Deposit in real estate: understand correctly so as not to fall into traps

Deposit in real estate: understand correctly so as not to fall into traps

Deposit is a familiar term in civil transactions, especially buying and selling real estate. Although it is quite specific in the law, it is not uncommon for deposits to be transformed into forms of fraud.

Deposit in real estate purchase and sale is a measure to create trust between parties, with a commitment that a promise or transaction will be performed. Setting up deposit agreements is a way for the parties to look at their interests, be more conscious in the actual implementation of what has been discussed and agreed with each other. However, deposit is still a method that many subjects apply to circumvent the law, creating contracts that are against the principle to gain illicit profits.
For safe transactions, customers must first understand about deposit before signing the relevant documents.

What is a deposit? Legal nature of the deposit

Article 328 of the 2015 Civil Code stipulates:

"first. Deposit is when one party (hereinafter referred to as the depositor) hands over to the other party (hereinafter referred to as the depositee) a sum of money or precious metals, gems or other valuables (hereinafter collectively referred to as the depository). as a security deposit) for a period of time to secure the conclusion or performance of the contract.

2. Where a contract is entered into or performed, the deposit property shall be returned to the depositor or deducted for the performance of the payment obligation; if the depositor refuses to enter into and perform the contract, the deposited property belongs to the deposit recipient; if the deposit recipient refuses to enter into and perform the contract, he/she must pay the depositor the deposit property and an amount equivalent to the value of the deposited property, unless otherwise agreed.

Thus, related to the deposit will have the following properties and characteristics:

    Subject matter of deposit: the subject matter of a deposit is “a sum of money or precious metal, precious stone or other valuable object”, which is valuables or other ordinary objects which a party directly hands over to them. across. Deposited assets are limited to a narrow range of: money, precious metals, gems or other valuable assets, but do not include property rights, real estate as in other security measures.
    Purpose of the deposit: the deposit can be only for the purpose of securing the conclusion of the contract or the performance of the contract, or both.
    Form of deposit: the deposit must be made in writing, can be notarized and authenticated to ensure legality (but not a mandatory requirement). Thus, if the deposit is made by oral agreement, it is considered to be of no provable value in all cases of dispute arising.
    Handling deposit properties: The Civil Code does not specify how much the deposit is compared to the contract value. The parties themselves agree on this issue, usually not more than 50% (due to trading habits).

Forms of fraud in the name of "deposit"

Deposits inherently have important legal significance for real estate transactions, however, in forms such as deposit for reservation, purchase and sale of deposit contracts, etc., buyers face many risks. in real estate investment.

Currently, many investors and distributors use the deposit contract as an official purchase and sale contract, collecting a large amount of money from customers, even more than 90% of the value of real estate only. to "reserve your place". This can be considered as an illegal form of capital mobilization when the actual implementation of the project has not met the conditions prescribed by law.

If a dispute arises, it is difficult to have a basis for settlement because the terms of the contract are often quite loose, with many errors. Not to mention the case, rushing to make a deposit will cause buyers to lose everything if they encounter a ghost project or an underground project like many cases have happened before.
A fairly common form is the form of trading piles - a quick way to make a profit without too much capital. According to the law on housing or the law on real estate business, there are no regulations that allow the transfer or use of the term transfer of the deposit contract.

However, in fact, buying and selling through a deposit contract is quite common, it is worth noting that legally, the individual transferring the deposit contract is still the subject of the official contract with the seller. or the investor, so all relevant documents are in their name. The person who buys the property through a deposit contract will bear all the risks, maybe the process of transferring the name takes a long time or it may also meet the object of fraud, take the money and then appropriate the whole house. This is an extremely risky form of trading, subjects often earn huge amounts of money thanks to this method.

Therefore, in order to be safe in trading, deposit should be done in accordance with its legal nature, any documents intended to take advantage of this institution to circumvent the law are not safe and absolutely do not rush to agree to sign.