Compensation when terminating the tenancy contract in Vietnam

by Quang Minh

During the housing tenancy, for some reason, the tenant unilaterally terminates the lease agreement before the expiration date. So, in which case the tenant must compensate for the early termination of the contract? How to compensate for the termination of the tenancy agreement? In this article, LSX legal firm informs: “Compensation when terminating the tenancy contract in Vietnam”

  • Law on Housing 2014
  • Civil Code 2015

Content of a tenancy contract

Article 121 of the Law on Housing 2014 stipulates that a house lease contract must be made in writing and must include the following contents:

  • Full names of individuals, names of organizations, and addresses of contracting parties;
  • Description of characteristics of the house and the piece of land attached to that house. Regarding agreements on apartment sale or lease purchase, contracting parties must state the common areas or common-using areas; private areas; floor areas; purposes of the common areas or common-using areas in the apartment building according to approved design;
  • The value of contributed capital, the transaction price of housing if there is a term on pricing in the agreement; regarding transactions in housing sale, lease, or lease purchase which is regulated pricing by the State, contracting parties shall comply with that regulations;
  • Deadline for and method of payment regarding transactions in housing sale, lease, lease purchase, or transfer of agreements on housing sale;
  •  Deadline for housing transfer; housing warranty duration regarding transactions in buying or renting and buying a new house; terms of agreements on housing lease, lease purchase, mortgage, lending, permission for stay, authorization of housing management; deadline for capital contribution;
  • Rights and obligations of contracting parties;
  • Commitments of contracting parties;
  • Other agreements;
  • The effective date of the agreement;
  • Date of agreement;
  • Signatures and full names of contracting parties, or stamps (if any) and positions of the signatories regarding organizations.

Requirements pertaining to parties in the housing lease

The lessor:

  • He/She is the homeowner, or the person permitted and authorized by the homeowner to enter into housing as prescribed in this Law and law on civil; if the agreement of commercial housing is transferred, he must be the buyer for housing of the investor or the transferee of the agreement on housing sale;
  • If the entity is a person, he must have full civil capacity to enter into transactions in housing as prescribed in law on civil; entities as organizations must have legal status, except for organizations giving the house of gratitude.

The lessee:

  • If the entity is a Vietnamese person, he/she must have full civil capacity to enter into transactions in housing as prescribed in law on civil and he/she is not required to register permanent residence in the place where the house under transactions is located;
  • If the entity is a foreign person or an overseas Vietnamese, he/she must have full civil capacity to enter into transactions in housing as prescribed in Vietnamese law, qualify for homeownership in Vietnam as prescribed in the law on housing. He/she not required to register temporary or permanent residence in the place where the house under transactions located.

Unilaterally terminating of tenancy agreement

During the tenancy period, although the parties may not terminate the tenancy agreement ahead of time, there are a number of exceptions as follows:

The lessor has the right to terminate unilaterally the lease agreement and withdraw the house in one of the following cases:

  • Firstly, the lessor leases out the state-owned houses or social houses ultra vires and not satisfying requirements.
  • Secondly, the lessee has not paid the rent for 3 months or more without reasonable explanation.
  • Thirdly, the lessee uses the house for improper purposes as agreed in the agreement.
  • Fourthly, the lessee expands, renovates, or demolishes the house under the lease agreement without the consent of the homeowner;
  • Fifthly, the lessee exchanges, lends, sublets the house under the lease agreement without the consent of the lessor.
  • Sixthly, the lessee still creates disorder or breaches hygiene and environmental conditions causing negative effects on activities of the neighborhood although he/she is warned for the third time by the lessor or the chief of the neighborhood, the chief of the village.
  • Lastly, cases prescribed in Clause 2 Article 129 of the Law on Housing 2014.

The lessee has the right to terminate unilaterally the lease agreement:

  • Firstly, the lessor does not repair the house that seriously damaged.
  • Secondly, the lessor increases the rents unreasonably or increases the rents without notification to the lessee.
  • Thirdly, the right to the enjoyment of the house restricted by the interests of a third party.

However, regardless of the reason, when terminating the contract, Clause 4, Article 132 of the Law on Housing 2014 must be met: “If any party unilaterally terminates the lease agreement, the other party must be informed at least 30 days, unless otherwise agreed; if he/she commits violations mentioned in this Clause and cause damage, he/she must pay compensation”.

Compensation for early termination of tenancy?

As stipulated in Clause 4, Article 132 of the Law on Housing, if either party violates the provisions on notice of the time of termination of the rental contract, causing damage, it must compensate.

However, the parties can negotiate on the level of compensation, form (money, in-kind, performance of work), and method (one time, many times) first. Then, if parties cannot reach into an agreement, the aggrieved party may file a lawsuit to the Court to claim compensation.

Determine the types of damage for compensation:

  • Property damage: The benefits associated with the use and exploitation of the rented house lost or reduced; expenses to repair damage caused by the rental house claimed before the due dateā€¦
  • Health damage: Actual lost/reduced income due to early repossession. If it cannot be determined, it is calculated according to the average income of workers of the same type…

Do you have to notarize the tenancy contract?

Clause 2, Article 122 of the Law on Housing 2014 stipulates that:
Regarding transactions in giving houses of gratitude; sale or lease purchase of state-owned housing; sale or lease purchase of social housing, housing serving the relocation; contributed housing which one entity of contracting parties is an organization; housing lease, lending, permission for stay, or authorization of housing management, the law does not require to notarize or authenticate the agreement, unless contracting parties wish to notarize or authenticate the agreement.
Therefore, the parties must make a house lease contract in writing but do not require notarization or authentication, unless requested by the contracting parties. Although the current law stipulates that housing rental contracts not required for notarization or authentication, contracting parties need to carefully consider whether it is necessary to notarize the contract, especially when entering into a high-value contract.
In case the parties entering into a house lease contract do not need notarization or authentication, whether or not to ask witnesses, the contract will have its validity, if such contract complies with the provisions of content and form as prescribed in Article 121 of the Law on Housing 2014.

LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:

  • Legal advice related to new regulations in business suspension;
  • Representing in drafting and editing documents;
  • We commit the papers to be valid, and legal for use in all cases;
  • Represent to submit documents, receive results, and hand them over to customers.

With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.

Furthermore, using our service, you do not need to do the paperwork yourself; We guarantee to help you prepare documents effectively and legally.

Also, you will not have to waste time preparing the application, submitting application, or receiving results. At those stages, we will help you do it smoothly.

After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.

Contact LSX

Finally, hope this article is useful for you to answer the question about “Compensation when terminating the tenancy contract in Vietnam”. If you need any further information, please contact  LSX Law firm+84846175333 or Email: hoangson@lsx.vn

How does the law defines tenancy contract?

According to Article 472 of the Civil Code 2015, contract for lease of property means an agreement between parties whereby a lessor delivers property to a lessee for use during a fixed term and the lessee is required to pay rent.
Lease contracts of houses or lease contracts of houses for other purposes shall comply with this Code, the Law on Housing and relevant laws.

What do you need to notarize a tenancy contract?

Firstly, a notarization request containing information on the full name and address of the notarization requester, contents to be notarized, and list of enclosed papers; the name of the notarial practice organization, the full name of the dossier recipient, and time of dossier receipt;
Secondly, the draft contract or transaction;
Thirdly, a copy of the personal identity paper of the notarization requester;
Fourthly, a copy of the ownership certificate or use right certificate or its substitute paper as permitted by law for assets subject to ownership or use right registration under law, in case the contract or transaction is related to those assets;
Lastly, copies of other papers related to the contract or transaction as required by law.

In case the homeowner dies but the lease has not expired, does the lessor have the right to continue renting the house?

In case the homeowner dies but the lease has not expired, the lessee has right to continue renting the house for the rest of their lease term. The heir must keep performing the lease agreement, unless otherwise agreed.

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