The practice of using a nominee to purchase real estate is relatively common, typically occurring in two main scenarios:
- Foreigners who are not eligible to purchase property under Vietnamese law use a Vietnamese individual as a nominee.
- Individuals residing abroad rely on relatives (parents, siblings, etc.) to act as nominees for property purchases.
Despite being based on trust or close relationships, disputes can arise when trust is breached. The nominee may refuse to return the property, sell it to a third party, or attempt to misappropriate it. In such cases, the person who entrusted the nominee risks losing the property entirely or suffering significant financial losses.
Mục lục bài viết
1. What Should the Person Entrusting the Nominee Do to Protect Their Rights?
When disputes arise, courts will require the person entrusting the nominee to prove two key elements:
- Was there an agreement regarding the nominee arrangement?
- Is there evidence of transferring funds to purchase the property?
To safeguard their interests, the person entrusting the nominee should take the following steps:
a. Nominee Agreement
Due to the trust-based nature of these arrangements, many people fail to create written agreements, which creates challenges during disputes. Without evidence of the agreement, the person entrusting the nominee may lose their claim to the property or only recover the initial amount paid, even if the property’s value has significantly increased. Therefore:
- Create a written agreement with signatures from both parties.
- If direct signing is not possible, retain evidence of communications via email, text messages, or other means to prove the nominee arrangement.
b. Proof of Fund Transfers
This is a critical piece of evidence. The person entrusting the nominee should:
- Transfer funds directly from their own bank account to the nominee’s account.
- If cash is used, obtain a clear receipt.
- Avoid transferring funds through unrelated third-party accounts
2. How Do Courts Handle Such Disputes?
Currently, Vietnamese law does not have specific regulations governing nominee arrangements for real estate purchases. However, Judicial Precedent No. 02/2016 serves as a key legal basis for courts to resolve these disputes. According to this precedent:
- The nominee must return the amount paid by the person entrusting them to purchase the property.
- If the property’s value has increased, the court will consider the nominee’s efforts in maintaining or improving the property. If these efforts cannot be quantified, the increased value is typically divided equally, with each party receiving 50% of the additional value.
This means that while the person entrusting the nominee may recover the property or its equivalent value, they may still have to share a significant portion of the increased value with the nominee.
3. Recommendations
To minimize risks in nominee arrangements for real estate purchases, the person entrusting the nominee should prepare thoroughly by establishing a clear agreement and retaining proof of fund transfers. When disputes arise, current judicial precedent ensures basic rights for the person entrusting the nominee, but sharing the increased value may result in substantial losses. Therefore, exercising caution from the outset is the best way to protect one’s assets.
Disclaimer:
This article is intended for informational purposes only and does not constitute legal advice from HTH & Partners. The content represents the views of HTH & Partners and is subject to change without prior notice.
The legal provisions referenced in this article were valid at the time of publication but may have been amended or repealed by the time of reading. We strongly recommend consulting a qualified legal professional before applying any information contained herein.
