Ministry proposes tough measures against firms canceling land contracts

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Following the recent controversial auction of land in the Thu Thiem New Urban Area in HCMC’s Thu Duc City, the Ministry of Natural Resources and Environment has proposed sanctions against firms winning land auctions but later canceling the deals.

Ministry proposes tough measures against firms canceling land contracts
Land lots in the Thu Thiem New Urban Area. – Photo: VNA

The ministry is consulting with the relevant agencies and organizations over a draft resolution amending and supplementing some decrees guiding the implementation of the Land Law.

In particular, those participating in land auctions must be eligible for the land lease in line with the law, have capital that can fund at least 20% of the investment in projects covering less than 20 hectares of land and 15% of the investment in projects covering 20 hectares and above. They must also have experience in executing projects on land and must not violate land regulations.

Enterprises participating in auctions must make deposits of at least 20% of the starting prices of assets put up for auction.

The deposits must be sent to the separate bank accounts of auctioneers. If the deposits are less than VND5 million each, enterprises participating in the auctions can directly submit the deposits to the auctioneers.

They must have assets such as mortgages to ensure their financial capacity. The mortgages’ value must be higher than the starting price of the land lot put up for auction.

If auction winners cancel contracts to buy with no legitimate reason, they would lose their deposits and must pay half of the land use fees and auction fees.

After completing the payment, enterprises can take back their assets. If not, the fees will be deducted from the asset value.

They will also be banned from participating in land auctions for five years.

Enterprises can refuse to participate in the auctions and receive their deposits if the starting prices, locations and area of land lots are different from those publicized earlier. If the deposits generate interest, enterprises participating in the auctions will receive interest.

Those that do not win the auctions or win the auctions and submit sufficient land use fees can take back their mortgages.

If enterprises and individuals win land auctions but fail to submit land use fees, the mortgages will be returned to them and fines deducted.

Land auction winners who fail to put the land lots into use within a continuous period of 12 months or use the land lots 24 months later than planned, the State will take back the land lots.

Source: SGT

The deadline for the first round of Thu Thiem land use fee payment has expired, yet none of the four winners of the land auction on December 10, 2021 perform its duty.

Experts have raised concerns about the involvement of real estate companies in commercial banks, warning it may pose risks to the financial system and the whole economy.

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