Vietnam Real Estate Deals: Discrepancies Between Property Status and Registration, Contract Validity Concerns

A potential buyer in Ho Chi Minh City is seeking to invalidate a deposit contract and recover their deposit due to discrepancies between the property's actual condition and its registered details. A lawyer has provided legal insights into the matter. The buyer had paid a deposit of VND 100 million (approximately $4,000 USD) for a property valued at VND 4 billion ($160,000 USD). After signing the deposit agreement, the buyer discovered that a portion of the second floor had been extended to include a balcony, which was not reflected in the property's official registration (Sổ đỏ). The seller had previously assured the buyer that the property was eligible for title transfer without any issues. According to Official Letter No. 11663/STNMT-VPĐK dated November 6, 2024, from the Ho Chi Minh City Department of Natural Resources and Environment, land registration offices will process title transfer applications based on the asset information recorded in the issued Certificate of Land Use Rights and Ownership of Property. Unless the owner requests to register changes to the property, the discrepancy between the actual condition and the certificate (e.g., additions or renovations) does not serve as a basis for refusing the title transfer procedure. Therefore, if legal conditions are met, the sale can proceed. The lawyer also noted that the seller provided both the certificate and allowed inspection of the property's condition before the deposit contract was signed, indicating no intent to conceal information or mislead the buyer. In real estate transactions, buyers also bear the responsibility of verifying the property's condition against its certificate before making a deposit. Based on the buyer's account, there are insufficient grounds to claim the seller acted fraudulently or to request the court to declare the deposit contract invalid solely due to the discrepancy between the property's current state and its certificate. If the buyer no longer wishes to proceed with the purchase, the most suitable solution is to negotiate with the seller for a mutual termination of the transaction and a return of the deposit. However, if the seller disagrees, under Article 328, Clause 2 of the Civil Code 2015, the buyer's refusal to proceed with the contract would result in the deposit being forfeited to the seller. This case highlights the potential risks for buyers in Vietnam's real estate market when actual property conditions do not align with official registration data. It underscores the importance of thorough due diligence by buyers, especially in urban areas where extensions and modifications are common.