HCM City makes property mortgage details public
Play
RECENTLY the Ho Chi Minh City Department of Natural Resources and Environment published a list of 77 apartment projects that have been registered as mortgaged at land registration offices.
The list has been submitted to offices in the city as well as uploaded on the website of the Land Registration Office.
This is the first time in Vietnam that property mortgages have been released publicly with details of names, addresses, contracts, organisations and mortgage registration dates.
Most of the projects were mortgaged under credit contracts signed in 2015 or 2016, though some go back as far ago as 2010, especially in Tan Phu district.
The developers of many of the projects have already sold flats in them to buyers but have yet to provide them with the title deeds, also known as red-and-pink books.
The action is said to have been prompted by the Harmona scandal in the city a few months ago.
More than 600 buyers of apartments in the Harmona in Tan Binh district got a rude shock one day when they were told their homes would be seized by a bank because the developer had mortgaged the building and failed to repay the loan.
The building was handed over to the bank on June 9, meaning nearly 2,000 people living there had to leave their apartments despite already making full payment. This kind of violation by developers has become a cause for serious concern in recent times.
The city has decided to make the legal status of property projects public to reduce the risk for buyers.
However, the action has not come in for universal approbation as one might have expected.
True, some analysts have hailed it, saying the risk faced by homebuyers has been growing since a large number of transactions are done before projects are finished, and this move would promote transparency in the property market and protect buyers.
However, many objections have been raised.
Many critics point out that the way the city has disclosed the list of mortgaged projects has deeply worried both buyers and developers and even affected their business.
The list is simplistic, only mentioning names, addresses and other information but not the precise status of the projects.
In many cases, the developers have not even borrowed money but had to mortgage the development to a bank to obtain the guarantee mandated by the Real Estate Law.
The law requires developers, before selling or leasing unfinished properties, to obtain guarantees from banks, which will compensate buyers if the sellers default.
So clearly there is a case for making it explicit why a development has been mortgaged – to borrow money or to get the bank’s guarantee.
The simplistic list has begun to cause misunderstandings between developers and buyers, according to critics.
Many buyers, on discovering their properties are mortgaged, have anxiously sought clarifications from the developers as well as local authorities.
Some individual customers, whose mortgage details have also been listed, are very unhappy that their private information has been made public.
Many developers are now fearful that potential buyers will become wary of buying from them.
Analysts insisted that the exact status of the mortgages needs to be published as well since it is the main reason for conflicts between developers and buyers.
One way the tension can be eased is by banks closely monitoring loans to ensure the developers use them for the right purpose, which would ensure projects are completed on schedule, they added.
