Dispute over deposit of townhouse project in Binh Thuan

I. Summary of the incident

Mr. TA, through an acquaintance who is a real estate broker, purchased a townhouse project under construction in a mega-urban development in Binh Thuan. During the transaction, Mr. TA signed a deposit agreement with Real Estate Joint Stock Company A, but this company was not the project’s developer; the developer was Company B Limited. Mr. TA transferred 6 billion VND to Real Estate Joint Stock Company A. According to project media, the project belonged to Real Estate Joint Stock Company A. However, during 2022-2023, the real estate market faced difficulties, with many reports suggesting that land in many project areas had not yet been reclassified for its intended use. Worried about the bank interest, Mr. TA requested the termination of the deposit agreement and demanded a partial refund from Real Estate Joint Stock Company A. However, Company A refused and demanded penalties for breach of contract. Having suffered double losses, Mr. TA sought legal advice from Inter Justice to protect his rights in court.

Conflicts of interest arise when a project runs into trouble.

 

II. Legal Regulations

• Regarding the legality of the project, if the land use purpose has not been changed, then it is not yet eligible to construct housing units under construction.
• Investors who want to raise capital must meet the basic infrastructure requirements before they can do so.
• Company A is not the investor, therefore signing the deposit agreement for townhouses in the project of Company B Limited Liability Company is not in accordance with regulations.

III. Lawyer’s proposed solution to the case

• Mr. TA filed a lawsuit against Company A in the People’s Court of District X to demand the return of the deposit.
• The deposit agreement signed between Mr. TA and Company A is invalid, as this company has no right to receive the deposit.
• Since the contract is invalid, Company A must refund Mr. TA’s money. Company A’s claim for a penalty for breach of contract against Mr. TA is unfounded.

IV. Outcome of the case resolution

The People’s Court of District X agreed with the solution proposed by Inter Justice Lawyers, based on the provisions of the Civil Code, the Law on Real Estate Business, the Law on Housing, and the Law on Land, accepting all of Mr. TA’s claims and ordering Company A to reimburse Mr. TA the sum of 6 billion VND.