Transfer of All or Part of a Real Estate Project under the 2023 Law on Real Estate Business: Conditions, Competent Authority and Procedures

In a market where many real estate projects have stalled for lack of capital or because the developer has run out of capacity, transferring all or part of a project to a more capable investor has become a common way out. It is also a route that many FDI investors choose in order to enter the Vietnamese market faster than applying for a new project from scratch. However, the transfer of a real estate project is not a simple sale of assets; it is the transfer of an entire bundle of legal rights and obligations attached to land, planning and home buyers, so if the conditions or procedures are not properly observed, the transaction may be rendered invalid and entail very substantial losses.

This article analyses the legal framework for the transfer of all or part of a real estate project under the 2023 Law on Real Estate Business (Law No. 29/2023/QH15, effective from 1 August 2024), focusing on the transfer conditions, the competent approving authority and the procedural sequence that both the transferor and the transferee need to master.

Mục 01The legal nature of a real estate project transfer

Unlike the sale of an individual real estate product, a project transfer means that the transferee inherits the status of developer with respect to all or part of the project, together with the rights and obligations already established. This includes the obligation to continue implementing the project in accordance with its approved contents, to comply with planning and schedule requirements, and to honour the commitments made to customers under previously signed contracts. Precisely because the transferee assumes obligations rather than merely receiving assets, the law imposes strict conditions to ensure that the project does not fall into the hands of a weaker party.

An overarching principle to bear in mind is that the transfer must not alter the objectives and contents of the project and must safeguard the interests of customers and related parties. In other words, home buyers in the project must not be placed at a disadvantage simply because the developer changes hands; this is a point that the State authorities scrutinise closely when considering whether to permit a transfer.

Mục 02Transfer conditions under Article 40 of the 2023 Law on Real Estate Business

Article 40 of the 2023 Law on Real Estate Business sets out the conditions under which a project may be transferred. On the project side, the project must have been approved by the competent authority, must have an approved detailed plan, and the project or part being transferred must have fulfilled the relevant obligations and hold lawful land use rights. In particular, the project or the part being transferred must not be subject to any dispute over land use rights, must not be distrained to secure judgment enforcement, and must not fall within the cases of suspension or revocation.

On the parties’ side, the transferor must hold the land use rights and must have fulfilled the land-related financial obligations in respect of the project or the part being transferred, while the transferee must be a real estate business enterprise that satisfies the capacity requirements and has sufficient financial capability to continue implementation. The requirement that the transferee be a duly qualified real estate enterprise is the crux: the law does not allow an individual, or an enterprise that fails to meet the conditions, to take over a project only to let it stall once again.

In practice, the most common sticking point is the land-related financial obligations. Many projects remain in limbo precisely because the former developer has not fulfilled these obligations, leaving the transfer transaction suspended until they are settled. From a lawyer’s perspective, thorough legal due diligence on the project’s financial obligations, planning status and disputes before signing is an indispensable step for the transferee.

Mục 03Competent authority and procedural sequence

The transfer of a real estate project is not a transaction that the parties can carry out and complete by themselves; it requires the approval of the competent State authority. Article 41 of the 2023 Law on Real Estate Business ties the authority to permit a transfer to the level that decided the investment policy or approved the project, whereby the corresponding authority at the provincial level or above will consider and decide whether to permit the transfer of all or part of the project. Linking the approving authority to the level that originally approved the project ensures that the body most familiar with the project is the one assessing the suitability of the change of ownership.

As to the sequence, Article 42 prescribes the steps to be taken from the transferor’s submission of the application dossier, through the competent authority’s review and issuance of the permission decision, to the parties’ execution of the transfer contract and completion of the handover formalities. Once the permission decision has been issued and the contract signed, the transferee formally inherits the developer’s rights and obligations in respect of the transferred project or part thereof, and must complete the procedures to be recognised as the new developer. Although this sequence involves many steps, it is precisely the protective mechanism that gives the transaction firm legal validity, rather than leaving it as a fragile civil arrangement prone to collapse.

Mục 04Common risks and practical advice

The greatest risk arises when the parties, eager to close the deal, resort to circumvention structures such as transferring shares in the project company instead of transferring the project through the proper procedure, or signing deposit agreements or cooperation contracts involving large sums before the project satisfies the conditions. These approaches carry the risk that the transaction will be invalidated, that monies already paid will be difficult to recover, and that the transferee may lose control of the project when disputes arise. A share transfer, while lawful from a corporate perspective, does not substitute for the conditions and responsibilities that real estate business law imposes on the project itself.

The practical advice is for the transferee to structure the transaction so that payment tracks the fulfilment of the legal conditions: major instalments should be disbursed only once the competent authority has permitted the transfer and the land-related financial obligations have been settled. The contract should also contain representations and undertakings from the transferor as to the legal status of the project, with clear sanctions if the information provided proves untrue. Businesses may refer to the real estate lawyer in Vietnam services of HTIC Law Firm for support throughout the entire process.

Mục 05Frequently asked questions

Can part of a project be transferred, or must the whole project be transferred? The law permits the transfer of either all or part of a project. However, the part being transferred must be legally and technically severable, must fully satisfy the conditions of Article 40, and the partial transfer must not adversely affect the remaining part of the project or the interests of customers.

What happens to customers who have signed home purchase contracts when the project changes hands? The transferee inherits the former developer’s obligations towards customers, including the obligations under signed contracts. Customers’ interests must be safeguarded, and this is one of the conditions examined by the competent authority when permitting the transfer.

May foreign investors receive the transfer of a project? Foreign investors may receive the transfer of a real estate project if they satisfy the condition of being a real estate business enterprise with sufficient capacity and comply with the investment and land regulations applicable to foreign-invested economic organisations. Structuring the transaction must take into account both investment law and land law, so specialised legal advice is essential.

Mục 06Legal support from HTIC Law Firm

HTIC Law Firm assists domestic enterprises and FDI investors with legal due diligence on projects, structuring and drafting transfer contracts, and carrying out the procedures to obtain approval for the transfer of all or part of a real estate project. Fixed fee quotation for each matter/project — Hotline +84 379 044 299.