At the beginning of April 2023, businesses and individuals, especially those participating in the real estate market, could be considered receiving "good" news when the Government officially promulgates Decree 10/2023/ND-CP amending a number of decrees guiding the land law ("Decree 10").
One of the contents that attracts the interest of investors and buyers of condotels is the policy on issuance of the Certificate of ownership for land-attached construction work (the "Certificate"). In this account, whether Decree 10 met these needs? In this legal update, ATA Legal Service would like to analyze the aforementioned matters as well as other issues of Decree 10 as follows:
1. Whether individual buyers of condotels could be issued individual certificates for each apartment?
Decree 10 has clearly stipulated that types of tourism real estate such as hotel, condotel, officetels, villas and other works serving accommodation and tourism on commercial land, shall be issued a certificate of ownership for land-attached construction work according to the commercial land use purpose from May 20, 2023, if they meet the conditions. At the same time, Decree 10 also stipulates that the responsibility for requesting a competent agency to issue a certificate will belong to the project investor.
However, it should be noted that under Decree 10, regarding the application for a condotel ownership certificate, the investor is only required to submit a list of properties (works, work items, area of work items) including information about the name of the property, land area, construction area for common use and private use of each property, without having to submit the "list of apartments” (including information on apartment number, land area, construction area and common and separate use area of each apartment) as in the case of houses. Accordingly, given the provisions of Decree 10, the person to be granted the Certificate shall be the investor, for "all condotels of the project", instead of "each condotel in the project". Moreover, the permission to issue Certificate for each individual apartment in the condotel project is also related to many other specialized regulations. Therefore, currently, according to the regulations of Decree 10 and the perspective of ATA Legal Service, individual buyers of condotels have not yet been able for the Certificate.
2. Determination of the "period" of force majeure events to subtract from the extension time limit for putting land into use
According to regulations: " Land that is allocated or leased for implementing investment projects is not used within 12 consecutive months, or the land use schedule is 24 months late compared with the schedule stated in the project documents since the hand-over in the field. In case of not putting the land into use, the land use term may be extended 24 months and the investors shall pay a sum of money equivalent to the total land use levy or land rental for the delayed period. If the investors still fail to put the land into use when the extended time is over, the State shall recover the land without compensation for land and land-attached assets, except due to force majeure”.
Pursuant to Decree 10, the determination of the time period for force majeure events to be deducted from the extension time limit for putting land into use according to the above regulations will be carried out by competent persons, specifically:
- For projects located in a province or centrally-affiliated city: Presidents of provincial People’s Committees shall consult regulations of law on force majeure events and actual implementation of investment projects to determine the period during which the province/city is affected by a force majeure event.
- For projects located in at least two provinces or centrally-affiliated cities: after considering the proposals submitted by relevant provincial People's Committees, the Minister of Natural Resources and Environment shall issue the decision; where necessary, an opinion survey involving concerned Ministries and central authorities may be conducted.
3. 20% of the total land parcel value must be deposited before the auction of land use rights
Under current regulations, individuals and organizations must meet the statutory conditions to participate in the auction of land use rights. Decree 10 continues to add a number of conditions in this regard, in which, particularly for organizations participating in auctions, Decree 10 introduces many notable new requirements related to deposit, cross-ownership, etc., specifically:
- Being categorized as one of the subjects of the State's assignment and lease of land as defined in Article 55 and 56 in the Law on Land. If a parcel of land, or a project sited at one or more parcels of land under cross ownership of two (02) or more companies as provided in laws on enterprises, is put up for auction, only one company is allowed to participate in that auction;
- Fulfilling a deposit equal to 20% of total value calculated at the starting price of the parcel or the complex of parcels at auction before coming up for the auction of land use right;
- Not being prohibited from attending the auction as prescribed by law;
- Satisfying the conditions prescribed by the laws on housing and the laws on real estate business in case of auction of land use rights for the implementation of housing projects or other real estate business projects.
These conditions more strictly bind the obligations of the auction participants, specifically the organization participants, in order to avoid the occurrence of deposit abandon.
4. Conditions for land to be put into auction
Under the 2013 Land Law, land subject to auction must fully meet the following conditions:
- The annual district-level land use plan approved by a competent state agency is available;
- The land has been cleared or is land with attached assets owned by the State;
- The plan for holding the auction of land use rights approved by a competent state agency is available.
In addition to the above 03 conditions, Decree 10 has added 03 additional conditions, including:
- The starting price at which the right to use such land is auctioned is decided by a competent state authority;
- The process of auctioning of land use right is applicable to a single parcel;
- The cadastral map in 1:500 scale of the parcel used for execution of a housing construction project has been available with approval from a competent authority.
Accordingly, the land must fully meet the aforementioned conditions to be eligible for the auction of land use rights.
5. The allocation or lease of land by the State for the investor who was approved as an investor due to only this investor participating in the auction or registering for bidding
Accordingly, in case the investor who was approved as an investor due to the unsuccessful auction or only one participates in the auction or only one registers to participate in the bidding; this investor shall carry out the procedures for requesting the State to allocate or lease land corresponding to the procedures for land allocation or land lease not through the auction of land use right, not through bidding for selection of investor. The order and procedures for land allocation or land lease in this case shall comply with specific instruction on Clause 3 Article 68 Decree 43/2014/ND-CP.
However, it should be noted that an enterprise is approved for investment policy and approved to become an investor (due to the unsuccessful auction or only one participates in the auction or only one registers to participate in the bidding), does not mean that, such investor will automatically be allocated or leased land by the State for the implementation of investment projects.
6. Competence to adjust land decisions that were issued before 01 July 2014
According to Decree 43/2014/ND-CP, the competent authority issuing land decisions, will also get the authority to adjust decisions on land allocation and land lease. However, this content is not clear in case of differences in the delimitation of competence to issue decisions from time to time.
Subsequently, in Clause 62 Article 2 of Decree 01/2017/ND-CP, from 03 March 2017, the above content has been narrowed to apply only to the issue of adjustment of land decisions issued by the Prime Minister before 01 July 2004. This provision creates the inadequacy of not covering all the actual cases.
Up to now, Decree 10 has redefined this issue in the spirit of Decree 43/2014/ND-CP, but more clearly. Accordingly, any competent authority to issue land decisions in accordance with the 2013 Land Law shall have the authority to adjust land decisions issued before July 1, 2014, regardless of which authority has previously issued this decision. Accordingly, if decisions on land allocation, land lease, and permission to change land use purposes were approved by the Prime Minister before 01 July 2014 under the old regulations; but up to now, according to the provisions of the 2013 Land Law, the competent authority to issue this decision has been assigned to the provincial-level People's Committee, the provincial-level People's Committee has the right to adjust the above decision of the Prime Minister.
7. The time limit for competent authorities to determine and promulgate specific land prices, as a basis for calculating land rent and land use levy
According to regulations, the determination of specific land prices is carried out by competent authority according to direct comparison methods, deduction methods, income methods, and surplus methods, and approved by provincial-level People's Committees. However, Decree 44/2014/ND-CP does not stipulate a time limit for competent authority to determine and approve specific land prices. In practice, this has affected the exercise of rights of organizations and individuals when land is allocated or leased by the State, indirectly affecting the state budget revenue.
Therefore, Decree 10 has adjusted in the direction of limiting the time for state agencies to determine and approve specific land prices within 90 days. The time limit of 90 days is determined from the date on which a competent authority issues a decision on land allocation, land lease, change of land use purpose, allowing the transfer from the form of land lease paying annual land rent to land lease paying land rent once for the whole lease period, extension of land use, adjustment of land use term.
8. Time for organizations and individuals winning land use right auctions to complete the payment of land use levies
According to the Decree 10, the maximum time for organizations and individuals to complete the payment of winning money in the land use right auction is 120 days from the date of issuance of the decision recognizing the winning auction results to fulfill the obligation to pay money. In case the auction winner fails to pay money or does not pay enough money to win the land use right auction within this 120 days, the competent People's Committee shall cancel the decision recognizing the winning result of the land use right auction and may conduct the auction again.
Within 05 working days from the date on which the organization or individual has fulfilled its financial obligations, the natural resources and environment authority shall submit to the competent authority for issuance of the Certificate and sign the land lease contract in case of land lease; organize the handover of land in the field and award certificates; direct the updating and correction of land databases and cadastral records.
Decree 10 takes effect from May 20, 2023.
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