Risks of buying land without a red book that people should know

Minh Huy (T/H) |

Buying land without a red book carries legal and financial risks. Buyers may lose everything if a dispute arises.

5 big risks when buying a house or land without a red book

+ Not verifying the exact origin of the land:

Houses and land without land use right certificates will cause difficulties in verifying the origin of that land.

For example, land users will not know whether the land they buy is in the planning area or not; whether the land is being encroached upon or disputed or not?

+ Disputes are likely to occur:

When transferring land use rights, it must be registered at the land registration office. This transfer is only effective from the time of registration in the land registry. If the house or land does not have a red book and the change is not registered, even if the buyer pays, he or she will not have the right to use that land.

+ No mortgage loan:

According to Article 45 of the 2024 Land Law, land users who want to mortgage their houses and land to borrow money must have a red book.

+ Restricted land use rights:

Land users without red books will have their rights restricted such as: Transfer, donation, inheritance, mortgage, conversion of land use purpose, leasing... (except for households and individuals who have not been granted red books but are eligible for red books according to the 2024 Land Law).

+ Difficult to get construction permit:

The application for a construction permit requires documents proving land use rights according to the provisions of the 2024 Land Law. If the purchased land does not have a red book, it is very difficult to build a new house or renovate it.

Limit risks when buying land without red book?

When buying land without a red book, to limit risks, the buyer needs to make a deposit contract, which clearly states the terms of the seller's commitment and compensation when the seller fails to fulfill the commitment.

Clearly state that the land currently does not have a red book. After completing the procedures to apply for a red book, the seller must complete the procedures to transfer the red book to the buyer.

On the buyer's side, you should find out information about the land: is the land encroached upon, disputed, or planned?

The buyer requires the seller to hand over the originals of all documents related to the land. In case the property is jointly owned by the seller and his/her spouse, both parties must participate in the transaction.

Minh Huy (T/H)
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The heir needs to clearly understand the documents and procedures to transfer the red book name conveniently and quickly.

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Minh Huy (T/H) |

Red books are not assets. Therefore, people cannot mortgage red books but can only use them as collateral.