AMENDING AND SUPPLEMENTING SOME ARTICLES OF DECREES GUIDING THE IMPLEMENTATION OF THE LAW ON LAND 2013

On April 03, 2023, the Vietnamese Government issued Decree No. 10/2023/ND-CP (“Decree 10”), amending and supplementing some articles of decrees guiding the implementation of the Law on Land. Decree10, taking effect from May 20, 2023,will address certain difficulties and obstacles for localities, people, and businesses.

Below are some noteworthy amendments and supplements under Decree 10.

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1.     Ownership certificate for tourism real estate

According to Articles1.4 and 1.11 of Decree 10 supplementing and amending to Articles 32 and 72 of Decree No. 43/2014/NĐ-CP dated May 15, 2014 (“Decree 43”), the constructions used for tourism under the laws on tourists, and built on commercial land area, if satisfying all the conditions of the land laws, construction laws, and the real estate business laws, shall be granted with an ownership certificate. This regulation set out a solid legal basis for certifying the ownership of tourism real estate such as condotels (in Vietnamese, ‘căn hộ du lịch’), tourist villas (in Vietnamese, ‘biệt thự du lịch’)[1]that have been struggled by the State agencies for years. Nonetheless, in practice, the issuance of ownership certificates for this type of real property may require further guidance from the competent authorities to clarify some technical issues within the regulations of Decree 43.

Unlike owning an apartment or a condo, which has an unlimited term of ownership, the ownership term of tourism real estate is subject to the land use term of the land area where the properties are located. Generally, the maximum granted land use term for an investment project in Vietnam is 50 years.[2]Thus, the ownership term of the tourism real estate property will be equivalent to the remaining land use term of the investment project, which may be less than 50 years.

Concerning other types of commercial real estate properties that have been popular in the commercial real estate market in Vietnam, such as officetels (in Vietnamese, ‘văn phòng lưu trú’),shop houses (in Vietnamese, ‘căn hộ cửahàng’), serviced apartment (in Vietnamese, ‘căn hộ dịch vụ’), the Decree 10 is still silent on certifying or granting ownership certificates to these type of properties.

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2.     Force majeure effect concerning the 24-month extended term for land recovery

Under Article64.1.(i) of the Law on Land, the project owner may have an additional 24 months extended term for land recovery in the following cases:

(i)     the land that is allocated or leased for implementing investment projects is not used within 12consecutive months; and

(ii)     the land use schedule is 24 months behind the schedule stated in the project documents, such as the investment registration certificate since the actual handover of the land.

In addition, upon the termination of investment projects following investment laws, the investor is permitted to use the land for the next 24 months from the termination date of the investment project.[3]

Previously, it was questionable whether the effects of a force majeure event during the 24 months were excluded. Article 1.1 of Decree 10, supplementing Article 15 of Decree 43,sheds light on this ambiguity. Accordingly, it provides that the affected period in case of force majeure should not be counted into the 24-monthextended term in the abovementioned circumstances. The evaluation of the effects period of the force majeure is rested on the Chairman of the provincial-level People’s Committee or the Minister of Natural Resources and Environment (applicable in case of an investment project located in two or more provinces or cities) based on applicable regulation of the laws on force majeure and the implementation of the investment project.

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3.    Condition sapplicable to the conversion of paddy land and forest land to another type of land for investment projects

Decree 43 provides only the procedure for converting the land use purpose from paddy land, land for protection forests, and special-use forests to other land types for implementing investment projects.[4]There have been no regulations on requirements and criteria applicable to the investment project and the to-be-converted land, causing struggles and difficulties for investors and competent State agencies in practice.

To address such uncertainty, Article 1.9 of Decree 10 provides the requirement and criteria as follows:

(i)    Having an investment project of which the in-principle approval is granted or having been granted with an investment registration certificate.

(ii)    Being compliant with the land use master plan at the district level or [the investment project]being included in the approved annual land use master plan at the district level.

(iii)    Having a plan on the planting of replacement forests, or a document on fulfillment of the obligation to pay for the planting of replacement forests for converting land for protection forests and land for special-use forests, or having the plan to use the topsoil and a document on fulfillment of the obligation to pay for protection and development of croplands for converting paddy land.

(iv)   Conducting preliminary environmental impact assessment and environmental impact assessment(if applicable).

Accordingly, the above requirement and criteria must be fulfilled before converting the land use purpose from rice cultivation, protection, and special-use forests to other purposes for implementing investment projects.

Notably, the new regulations also clarify that the authorized State official shall only be responsible for the criteria (ii) and (iii) above and shall not be held accountable for other related prior approvals by other competent State authorities.

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4.     Setting out critical steps for land recovery upon the termination of an investment project

There has been no regulation concerning land recovery in case an investment project is terminated under the investment laws. Article 1.8 of Decree 10, supplementing Article 65ato Decree 43, sets out key steps for land recovery in such case. Accordingly, except for the case of failure to put the land into use or delay in placing the land into use according to the Law on Land, upon the termination of the investment project, the investment registration agency or investor shall send the termination document to the Department of Natural Resources and Environment of the locality where the land is located. The Department of Natural Resources and Environment shall inspect and recover land according to the laws. The land user will have 24 months from the termination date of the investment project to transfer the land use right and liquidate the properties attached there on. After the expiration of such 24 months, the State shall recover the land without any compensation.

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5.  Applying technology information in implementing land-related administrative procedures

Article 1.7 of Decree10 now allows both the State agencies and the applicants to implement land-related administrative procedures via online methods. Although this is based on specific conditions for land information technology technical infrastructure and land database under the management of the licensing agencies of each province and city, it is a ground for improving the efficiency of land-related administrative procedures.

In addition to the above improvement, Decree 10 has other amendments and supplements that need to be considered, such as amendments to land auctions, time to issue the specific land price, etc.

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‍[1] Art. 21 of Decree No. 168/2017/NĐ-CP dated December 31, 2017

[2] Art. 126.3 of the Law on Land

[3] Article 15b of Decree No. 01/2017/NĐ-CP dated January 06, 2017 amended by Article 1.2 of Decree10

[4] Article 68 of Decree 43

[5] Article 15b of Decree No. 01/2017/NĐ-CP dated January 06, 2017 amended by Article 1.2 of Decree10

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Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For legal advice, please contact our Partners.

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