Before freezing and collapsed in 2008, Vietnam’s real estate market snowballed and attracted numerous domestic and foreign investments. However, with consecutive land fevers reported by the media, the real estate market in Vietnam has shown signs of “hot” growth again in recent years. The temptation of huge returns on investment from real estate (especially land) has prompted investors to spend their money despite the potential risks. This is also an opportunity for bad actors to take advantage of investors’ ignorance and greed, especially foreigners – subjects that cannot own land under current Vietnamese law.
The constitution states that land is owned by all the people and represented and uniformly managed by the State. In addition, the provisions of the land law also do not allow foreigners to receive land use rights. Meanwhile, the demand for investment in land by foreigners is continuously increasing. Since then, the situation of foreigners asking Vietnamese individuals to “fraudulent representation” of land use rights is quite common, and there are many cases where “money is easy to go but difficult to come.”
The beginning of a series of tricks is Vietnamese fraudsters approaching, discussing, and creating relationships with their “prey”. They try to create confidence to show foreigners that they are knowledgeable about the real estate market in Vietnam and fully capable of conducting investment activities. They can even set up real estate companies or create a solid base of their own to attract and create confidence for ill-fated investors. Besides, some fraudsters can also use emotional cards to trick foreigners into transferring money into their accounts. Consequently, foreigners are left with the loss of money that is often hard to retrieve.
These fraudsters are willing to sign foreign agreements, contracts, loan notes, or other similar documents if required. Once the money is received, these entities will prevent contact with foreigners, moving to new locations that are difficult to find.
From the Civil Law perspective, the amount of money that foreigners transfer to objects in Vietnam under agreements, contracts, loan notes, etc. can be considered as a civil transaction, specific a loan contract that gives rise to the lender’s obligation to lend and the borrower’s obligation to repay the loan. The lenders are foreigners and the borrowers are Vietnamese residents. Additionally, there are some cases where, because of the light of gullibility, foreigners only make a verbal agreement without making a written agreement. Although the current Civil Law does not stipulate that the writing is a mandatory condition for a loan contract. However, the parties do not have a written agreement, which makes it difficult to prove the rights and obligations of the parties. Once a dispute takes place, the court is difficult to have grounds to resolve. As a result, it is difficult for foreigners to return the money. Also related to borrowing, Clause 11, Article 1 of Ordinance No. 06/2013 / UBTVQH13 amending and supplementing several articles of the Foreign Exchange Ordinance states: “Residents being individuals shall be permitted to borrow and repay foreign loans on the principle of self-borrowing and self-repayment in accordance with regulations of the Government.”. However, the law does not have specific guidelines for foreign borrowing and foreign debt repayment activities of individuals. As a result, there is no adequate legal basis for such a foreign loan transaction in Vietnam.
From the perspective of criminal law, appropriation of property by providing false information or deliberately evading the liability of bad actors may be subject to criminal liability if there are enough valid proofs. Two crimes that can be considered and handled are fraudulent property appropriation and abuse of trust to appropriate property under the current Criminal Code. In general, offenders willfully and directly infringe the property ownership rights through fraudulent acts in order to appropriate the property of others. Once the property has been appropriated, the offenders disappear to avoid all communication with the victim, resulting in difficulties in finding offenders and preventing the dispersal of appropriated property. Foreigners can report to the authorities for prompt prevention and handling if there is sufficient evidence to prove that the person being asked to represent the household has signs of fraud or abuse of trust to appropriate property.
In conclusion, foreigners cannot own or receive land use rights in Vietnam under Vietnamese law. Therefore, the fact that foreigners intend to ask Vietnamese individuals to be in their household names for land and real estate investment or purchase houses/land by transferring money to Vietnamese individuals implicates potential high risk. Once a Vietnamese individual stands in the name of a household or receives money intentionally intends to usurp, it will cost a lot of time, effort, and money for foreigners to recover their purchased property; additionally, it is not always possible to fully recover the money.