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On April 03, the Vietnamese Government issued Decree No. 10/2023/ND-CP, amending and supplementing some articles of decrees guiding the implementation of the Law on Land. Decree 10 will address certain difficulties and obstacles for localities, people, and businesses.

On April 03, 2023, the Vietnamese Government issued Decree No. 10/2023/ND-CP (“Decree 10”), amending and supplementingsome articles of decrees guiding the implementation of the Law on Land. Decree10, taking effect from May 20, 2023,will address certain difficulties and obstacles for localities, people, andbusinesses.

Beloware some noteworthy amendments and supplements under Decree 10.

1.     Ownership certificate for tourism real estate

According to Articles1.4 and 1.11 of Decree 10 supplementing and amending to Articles 32 and 72 ofDecree No. 43/2014/NĐ-CP dated May 15, 2014 (“Decree 43”), the constructions used fortourism under the laws on tourists, and built on commercial land area, ifsatisfying all the conditions of the land laws, construction laws, and the realestate business laws, shall be granted with an ownership certificate. Thisregulation set out a solid legal basis for certifying the ownership of tourismreal estate such as condotels (inVietnamese, ‘căn hộ du lịch’), tourist villas (in Vietnamese, ‘biệt thự du lịch’)[1]that have been struggled by the State agencies for years. Nonetheless, inpractice, the issuance of ownership certificates for this type of real propertymay require further guidance from the competent authorities to clarify sometechnical issues within the regulations of Decree 43.

Unlike owning anapartment or a condo, which has an unlimited term of ownership, the ownershipterm of tourism real estate is subject to the land use term of the land areawhere the properties are located. Generally, the maximum granted land use termfor an investment project in Vietnam is 50 years.[2]Thus, the ownership term of the tourism real estate property will be equivalentto the remaining land use term of the investment project, which may be lessthan 50 years.

Concerning othertypes of commercial real estate properties that have been popular in thecommercial real estate market in Vietnam, such as officetels (in Vietnamese, ‘văn phòng lưu trú’),shop houses (in Vietnamese, ‘căn hộ cửahàng’), serviced apartment (inVietnamese, ‘căn hộ dịch vụ’), the Decree 10 is still silent on certifyingor granting ownership certificates to these type of properties.

2.     Force majeure effect concerning the 24-month extended term for land recovery

Under Article64.1.(i) of the Law on Land, the project owner may have an additional 24 monthsextended term for land recovery in the following cases:

(i)     the land that isallocated or leased for implementing investment projects is not used within 12consecutive months; and

(ii)     the land use scheduleis 24 months behind the schedule stated in the project documents, such as theinvestment registration certificate since the actual handover of the land.

In addition, upon thetermination of investment projects following investment laws, the investor ispermitted to use the land for the next 24 months from the termination date ofthe investment project.[3]

Previously, it wasquestionable whether the effects of a force majeure event during the 24 monthswere excluded. Article 1.1 of Decree 10, supplementing Article 15 of Decree 43,sheds light on this ambiguity. Accordingly, it provides that the affectedperiod in case of force majeure should not be counted into the 24-monthextended term in the abovementioned circumstances. The evaluation of theeffects period of the force majeure is rested on the Chairman of theprovincial-level People’s Committee or the Minister of Natural Resources andEnvironment (applicable in case of aninvestment project located in two or more provinces or cities) based onapplicable regulation of the laws on force majeure and the implementation ofthe investment project.

3.    Conditions applicable to the conversion of paddy land and forest land to another type ofland for investment projects

Decree 43 providesonly the procedure for converting the land use purpose from paddy land, landfor protection forests, and special-use forests to other land types forimplementing investment projects.[4]There have been no regulations on requirements and criteria applicable to theinvestment project and the to-be-converted land, causing struggles anddifficulties for investors and competent State agencies in practice.

To address suchuncertainty, Article 1.9 of Decree 10 provides the requirement and criteria asfollows:

(i)    Having an investmentproject of which the in-principle approval is granted or having been grantedwith an investment registration certificate.

(ii)    Being compliant withthe land use master plan at the district level or [the investment project]being included in the approved annual land use master plan at the districtlevel.

(iii)    Having a plan on theplanting of replacement forests, or a document on fulfillment of the obligationto pay for the planting of replacement forests for converting land forprotection forests and land for special-use forests, or having the plan to usethe topsoil and a document on fulfillment of the obligation to pay forprotection and development of croplands for converting paddy land.

(iv)   Conductingpreliminary environmental impact assessment and environmental impact assessment(if applicable).

Accordingly, the aboverequirement and criteria must be fulfilled before converting the land usepurpose from rice cultivation, protection, and special-use forests to otherpurposes for implementing investment projects.

Notably, the newregulations also clarify that the authorized State official shall only beresponsible for the criteria (ii) and (iii) above and shall not be heldaccountable for other related prior approvals by other competent Stateauthorities.

4.     Setting out critical steps for land recovery upon the termination of an investmentproject

There has been noregulation concerning land recovery in case an investment project is terminatedunder the investment laws. Article 1.8 of Decree 10, supplementing Article 65ato Decree 43, sets out key steps for land recovery in such case. Accordingly,except for the case of failure to put the land into use or delay in placing theland into use according to the Law on Land, upon the termination of theinvestment project, the investment registration agency or investor shall send thetermination document to the Department of Natural Resources and Environment ofthe locality where the land is located. The Department of Natural Resources andEnvironment shall inspect and recover land according to the laws. The land userwill have 24 months from the termination date of the investment project totransfer the land use right and liquidate the properties attached thereon.After the expiration of such 24 months, the State shall recover the landwithout any compensation.

5.  Applying technology information in implementing land-related administrative procedures

Article 1.7 of Decree10 now allows both the State agencies and the applicants to implementland-related administrative procedures via online methods. Although this isbased on specific conditions for land information technology technicalinfrastructure and land database under the management of the licensing agenciesof each province and city, it is a ground for improving the efficiency ofland-related administrative procedures.

Inaddition to the above improvement, Decree 10 has other amendments andsupplements that need to be considered, such as amendments to land auctions,time to issue the specific land price, etc.

‍‍[1] Art. 21 of Decree No. 168/2017/NĐ-CP datedDecember 31, 2017

[2] Art. 126.3 of the Law on Land

[3] Article 15b of Decree No. 01/2017/NĐ-CPdated January 06, 2017 amended by Article 1.2 of Decree10

[4] Article 68 of Decree 43

[5] Article 15b of Decree No. 01/2017/NĐ-CPdated January 06, 2017 amended by Article 1.2 of Decree10

Disclaimer: This Briefing is for information purposes only. Itscontents do not constitute legal advice and should not be regarded as detailedadvice in individual cases. For legal advice, please contact our Partners.

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LNT & Partners is a full-service independent Vietnam law firm, which focuses on advisory and transactional work in the areas of corporate/M&A, competition, pharmaceutical, real estate, infrastructure and finance as well as complex and high-profile litigation and arbitration matters.

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