Allowing the sale of mortgaged homes could shift risks to buyers – VnExpress

The proposal to allow developers to sell homes even before they are released from bank mortgages could help them increase capital mobilization, but the risk is shifted to the buyers, according to experts.

In the draft of the amended Housing Law currently open for public feedback, the Ministry of Construction proposes allowing developers to mobilize capital even if the project or the home is still mortgaged at a bank. The condition is that the buyer or lease-buyer agrees not to release the mortgage or agrees to become the mortgagor.

Under current regulations, developers are only allowed to mobilize capital after partially releasing the mortgage on the project, housing, and corresponding land use rights, except for certain special cases.

Regarding this proposal, experts believe it could be a solution to reduce financial pressure and increase capital mobilization capacity for real estate enterprises. Mr. Pham Duc Toan, Director General of EZ Property, said that many developers currently use projects as collateral to secure loans. If they have to release the mortgage on each apartment before selling, they must have a massive cash flow or depend entirely on banks.

He said the Ministry of Construction’s proposal could help businesses reduce the pressure of partial mortgage releases, thereby rotating capital faster and accelerating construction progress if the funds are used for the right purposes. In the context of slowing real estate market liquidity, this could be a “valve” to prevent projects from stalling.

Similarly, independent real estate consultant Le Quoc Kien observed that having to partially release the project mortgage before selling extends the capital mobilization process and slows down implementation progress. If the regulation is eased, businesses will have the opportunity to bring products to the market earlier, thereby improving liquidity, gaining more funds to repay bank debts, and continuing construction investment.

“If businesses can mobilize part of their capital from buyers, they will reduce financial pressure from interest costs,” Mr. Kien said. He added that when capital mobilization conditions are eased, in addition to new projects, inventory will also be pushed to the market faster, contributing to an increase in housing supply.

Real estate in the eastern area of Ho Chi Minh City, August 2025. Photo: Quynh Tran

However, this proposal could increase risks for buyers, potentially leading to disputes. Mr. Le Quoc Kien stated that when an asset is mortgaged, the priority right to that asset still belongs first and foremost to the bank. If the developer encounters financial difficulties or defaults, buyers could end up in a situation where they have paid the money but their ownership rights to the home are not fully secured. In that case, asset liquidation will become more complex, and buyers may spend a long time protecting their interests.

He noted that the binding condition “if the buyer agrees” could easily turn into a mere formality, while the legal risks still fall on them. In transactions involving future-formed housing, contracts are mostly drafted by developers using templates, leaving buyers in a weaker position with almost no leverage to negotiate terms regarding the mortgage relationship between the developer and the credit institution.

“In many cases, the buyer signing their consent in the contract does not fully mean they have fully understood the arising legal risks,” Mr. Kien added.

Sharing the same view, lawyer Pham Thanh Tuan, a real estate legal expert, said that in this case, the draft law does not clearly define the rights, obligations, and protection mechanisms for buyers. They may have to bear risks from the credit relationship established by the developer but have no control over the use of loan capital, debt repayment obligations, or the disposal of collateral.

Mr. Tuan wondered whether buyers could still borrow from banks to purchase that very home. In reality, the majority of homebuyers currently rely on bank credit. If the entire project is still mortgaged by the developer, will banks accept that same house as collateral for the buyer’s loan? If not, the new regulation could unintentionally make it harder for citizens to access capital. If yes, the law must resolve conflicts of priority rights between the parties when disposing of the asset.

Experts suggest that the drafting agency should retain the regulations in Clause 2, Article 183 of the 2023 Housing Law, which require developers who have mortgaged part or all of a project to release the mortgage before mobilizing capital. Lawyer Pham Thanh Tuan noted that current regulations have established an effective protection mechanism for homebuyers, limiting disputes between them, developers, and mortgagees.

In case the draft regulation is retained, Mr. Le Quoc Kien recommended adding a mandatory mechanism to protect buyers. Specifically, the mortgagee bank must provide a written commitment to release the mortgage on each house once the buyer completes their payment obligations. The payment cash flow should be managed through a controlled account at the bank to prioritize debt reduction and the release of the corresponding asset.

Along with this, developers must fully disclose the mortgage status of the project, including the scope and value of the mortgaged assets, the developer’s loans at the bank, the mortgage release progress, etc., so that buyers have complete information before deciding on a transaction. The developer’s mortgaged assets should be split into two parts: the land use rights belong to the bank, but the value of the constructed house belongs to the buyer once they have paid for its construction.

“The regulation also needs sufficiently strong sanctions for cases where the developer delays mortgage release or uses mobilized funds for improper purposes to ensure the safety and transparency of the real estate market,” Mr. Kien recommended.