When a backer is an expropriator: pitfalls in the consumer protection mechanism for off-plan building sales in Vietnamese law
| DOI | https://doi.org/10.1108/JPPEL-01-2022-0005 |
| Published date | 10 May 2022 |
| Date | 10 May 2022 |
| Pages | 11-24 |
| Subject Matter | Property management & built environment,Building & construction,Building & construction law,Real estate & property,Property law |
| Author | Hai Thanh Doan,Diep Thi Phuong Doan,Sang Minh Luu |
When a backer is an expropriator:
pitfalls in the consumer protection
mechanism for off-plan building
sales in Vietnamese law
Hai Thanh Doan
Faculty of Law, University of Economics and Law, Ho Chi Minh City, Vietnam;
Vietnam National University, Ho Chi Minh City, Vietnam and Bioethics Centre,
University of Otago, Dunedin, New Zealand, and
Diep Thi Phuong Doan and Sang Minh Luu
Faculty of Law, University of Economics and Law, Ho Chi Minh City, Vietnam and
Vietnam National University HCMC, Ho Chi Minh City, Vietnam
Abstract
Purpose –To motivate investments in housing projects, thestate may allow private entities to mobilize
capital through sellingoff-plan buildings and use proceeds to complete the project. The state senses the risks
for consumers in these projects: frauds certainly occur. To safeguard consumers’interests, the Vietnamese
Governmentrequires developers to obtain a bank’s refund guarantee to sell off-plan. Thispaper aims to point
out how consumersare marginalized due to the mechanism (mechanisms)dedicated to protecting them.
Design/methodology/approach –The authors review the legal regulations in Vietnam, contracts in
transactions on which they have givenlegal consultation (the authors leave the information anonymous for
privacy issues),and real disputes exposed by newspapers re: off-plansales.
Findings –This paper argues that the measure fails for two reasons. First, there are many weaknesses
allowing banks to avoid this mechanism. Second,banks lend to developers, and as such, play the role of a
secured creditor. In these situations,there is a conflict of interest between the bank’s roles and between the
bank and consumers. Moreover, Vietnameselaw, by endowing banks the privilege of seizing and obtaining
possessionof collaterals, may put aside consumers’interests.
Originality/value –Bank’s refund guarantee’isa recent initiative of the Vietnamese Government, offered
to safeguard consumers’interestsin off-plan sales. Issues arising thereupon havenot yet been fully exposed,
especially, in conjunction with a broad view of the Vietnamese legal system. The analysis and critiques
offeredby this studymay have policy implications for other jurisdictionsas well.
Keywords Consumer protection, Off-plan houses, Mortgage, Guarantee, Realization, Real estate business
Paper type Research paper
Funding: This research is funded by Vietnam National University HoChiMinh City (VNU-HCM)
under grant number C2020-34-04.
Author contributions: It is agreed among authors that all authors are co-first authors and all rights and
responsibility are equally distributed. Doan Thanh Hai make the draft with supervision and suggestions
from Doan Thi Phuong Diep and Luu Minh Sang. All authors read and approved the final manuscript.
Conflict of interest: The authors declare no conflictofinterest.
Acknowledgments: The authors are indebted to valuable and encouraging comments of Dr Luke
Bennett on the first draft of this paper. The authors are sincerely thankful to two anonymous reviewers
for their time and effort dedicated to reviewing and commenting on this paper. They highly appreciate
Michael Poulsom and the editorial team for reviewing and editing this paper. All errors are ours. Thank
Mi Oanh –journalist and anh Trường –officer of the Ministry of Justice for helpfulm aterials.
Consumer
protection
mechanism
11
Received25 January 2022
Revised7 April 2022
Accepted7 April 2022
Journalof Property, Planning and
EnvironmentalLaw
Vol.14 No. 1, 2022
pp. 11-24
© Emerald Publishing Limited
2514-9407
DOI 10.1108/JPPEL-01-2022-0005
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