Question: When does a capital raising contract to purchase off-the-plan housing have the nature of a deposit contract?
Answer from lawyer:
To determine whether a capital raising contract to purchase off-the-plan housing is a deposit contract, many factors need to be considered, but primarily it should be based on the nature of the terms in this capital raising contract.
A determination of this nature is based on the legal distinction between the deposit contract and the capital raising contract.
In terms of a capital raising contract to purchase off-the-plan housing, according to point a clause 2 article 19 Decree No.99/2015/ND-CP:
“2. The conclusion of contract for raising capital for development of commercial housing must comply with the regulations below:
a) In case of conclusion of a capital raising contract prescribed in Clause 2 Article 69 of the Law on Housing, the methods, conditions in the Law on Housing and regulations of Clause 3 of this Article shall apply.
The capital contributors, cooperators, partners mentioned in this Point shall receive distribution of profit (in money or shares) according to their contribution ratio in the contract. The investor must not apply the capital raising method in this Point or other capital raising methods to distribute housing products, give priority to buy houses, pay deposits, or obtain the right to buy houses, or distribute land use right of the project to the capital contributors, except for contribution of capital for establishment of a new legal entity to be appointed by the State as investor in the housing construction project.”
In terms of deposit contract, Article 328 Civil Code 2015 stipulates:
“1. Deposit is an act whereby one party (hereinafter referred to as the depositor) transfers to another party (hereinafter referred to as the depositary) a sum of money or precious metals, gemstones or other valuable things (hereinafter referred to as the deposited property) for a period of time as security for the entering into or performance of a contract.
2. Upon a contract being entered into or performed, any deposited property shall be returned to the depositor, or deducted from the amount of an obligation to pay money. If the depositor refuses to enter into or perform the contract, the deposited property shall belong to the depositary. If the depositary refuses to enter into or perform the contract, it must return the deposited property and pay an amount equivalent to the value of the deposited property to the depositor, unless otherwise agreed.”
Several examples will clarify what a “deposit” means in the context of the capital raising contract to purchase off-the-plan housing:
- The purpose of the capital raising contract: If it is actually a deposit contract, the capital raising contract is intended to secure the house purchase, the implementation of the contract of sale and purchase of the off-the-plan housing…
- Rights and obligations of capital contributors: If it is actually a deposit contract, the contributors who meet the legal requirements may be required to sign an apartment sale and purchase contract.
- Rights and obligations of capital contributions: If it is actually a deposit contract, the capital contribution parties may be given the right to refuse a sale and purchase contract with the contributors… In case the capital contributor refuses to sign the capital contribution contract, the contributors will lose their contributed assets…