How is a deposit for purchasing an off-plan house legally compliant?

In recent times, many homebuyers have reported being required to sign various “agreement documents,” “reservation forms,” “capital lending agreements,” or to place deposits through real estate brokers while the projects were not yet legally eligible for sale.

In response to this situation, the Ministry of Construction has issued an official opinion, specifically citing the provisions of the 2023 Law on Real Estate Business, to help the public verify compliance and avoid legal risks.

Properly understanding the regulations on deposits for purchasing off-plan housing is a key factor in helping buyers avoid financial loss, prevent contracts from being declared invalid, and minimize prolonged disputes.

1. Prohibited acts in selling off-plan housing

According to Article 8 of the 2023 Law on Real Estate Business, the following acts are strictly prohibited:

Conducting real estate business without meeting statutory conditions

Intentionally providing false or non-disclosed information about a project

Fraud, deception, or misrepresentation in real estate business activities

Collecting money from customers in violation of legal regulations, especially for off-plan housing

Using money collected from buyers for improper purposes, not serving project development

Even if these acts are disguised as “civil agreements,” “reservation arrangements,” or “capital lending contracts,” they may still be deemed unlawful.

2. When is an off-plan housing project allowed to receive deposits?

Under the 2023 Law on Real Estate Business, an investor may only receive deposits after the project has fully satisfied the conditions for being put into business.

Basic conditions include:

A land allocation decision or a land use right certificate

No disputes regarding land use rights or ownership of the construction works

Full completion of financial obligations related to land use

Compliance with all conditions stipulated in Articles 14, 23, 24, 31, and 35 of the Law

If a project does not meet these conditions, any form of fund collection from customers carries significant legal risks.

3. Key regulation: Deposits capped at 5% of the sale price

One of the most important new points of the 2023 Law on Real Estate Business is the tightening of deposit regulations.

Specifically:

Investors may collect a deposit of no more than 5% of the selling price, pursuant to Clause 5, Article 23 of the Law

Deposits may only be collected after the project is legally eligible for business

The deposit agreement must clearly state the selling price

Deposits may not be collected under the guise of capital lending, reservation fees, or consultancy fees

Any agreement requiring buyers to deposit 20%, 30%, or even 90–100% of the property value is contrary to both the spirit and provisions of the law.

4. Investors are not allowed to authorize brokers to sign deposit contracts

According to Clause 4, Article 17 of the 2023 Law on Real Estate Business:

Investors may not authorize other organizations or individuals

Real estate brokers are not allowed to sign deposit, sale, or lease-purchase contracts

Brokers are not permitted to collect money on behalf of investors

The lawful role of real estate brokers is limited to:

Searching for and introducing customers

Providing information

Supporting negotiations and contract execution

Brokers have no authority to collect deposits or bind buyers to purchase obligations.

5. Are “reservation agreements” disguised contracts?

In practice, many so-called agreements contain the following characteristics:

Requiring customers to make payments according to a schedule reaching up to 100% of the product value

Imposing obligations to sign a sale contract, with penalties or forfeiture of deposits for refusal

Transferring money to “designated accounts” with unclear legal nature

Allowing brokers to retain part of the payment under the label of consultancy fees

In substance, such documents may be considered:

Disguised deposit contracts

Illegal capital mobilization

Transactions intended to circumvent the law when the project is not yet eligible for sale

6. Transactions may be declared invalid under the Civil Code

Pursuant to Articles 123 and 124 of the 2015 Civil Code, a civil transaction shall be invalid if:

Its purpose or content violates prohibitions of the law

It is established to conceal another unlawful transaction

If an agreement is essentially used to collect money for purchasing housing when legal conditions are not met, the risk of it being declared invalid is very high. In such cases, recovering the money may be difficult and disputes may become prolonged.

7. What should homebuyers do to avoid legal risks?

Before signing any document, buyers should:

Carefully verify the legal status of the project

Ensure the deposit does not exceed 5% of the selling price

Avoid transferring money through brokers or unclear accounts

Refuse agreements with unreasonable deposit forfeiture clauses

Consult a real estate lawyer before proceeding with any transaction

Being cautious from the outset helps buyers avoid financial loss and long-lasting legal disputes.