Amid the rapid development of the real estate market, future housing guarantees play a vital role in protecting the rights of homebuyers. This article provides a detailed analysis of the latest regulations on this matter.

1. Overview of New Regulations

The new regulations on future housing guarantees have undergone significant changes to enhance the protection of homebuyers’ rights. These updates focus on increasing transparency in the guarantee process and strengthening the responsibilities of the parties involved.

Key Changes (Articles 11-13, 26 Circular 61/2024/TT-NHNN)

Stricter Regulations on Guarantee Issuance Conditions

The new regulations impose stricter conditions on guarantee issuance to ensure the safety and reliability of guarantee activities. Key points include:

• Dossier Assessment: Credit institutions and foreign bank branches are required to rigorously assess customer dossiers to ensure the authenticity and completeness of the information provided.
• Risk Evaluation: A comprehensive evaluation of the risks associated with the guarantee is mandatory to ensure that the financial stability of the parties involved is adequate.
• Customer Financial Capacity: Banks must assess the financial capacity of the customer, including their ability to meet obligations, to minimize the risk of non-fulfillment of guarantee obligations.

Enhanced Responsibilities of the Guaranteeing Bank

1. Issuing Guarantee Letters Before the Handover Deadline
   The guaranteeing bank must issue a guarantee letter to the buyer before the stipulated handover deadline in the sales contract, provided that the bank has received a valid sales contract from the buyer. This ensures that the buyer is protected by a guarantee even before the property is delivered.
2. Public Notification Upon Termination of the Guarantee
   When the developer terminates a guarantee agreement, the guaranteeing bank must publicly notify the termination on its website and send a written notice to the provincial housing management authority. This ensures that all parties are informed of the change and can take appropriate action.
3. Fulfilling Guarantee Obligations
   The guaranteeing bank must fulfill its obligations by covering the amount corresponding to the developer’s financial commitments. The amount is determined based on the buyer’s request dossier for guarantee obligation fulfillment. This guarantees the buyer’s financial protection if the developer fails to meet their obligations.

Expanded Protection for Homebuyers

1. Receiving Guarantee Letters Before the Handover Deadline
   Homebuyers are entitled to receive guarantee letters before the handover deadline. This provides them with financial protection in the event that the developer fails to deliver the property on time. The guarantee letter acts as a safeguard, ensuring the buyer’s interests are protected.
2. Requesting the Bank to Fulfill Guarantee Obligations
   Homebuyers have the right to request the guaranteeing bank to fulfill its guarantee obligations regarding the developer’s financial commitments. This can be done by presenting the guarantee letter and a valid dossier, ensuring that the buyer is compensated in case the developer does not meet the financial obligations.

2. Detailed Guarantee Process

The guarantee process is designed to ensure transparency and efficiency. The investor must follow these steps: (Articles 11, 13-16, 22, 23 of Circular 61/2024)

Customers submit guarantee application dossiers to credit institutions or foreign bank branches.

The dossier includes:

• Guarantee application.
• Customer documents (including information about related parties).
• Documents regarding the obligation to be guaranteed.
• Documents about security measures (if any).
• Documents about other related parties (if any).

Credit institutions or foreign bank branches will provide specific guidance on dossier requirements based on actual circumstances, customer group characteristics, and guarantee implementation methods.

Credit institutions or foreign bank branches assess the dossier and decide on guarantee issuance.

They must review and evaluate the customer’s repayment ability, verify the legality of the obligation to be guaranteed, and ensure compliance with credit extension restriction regulations.

Credit institutions or foreign bank branches and customers sign a guarantee issuance agreement.

Credit institutions or foreign bank branches issue a guarantee commitment.

After signing the house purchase or lease-purchase contract, which includes the investor’s financial obligations, the investor submits the house purchase or lease-purchase contract to the guarantor to request the issuance of a guarantee letter for the buyer.

The guarantor, based on the house purchase or lease-purchase contract, the guarantee issuance agreement, and the written commitment, issues the guarantee letter and sends it to the investor to provide to the buyer.

Performing guarantee obligations (upon request).

• The beneficiary sends the guarantee obligation performance dossier to the guarantor.
• The guarantor reviews the dossier and performs the guarantee obligation if the dossier is valid.
• The guarantor must fulfill the guarantee obligation within five working days from the receipt of a valid dossier.

Termination of guarantee obligations.

Guarantee obligations are terminated in the following cases:

• The guaranteed party’s obligations are fulfilled.
• The guarantee obligations have been performed.
• The guarantee is canceled or replaced.
• The guarantee commitment expires.
• The beneficiary waives the guarantee obligation.
• By agreement of the parties.
• Other cases as prescribed by law.

Notes:

• In the case of guarantees for future housing, the process includes additional steps as specified in Article 13 of Circular 61/2024/TT-NHNN.
• Credit institutions or foreign bank branches may opt to perform electronic guarantee activities under Article 9 of Circular 61/2024/TT-NHNN.
• Credit institutions or foreign bank branches must issue internal regulations on guarantee operations in compliance with this Circular and other related legal regulations.

3. Responsibilities of Relevant Parties

Guarantee Bank

Thorough Dossier Assessment

Before deciding to issue a guarantee, the bank must carefully assess the investor’s and project’s dossiers, including: (Articles 11-13 Circular 61/2024/TT-NHNN; Article 11, 24 Real Estate Business Law 2023)

• Investor’s conditions: Legal capacity, financial status, experience, reputation, etc
• Project legality: Investment license, construction permit, land use rights, etc
• Project completion capability: Project progress, contractor capacity, funding sources, etc

Thorough assessment helps the bank evaluate risks and the feasibility of fulfilling the guarantee obligation when due.

Project Progress Supervision

After issuing the guarantee, the bank is responsible for monitoring and supervising the project’s progress, ensuring the investor implements the project on schedule and meets quality standards as per the guarantee contract commitments. (Article 13 Circular 61/2024/TT-NHNN).

Circular 61/2024/TT-NHNN does not specify the frequency or method of supervision. However, the bank should proactively develop appropriate and effective supervision procedures to promptly detect risks and issues during project implementation.

Ensuring Payment Capability Upon Request

When the investor violates obligations or fails to deliver housing on time, the guarantee bank must make payments to homebuyers according to the terms in the guarantee letter. (Articles 23, 54-58, Circular 61/2024/TT-NHNN).
To ensure payment capability, the bank must:

• Allocate sufficient financial reserves to guarantee operations.
• Effectively manage risks to avoid fulfilling guarantee obligations exceeding financial capacity.
• Require the investor to implement security measures (e.g., escrow, collateral) to mitigate risks for the bank.

The guarantee bank must also fulfill other obligations under Circular 61/2024/TT-NHNN, including:

• Publicly listing guarantee fees (Article 19).
• Storing guarantees dossiers following regulations (Article 69).
• Guiding homebuyers in verifying the authenticity of guarantee letters (Article 69).

Investor

Providing Honest Information

The investor must provide complete, accurate, and honest information related to the project, legalities, progress, financial capacity, etc., to the guarantee bank during the guarantee issuance assessment process. (Article 31 Circular 61/2024/TT-NHNN).

This includes information on:

• Legal documents: Investment license, construction permit, land use rights, detailed planning…
• Project details: Scale, location, design, progress, pricing, payment methods…
• Financial capacity: Financial statements, funding sources, project completion capability…

Providing honest information is the basis for the bank to evaluate risks and decide on guarantee issuance. False information may lead to the bank refusing to issue guarantees or incurring significant guarantee obligations, causing harm to both the bank and homebuyers.

Adhering to Commitments to Progress

The investor must strictly comply with the project implementation progress committed to the guarantee bank and homebuyers in the purchase contract and guarantee contract. (Article 11 Real Estate Business Law 2023).

Delays may result in:

• Homebuyers requesting the bank to fulfill guarantee obligations.
• The bank compensates homebuyers for damages.
• The investor’s reputation is negatively affected.

Periodic Reporting to the Bank

The investor must periodically report to the guarantee bank on project progress, financial status, arising issues, etc., as per the guarantee contract agreement. (Articles 13 Circular 61/2024/TT-NHNN).
Periodic reporting helps the bank:

• Update project information.
• Supervise progress and risks.
• Promptly address arising issues.

The investor must also fulfill other obligations as prescribed by law, including:

• Handing over housing to homebuyers on time and in quality accordance with the purchase contract.
• Reimbursing the guarantee bank for payments made on behalf of homebuyers in case of contract violations.
• Taking legal responsibility for any violations during project implementation.

Homebuyers

Verifying the Validity of the Guarantee Letter

Before signing the purchase contract, homebuyers should thoroughly verify the validity of the guarantee letter provided by the investor, including:

• Information: Ensure details about the guarantor, the guaranteed party (investor), the beneficiary (homebuyer), the guarantee amount, and the validity period are accurate and consistent with the purchase contract. (Article 52 Circular 61/2024/TT-NHNN).
• Format: A commercial bank or foreign bank branch qualified to conduct guarantee operations must issue the guarantee letter.
• Signature: Verify the signature of the authorized representative of the guarantee bank on the guarantee letter.

Homebuyers can contact the guarantee bank to verify the authenticity of the guarantee letter. (Article 32 Circular 61/2024/TT-NHNN).

Carefully Keeping Records

Homebuyers must carefully keep all documents related to the housing purchase and guarantee transactions, including:

• Purchase contracts.
• Guarantee letters.
• Payment receipts.
• Correspondence between parties.

Keeping complete and careful records is crucial evidence to protect homebuyers’ rights in case of disputes.

Promptly Reporting Violations

When detecting signs of investor contract violations, such as delays, design changes, or substandard construction quality, homebuyers must immediately report to the guarantee bank and relevant authorities. (Article 32 Circular 61/2024/TT-NHNN).

Timely reporting helps:

• The guarantee bank monitors and requires the investor to address violations.
• Prevent further harm to homebuyers.
• Authorities promptly handle the investor’s violations.

Homebuyers should also:

• Thoroughly understand legal provisions on guarantees for future housing.
• Choose reputable investors and projects with bank guarantees.
• Fulfill their commitments in the purchase contract.

4. Homebuyer Rights

Homebuyers are comprehensively protected through the following rights:

Entitled to a 100% Refund of Paid Amounts if the Investor Fails to Fulfill Commitments (Article 13, 26 Circular 61/2024/TT-NHNN, Article 26 Real Estate Business Law 2023)

• When the investor fails to deliver housing on time or does not fulfill/partially fulfill financial obligations under the signed purchase contract, the homebuyer has the right to request the guarantee bank to perform its guarantee obligation. 
• “Investor’s financial obligations” include the amount the investor received in advance from the buyer (after the buyer received the guarantee letter) and other amounts (if any) under the contract. 
• The guarantee bank will pay, on behalf of the investor, the full amount that the investor is obligated to refund to the homebuyer. 

Guaranteed Construction Progress and Housing Handover (Article 13, 19 Circular 61/2024/TT-NHNN)

• The guarantee letter issued by the bank serves as a commitment to the homebuyer that the investor will deliver housing on the schedule agreed upon in the purchase contract. 
• The guarantee bank is responsible for supervising the project’s progress and requiring the investor to address violations if any.
• This minimizes risks for homebuyers in cases of project delays or the investor’s inability to deliver housing.

Right to Request Guarantee Execution When Conditions Are Met (Article 13, 22 Circular 61/2024/TT-NHNN)

• Homebuyers can request the bank to fulfill the guarantee obligation if the investor breaches the purchase contract and meets the conditions outlined in the guarantee letter.
• Conditions for executing the guarantee obligation include providing the required documentation as stipulated in the guarantee letter. 

5. Advice for Homebuyers

To ensure their rights, homebuyers should:

• Thoroughly verify project and investor information: Ensure the project has proper legal permits, and the investor is reputable and capable of implementing the project.
• Carefully review the terms of the guarantee letter: Clearly understand rights, obligations, and the validity period of the guarantee to avoid unnecessary risks.
• Maintain complete transaction records: Keep contracts, guarantee letters, and transaction documents securely for use when necessary, especially in case of disputes.
• Consult legal experts when needed: Seek professional assistance to better understand legal provisions and protect personal rights.

Understanding and adhering to new regulations on guarantees for future housing will help parties engage in transactions more safely and effectively. Homebuyers should pay close attention to their rights and not hesitate to seek professional legal advice from Harley Miller Law Firm when necessary.

Harley Miller Law Firm “HMLF”

Address: 14th floor, HM Town Building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.

Phone: +84 937215585

Website: hmlf.vn

Email: [email protected]