When a backer is an expropriator: pitfalls in the consumer protection mechanism for off-plan building sales in Vietnamese law
Journal of Property, Planning and Environmental Law
ISSN: 2514-9407
Article publication date: 10 May 2022
Issue publication date: 7 June 2022
Abstract
Purpose
To motivate investments in housing projects, the state may allow private entities to mobilize capital through selling off-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 Government requires developers to obtain a bank's refund guarantee to sell off-plan. This paper aims to point out how consumers are 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 given legal consultation (the authors leave the information anonymous for privacy issues), and real disputes exposed by newspapers re: off-plan sales.
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, Vietnamese law, by endowing banks the privilege of seizing and obtaining possession of collaterals, may put aside consumers' interests.
Originality/value
Bank's refund guarantee’ is a recent initiative of the Vietnamese Government, offered to safeguard consumers’ interests in off-plan sales. Issues arising thereupon have not yet been fully exposed, especially, in conjunction with a broad view of the Vietnamese legal system. The analysis and critiques offered by this study may have policy implications for other jurisdictions as well.
Keywords
Acknowledgements
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 conflict of interest.
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 helpful materials.
Citation
Thanh Doan, H., Thi Phuong Doan, D. and Minh Luu , S. (2022), "When a backer is an expropriator: pitfalls in the consumer protection mechanism for off-plan building sales in Vietnamese law", Journal of Property, Planning and Environmental Law, Vol. 14 No. 1, pp. 11-24. https://doi.org/10.1108/JPPEL-01-2022-0005
Publisher
:Emerald Publishing Limited
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