Increased fines for some violations in the construction sector

The Ministry of Construction is drafting a decree to replace Decree 16/2022/ND-CP, which regulates administrative sanctions for construction violations by increasing the maximum fines for some violations.

Fine up to 1 billion VND if investor "lies" about project

Decree No. 16/2022/ND-CP (referred to as Decree 16) regulating administrative sanctions for construction violations was issued on January 28, 2022.

The Ministry of Construction assessed that recently, some investors, for economic benefits, have deliberately violated regulations such as not fully disclosing information when transacting real estate; putting real estate into business but not ensuring the conditions according to regulations; collecting deposits from home buyers that account for a large proportion compared to the value of the sales contract... causing great impact on people's rights.

Therefore, the Ministry of Construction has focused and noted when drafting the Decree replacing Decree 16 in the direction of increasing the maximum fine of 1 billion VND for some violations. In addition, there are additional forms of sanctions, applying remedial measures to ensure deterrence and limit the consequences of administrative violations.

Of which, 800 million to 1 billion VND is the highest fine applied to 4 violations related to investors not publicly disclosing information on mortgages of houses, construction works, floor area in works, land use rights, real estate projects put into business.....

Acts of not disclosing, not fully disclosing or not correctly disclosing the contents of real estate projects and housing construction investment projects as prescribed are subject to penalties in Decree No. 16/2022/ND-CP, with fines ranging from 100 million to 120 million VND.

However, in recent times, there has been a situation where investors concealed information that the project had been mortgaged to the bank but still signed contracts with people without publicly informing people that the project had been mortgaged.

The investor concealed the above information, leading to the home buyer signing the sales contract due to insufficient information, only to find out when the bank foreclosed on the property that the house he bought had been mortgaged by the investor. Therefore, in this draft, the Ministry of Construction proposed to the Government to increase the fine from 120 million VND to 1 billion VND.

Regarding this fine, some people say that although the fine has been increased, compared to the benefits that investors receive, this fine is still low. That is the reason why many investors deliberately break the law, accept to pay the fine, causing great impact on the interests of customers.

The Construction Ministry Inspectorate confirmed that this is the maximum penalty (maximum penalty) in the real estate business sector as prescribed by the Law on Handling of Administrative Violations.

According to Article 24 of the Law on Handling of Administrative Violations, the maximum fine in the real estate business sector is 1 billion VND (maximum penalty) applicable to organizations.

Based on the above provisions, the draft Decree has adjusted the fine for some violations in the real estate business sector to a maximum of 1 billion VND.

In addition, the draft decree also requires investors to publicly disclose correct and complete project information and will be subject to additional penalties of suspension of real estate business activities.

In addition to the act of investors not publicly disclosing information about mortgages, the act of real estate business that does not fully meet the prescribed conditions or is not allowed to be put into business according to regulations is also proposed by the Ministry of Construction to increase the fine from 600 million VND to a maximum of 1 billion VND.

In addition to the form of monetary fines, according to the draft Decree, violating organizations and individuals will also be subject to additional penalties of temporary suspension of real estate business activities and appropriate remedial measures commensurate with the violation.

These include forcing information disclosure according to regulations, forcing the re-establishment of contracts related to land use rights, forcing the buyer to return all fees and money related to real estate business. Or forcing the refund of deposits exceeding regulations, forcing the procedures for granting certificates according to regulations....

Adding more violations on the trading floor

Regarding the real estate service business sector, the draft also adds many violations. The draft Decree provides specific penalties for a series of acts, from real estate trading floors signing contracts with real estate brokers who are not qualified to operate according to regulations; real estate trading floors operating without operating licenses... To real estate trading floors not listing, not providing information or listing, providing incorrect information, or providing incomplete information on real estate qualified to be put into business according to regulations; real estate trading floors not confirming or incorrectly confirming real estate transactions through direct forms or through email according to regulations... to protect the rights of all parties, including home buyers.

Many violations in real estate business and new housing development that have been amended, supplemented or adjusted in this draft decree will be strictly handled, closely and deterrently, contributing to the work of building and perfecting institutions, contributing to stabilizing security, order and social safety.

For the act of signing capital mobilization documents and implementing capital mobilization for housing development without sufficient qualifications, enterprises can be fined 600 - 800 million VND.

The current Decree 16 does not have a fine frame at this level. Investors can be fined 400 - 600 million VND if they do not submit a request to the competent state agency to issue a red book to the real estate buyer.

The fine of 300 - 400 million VND applies to two violations including trading in housing, construction works and land use rights with technical infrastructure in the project that are not in the correct form and transferring the whole or part of the project that is not in the correct form or procedure.

Project investors and real estate businesses can be fined VND200-260 million when receiving payments from buyers not through bank accounts.

The proposed fine for acts of not publicly disclosing or incompletely and inaccurately disclosing information about real estate and projects before putting them into business is 120 - 160 million VND.

According to current regulations, businesses committing these violations will only be fined from 100 to 120 million VND. Investors can also be fined from 160 to 200 million VND if the deposit agreement does not clearly state the sale or lease-purchase price of the house or construction project.

Source: https://www.nguoiduatin.vn/de-xuat-tang-muc-tien-phat-voi-mot-so-vi-pham-trong-linh-vuc-xay-dung-204240720170833802.htm