What Are Penalty for Violations in the Field of Construction in Hanoi?

In any field, mistakes can occur but differ in actual consequences. Especially in construction activities, the consequences are difficult to predict, the violations in construction activities, to any extent, affect individuals and collective users. Therefore, the Hanoi City People’s Council issued Resolution No.07/2014/NQ-HDND prescribing the fine levels for a number of administrative violations in the field of construction.

 

This Resolution prescribes the fine levels for a number of administrative violations in construction activities in the Government’s Decree No. 121/2013/ND-CP of October 10, 2013 on sanctioning of violations. administration in construction activities; real estate business; exploitation, production and trading of construction materials; technical infrastructure management; housing and office development management (abbreviated to Decree No. 121/2013/ND-CP) in Hanoi city.

The Resolution provides a number of violations and penalties for corresponding acts of investors; of contractors and other organizations and individuals. In particular, the fine level prescribed for an administrative violation in the Resolution is equal to twice the fine level for the corresponding administrative violation in Decree No. 121/2013/ND-CP. The fines prescribed in Chapter II of this Resolution are those imposed on organizations. For the same administrative violation, the fine of an organization is 2 times that of an individual.

The titles competent to impose fines for administrative violations specified in Decree No. 121/2013/ND-CP are competent to impose penalties corresponding to the fines for the prescribed violations. in chapter II of this Resolution. Specifically, the subjects competent to sanction administrative violations under this Regulation include: Construction inspectors; Head of a specialized inspection team; Chief Inspector of Department of Construction; Chief Inspector of Ministry of Construction; Police; Market management; Presidents of People’s Committees at all levels

Above are the main contents of Resolution No. 07/2014/NQ-HDND of the Hanoi City People’s Council stipulating the fine level for a number of administrative violations in the field of construction, individuals and organizations should grasp to ensure their legitimate rights and interests. For compliance in the area of construction, it is important to consult with construction lawyers in Vietnam for advice.

ANT Lawyers is a law firm in Vietnam, recognized by Legal500, IFLR1000. We are an exclusive Vietnam member of Prea Legal, the global law firm network covering more than 150 jurisdictions. The firm provides a range of legal services to multinational and domestic clients.

 

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Construction Contract in Vietnam

In Vietnam, like other countries companies seeking to build an office building or industrial facility work with the contractor through a construction contract.

There are several types of construction contract used in the construction industry depending on the level of control from parties involved in terms of investment, responsibilities and duration.

Construction lawyers inVietnam

Fixed price is a type of construction contract that offer a total fixed priced for all construction related activities. This contract type could include incentives or benefits for early termination, or can also have penalties, called liquidated damages, for a late termination. This contract type is preferred when a clear scope and a defined schedule has been reviewed and agreed upon.

Cost plus contract is a type of construction contract involves payment of the actual costs, purchases or other expenses generated directly from the construction activity. This type of contract must contain specific information about certain pre-negotiated amount (some percentage of the material and labor cost) covering contractor’s overhead and profit. Costs must be detailed and should be classified as direct or indirect costs.

Time and material contract is usually preferred if the project scope is not clear, or has not been defined. The owner and the contractor must establish an agreed hourly or daily rate, including additional expenses that could arise in the construction process. The costs must be classified as: direct, indirect, mark-up, and overhead. Sometimes the owner might want to establish a cap or specific project duration to the contractor that must be met, in order to have the owner’s risk minimized.

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Decree No. 59/2015/ND-CP on Management of Construction Investment Project

On June 18th 2015, the Government issued Decree No. 59/2015/ND-CP on the management of construction investment project. Notably, there is provision on the issuance of construction practicing certificate for individuals who are Vietnam citizen, foreigners that are legally conduct construction activities in Vietnam to take over the position, engaging in works for that position or independent practicing as prescribed.

In order to be certified, individuals must have the capacity for civil acts; have residence permit in Vietnam (for foreigners and Vietnamese residing abroad); meets the requirements of professional, experience examination and legal knowledge relating to the professional practicing field; have university degree in suitable majors, have experiences joining the work with the content requesting for practicing certificate issuance from 7 years or more for the grade I certificate, 5 years for the grade II certificate and 3 years if individuals have university degree or from 5 years if they have degree of college, professional secondary school for the grade III certificate.

Construction practicing certificate is valid for the maximum period of 5 years. The construction practicing certificates that were granted by competent State agencies are allowed to continue to use until expiry; after March 1st 2016, individuals wishing to use practicing certificate must implement procedures requesting for certificate issuance under the new rules.

Particularly for individuals, foreigners or Vietnamese residing abroad that had practicing certificates which are granted by the foreign agencies and organization, when practice construction activities in Vietnam from 6 months upwards shall be recognized to practice. The case of practicing in Vietnam from 6 months upwards, it is necessary to convert the certificate at the Ministry of Construction.

Other notable content of the Decree is the regulation on the publication of information about capacity of the organizations involved in construction activities. Accordingly, organizations involving in the construction works have to submit information about their capabilities to the professional agencies to to be posted publicly on the website managed by that agency.

This information is the basis for the selection of organizations and individuals involved in the planning, establishment and verification of the construction project; management of construction investment project; surveying, construction supervision…

Decree No. 59/2015/ND-CP takes effect from August 5th 2015.

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Construction Operation License Instead of Contractor’s Permits for Foreign Contractor in Vietnam

Operation License forConstructions in Vietnam

The foreign contractors are only permitted to carry out construction activities in Vietnam so long as being granted construction operation license by Ministry of Construction as per the Construction Law.

EPC Contractors have increasingly been interested to learn the requirements of licenses and permits to operate in Vietnam. It is advised that the construction law firm in Vietnam with lawyers specializing in construction area to assist the foreign contractors to understand the legal frameworks, and requirements of foreign contractors before and after taking on construction projects in Vietnam after bidding result.

The regulations and procedures are promulgated in Decree No. 59/2015/NĐ-CP on management of construction investment projects and Circular No.14/2016/TT-BXD guiding on licensing construction activities and management of foreign construction contractors in Vietnam.

Investment in construction activities has been growingly rapidly. In order to meet the tender conditions and take part in construction activities in Vietnam, foreign contractors shall follow the regulations in Vietnam and obtain proper license during the preparation and the execution of the construction of the project.

Prior to construction operation license, foreign constructors have experienced another form of permit named contractor’s permits for foreign contractors in Vietnam. These are two concepts however the process of registration and document requirements are not so different.

There has been an effort to harmonize and reduce differences and conflicts arisen in many fields of laws regulating the mentioned subject and the new provisions of the Law on Bidding, Construction Law and the Investment Law to be issued in 2014 which establish a stable legal framework for the implementation of foreign contractor’s bidding and construction activities in Vietnam. This changes does not differentiate which position the foreign contractors are appointed from the lead contractor, the main contractor, contractor to subcontractor consortium. Unlike domestic contractors, foreign contractors must be granted construction operation license for each awarded contract. The amendment from the contractor’s permits for foreign contractor contribute to the unity of the same concept in different legal instruments regulating the license procedure of foreign contractors operating within the territory of Vietnam, and limit the unnecessary overlaps, difficulties to law interpretation and application of legal entities.

We shouldn’t forget to mention that the amendment of the foreign contractor’s construction operation license is to increase the relevance between the name and nature of the licensed activities of foreign contractors in construction operation. One of the initial conditions to a foreign contractor to be licensed is when the contractor has won a bid or been selected to be sub-contractor of an investment project. Therefore, the terms construction operation license shall demonstrate the role of the contractor in the construction projects they have been participated in.

The new construction operation license for foreign contractor is expected to be easier to relate to when foreign contractor take part in construction project in Vietnam. This would attract more foreign contractors to undertake construction projects in Vietnam to bring in the technology equipment, as well as the management skills to Vietnam.

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Legal Regulations in Purchasing Real Estate in for Foreigners in Vietnam

Construction lawyers in Vietnam

Vietnam has become a better place for foreigners to visiting and staying. Many chose Vietnam as home and they come to Ho Chi Minh City, Ha Noi, Da Nang, Phu Quoc, Nha Trang… to buy real estates for living. Many foreigners consider seeking understanding and with the advisory of their real estate lawyers in Vietnam to purchase the property under their name for best interest protection. There are a number of foreigners seek to cooperate with local Vietnamese under investment agreement to invest in properties. It has always been suggested the buyer or investor to receive legal advice from real estate lawyers and law firms in Vietnam before committing the investment to a certain extent.

According to the Law on housing 2005, foreign organizations and individuals investing in construction of houses for sale and lease in Vietnam have the right to own the houses in Vietnam. However, according to the provisions of the Law on housing 2014, the house owners expand and include foreigners being investors building the houses under investor projects, foreign organizations operating in Vietnam and foreign individuals being allowed to enter Vietnam under the provisions of the Law on Entry, Exit, Transit and Residence of Foreigners in Vietnam; and are not entitled to diplomatic privileges and immunities.

Under the provisions of the Law on housing 2014, foreign organizations and individuals are allowed to own apartments, individual houses (villas and townhouses) in commercial housing projects. The total number of foreign individuals/organizations owned does not exceed 30% of an apartment building or does not exceed 10% or 250 houses of a housing project. Foreign individuals may own houses for up to 50 years and are allowed to extend for no more than 50 years. Foreign organizations own the houses according to the time limit on the Investment Registration Certificate and the extension period. During the time of owning the houses, foreign individuals are allowed to sublease, but foreign organizations are not allowed to sublease the houses.

For foreign individuals/organizations, when buying the houses in Vietnam, it is necessary to have a well drafted sales contract for purchase and sale of the houses because all rights and obligations related to the purchase, sales and ownership of houses are regulated in the contract. Therefore, the buyer should consider the contract carefully, usually with the help of real estate lawyers whom understand Vietnam laws before signing, in order to protect their legitimate rights and interests.

The foreigner when buying and selling the houses, especially off-plan house, need to also pay attention to the regulations on payment schedule in the contract. According to Article 57 of the Law on housing 2015, the payment in the purchase, sales, lease sales of the off-plan real estate in Vietnam is carried out in installments, and the first time must not exceed 30% of the contract value, the next times must be in accordance with the construction schedule, however, not exceeding 50% of the contract value when not handed over when the buyer is an enterprise with foreign investment, not exceeding 70% the value of contract, if the buyer is the foreigner individual the payment is not exceed 50% the value of the contract before handing over the house to the buyer. Until the buyer is issued with a certificate of land use right, ownership of houses and other assets attached to the land, the buyer shall pay no more than 95% the value of contract.

Foreigners in Vietnam need to be assisted to be familiar with the laws relating to the purchase and sale of real estate in order to protect their legitimate rights and interests when participating in transactions in Vietnam. It is important that the foreigners consider using the services of law firm in Vietnam specializing in real estate to advise and help manage the transaction.

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