total units in a building and 250 houses in a local area. However, Article 68.4 of the fourth Draft Decree of the Law on Residential Housing limits that foreign organizations/ individuals may only own maximum 10% of the total number of individual housing in each residential housing project. This could be a restriction not in compliance with the Law on Residential Housing.

Another restriction in the fourth Draft Decree of the Law on Residential Housing is also introduced. While Article 159.2(b) of the Law on Residential Housing only prohibits foreign individuals and organizations from buying houses in national defense and security area, Article 67 of the fourth Draft Decree of the Law on Residential Housing does not allow them to own residential houses in areas where foreigners are prohibited or restricted from residing or traveling as stipulated under the Law on Residence and Travel.

The development of this regulation needs to be awaited.

—o0o—

Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com; if you wish to take the opportunity and purchase property or if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.