Proposing compensation, banning land auction for 5 years if the deposit is removed, it needs to be considered carefully

Accordingly, in the face of a series of cases of dropping stakes after the land auction, recently, the Ministry of Natural Resources and Environment is collecting opinions on a draft amendment and supplement to a number of articles of Decree No. 43/2014/ND -CP details the implementation of a number of articles of the 2013 Land Law. Notably, in this content, the Ministry of Natural Resources and Environment proposes to compensate and ban the auction for 5 for the act of voluntarily giving up the number. deposit, discard the winning result at the auction of land use rights.

Dealing with the act of dropping stakes in land auctions should avoid restricting the legal rights of individuals and organizations – Illustration

Specifically, according to the proposal of the Ministry of Natural Resources and Environment, in case an auction participant arbitrarily cancels the auction winning result without a legitimate reason, drops the deposit, he will have to pay additional compensation to the State. an amount equal to the deposit value (equivalent to 50% of the land use right value). After auction participants pay enough compensation to the State, the mortgaged property will be returned, in case auction participants do not pay compensation, it will be deducted from the mortgaged property.

At the same time, the Draft also stipulates that the value of the mortgaged property must be greater than the starting price of the auctioned land plot. Auction participants and auction organization may agree to replace the security and deposit with a bank guarantee.

In addition, in case an auction participant voluntarily drops the deposit and refuses to participate in the auction, he/she may not participate in the auction of land use rights for a period of 5 years.

Commenting on this proposal, experts said that such regulations will not only limit and hinder future real estate auctions, but also may lead to the case that businesses will buy back assets. winning the auction, because it is not subject to the limitations of the regulations.

Referring to the land auction in Thu Thiem, according to experts, the businesses that put down the deposit have already lost their deposit, so in essence they are not breaking the law.

According to experts, businesses that put down deposits have already lost their deposit, so in essence they are not breaking the law – Illustration

In addition, the 5-year ban on businesses from participating in the auction also needs further consideration, because businesses can completely set up subsidiaries and bring new “clean” legal entities to “dodge” law” and legalization.

From there, experts suggest, instead of applying the aforementioned regulations, should increase the deposit amount from 20% of the starting price to 30%. Along with that, there should be stronger sanctions for the case where the auction winner “soaks” the property for too long.

“If the real estate winning the auction is not put into use within a certain period of time, it will be fined, if it continues to do so, it will be confiscated and no compensation will be paid. This also applies to secondary investors behind, which means that when the project implementation period is almost over, they will sell or transfer to other investors. Just like that, prolonging the project from being put into operation, creating value for society”, commented Mr. Nguyen Duy Thanh – General Director of Global Housing Company.

Information to the press from a legal perspective, Lawyer Nguyen Trong Hiep – Director of HPVN Law Firm said that the draft issued by the Ministry of Natural Resources and Environment is “deviating” compared to the 2016 Law on Property Auction. .

Specifically, according to Lawyer Hiep, the provisions as in the Draft have established a different type of auction than in the Law when it comes to the deposit that can be replaced by a bank guarantee, thus, converted to deposit. Meanwhile, the deposit is given to the bank to keep, and the deposit is given to the seller (ie the Property Auction Center).

In addition, for the claim of an additional amount equal to 50% of the value of the land use right, Lawyer Hiep said that this is not consistent with the provisions of the law.

“The Ministry of Natural Resources and Environment issued the Draft but it was not based on legal principles. In this case, if the enterprise commits a violation, it must be fined or handled in the pre-set amount, but here the Ministry of compensation is unreasonable, because this is just a violation, and wants to claim compensation. usually there must be actual damage, but here it is not damage so there is no basis to claim compensation. As for the 5-year or 10-year ban, it must be included in the document dealing with administrative violations, not in this document, “said Lawyer Hiep.

Experts say that the Ministry of Natural Resources and Environment’s proposed proposals have a good purpose in order to limit unhealthy behaviors and manipulate the real estate market in auction activities. However, in order for the provisions of the law to come to life and be feasible, it is necessary to consider thoroughly and carefully, to avoid limiting the legal rights of individuals and organizations.

According to DDDN