“Hello, Lawyer, I am currently planning to start a rental business because I have an empty apartment. I don’t know if I need to register a business for this activity? I heard people say that it is not necessary because of the number of houses. not much at a time. Do they say that is in accordance with the law? Do property rentals have to be registered?”. Thanks for your question. Most families and individuals have idle houses for rent. However, most of them do not pay attention to the very basic legal issues when conducting this activity. The following article is intended to provide an overview of such legal issues. To answer your question, today, LSX Lawfirm will give you an article about “Do property rentals in Vietnam require business registration?”, as follows:
Legal grounds
Civil Code 2015
What is a property lease?
Currently, in a country with a developed economy following the socialist-oriented market mechanism, property rental services in cities and towns are widely and diversely developed. Thanks to this service, people and organizations save a lot of time and money. With a limited cost, the lessee can use a valuable asset to meet his or her needs. The purchase and sale cost a lot of money without using the full capacity of the property, wasting money of individuals, organizations, and the State.
Accordingly, to Article 472 of the Civil Code 2015, a property sale and purchase contract is defined as follows:
“Article 472. The property lease contract is an agreement between parties whereby the lessor delivers the property to the lessee for use for a certain period of time, and the lessee must pay rent. housing, house rental contracts for other purposes shall comply with the provisions of this Code, the Law on Housing, and other relevant laws.”
The concept of property is understood in a broad sense, that is material (tangible and intangible assets) used to satisfy the needs of consumption and production activities of individuals and organizations. Therefore, the subject matter of the lease agreement is the means of production or the means of consumption. The right to use land, water surface, sea surface, technology… can also be the subject of a lease contract.
Accordingly, the property lease relationship consists of two parties, the lessee and the lessor. The agreement of the two parties on the terms related to the leased property is specifically recorded in the lease contract and signed by both parties.
Meaning of the lease agreement
A lease contract is a legal basis for the lessee’s right to possess and use the property. The lessee’s right to exploit the leased asset is not different from the right of the owner of that property. Through the lease of the property, the owner of the rental property has exercised the right to use his property through the behavior of the lessee.
The property lease contract is a legal basis for the parties to fully exploit the means of production and consumption of materials that have not been exploited to their full potential and capacity, avoiding waste. A property lease contract is a legal means to overcome the situation that a business or producer who does not have sufficient means of production can still conduct production and business through the use of the leased property.
What are the characteristics of a lease agreement?
A lease agreement is a contract of compensation
The lessee’s purpose is to use someone else’s property for a certain period of time. Meanwhile, the lessor aims to obtain a monetary benefit; when letting others use your property. Therefore, when a lease is established, each party transfers the benefits to each other; the lessor transfers to the lessee the right to exploit the utility of the property; the lessee transfers to the lessor a sum of money (property rent).
A property lease is a bilateral contract
The lessee is obliged to return the leased property and rent as agreed; has the right to request the lessor to hand over the property for use.
The lessor has the right to require the lessee to use the leased property for the right purpose; use, time limit, method; and return rental property, rent.
Does property rental require business registration?
Housing rental is a form of real estate business and does not fall into the cases where business registration is not required as prescribed in Decree 39/2007/ND-CP on individual commercial activities independently. established, often do not have to register a business.
Therefore, in principle, individuals and households need to consider business registration when performing housing rental activities. Because it is a form of real estate business, the question is: Is it necessary to set up a business with a minimum capital of 20 billion VND?
The answer is no; Because, housing rental activities of individuals and households in the case of real estate business do not require the establishment of an enterprise specified in Clause 7, Article 5 of Decree 76/2015/ND-CP stipulating detailing a number of articles of the Law on Real Estate Business.
Thus, individuals and households can completely conduct business registration in the form of Business Households – refer to the Guidelines for registration of establishment of business households.
However, whether or not business registration is required when conducting residential rental activities is still a controversial issue, which we would like to discuss in another detailed article.
How are the rights and obligations of the lessor specified?
Rights of the lessor
- Requires lessee to pay rent on time as agreed and may require mortgage deposit.
- Require the lessee to return the leased property in its normal condition at the end of the lease term (except for natural wear and tear or to the agreed condition)
- The right to unilaterally terminate the performance of the property lease contract, and claim damages if the lessee commits one of the following acts:
Failure to pay rent for three consecutive periods; unless otherwise agreed or otherwise provided by law.
Using the leased property for improper purposes and uses of the property. Loss or damage of rental property.
Repair, exchange, or sublease part or all of the property; without the consent of the lessor.
Other cases as prescribed by law.
Obligations of the lessor
- Deliver the property to the lessee on time and at the right place.
- Guarantee the rental property in the condition as agreed; suitable for rental purposes. If the property is a means of transport; the lessor must ensure the necessary safety and technical conditions for the lessee.
- In case the leased property is damaged through no fault of the lessee; the lessor must repair and change other assets; or must compensate the lessee for damage.
- In case the lessee has been notified about the damage to the property and requests the lessor to repair, but the lessor fails to fulfill such request; If the lessee has to repair the damage by himself, the lessor must bear the costs.
- Secure the right to use the property stably for the lessee during the lease term. When there is a dispute over ownership of the leased property; and the lessee is not allowed to use the stable asset; the lessee has the right to unilaterally suspend the performance of the contract, and claim damages.
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Related questions
Depending on whether the object of the contract is movable or immovable property, the form of the contract must comply with the provisions of law. If the subject matter of the contract is property over which the state does not control; when transferring or the property is not subject to registration of ownership, the property lease contract must be made in writing; if agreed by the parties or provided for by law. The document is handwritten or typed by the parties and signed by both parties.
In this case, according to the provisions of Clause 2, Article 132 of the Law on Housing 2020, the unilateral termination of the contract is as follows: The lessee causes disorder and environmental sanitation, seriously affecting the daily life; of people around who have been housed by the lessor or the leader of the residential group; The head of the village, village, hamlet, hamlet, hamlet, Phum, squirrel made a record for the third time but still did not fix it.
The rental contract basically follows the general provisions of the property lease contract, in addition to a number of other points, specifically:
– Firstly, the rental contract must be made in writing, if the lease term is 06 months or more, it must be notarized or authenticated.
– Secondly, in addition to the Civil Code, the rental contract also complies with the provisions of the 2014 Housing Law.
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