23/07/2024
In the legal and commercial fields, contracts are indispensable for managing and safeguarding the rights of all parties involved. Sale and Purchase Agreements (SPA) and Long-Term Lease Agreements (LTLA) are two common types of contracts, each with its own distinct purpose and characteristics. The difference between SPA and LTLA not only lies in their intended use but also impacts the rights and obligations of the parties. In this article, we will analyze and compare these two types of contracts to provide a clearer understanding of their significant differences.
Purpose and nature
1. Sale and Purchase Agreement (SPA):
The Sale and Purchase Agreement (SPA) is understood as the contract of sale in Vietnamese. It is a crucial legal contract in transactions involving the sale of assets, where the terms and conditions of the sale are clearly defined.
Purpose: SPA is used when parties wish to transfer ownership rights of an asset from one party to another. Typically, the asset can be intangible assets like shares, patents, or tangible assets like real estate.
Nature: SPA specifies the specific terms and conditions of the sale, including the price, payment method, and conditions of ownership transfer.
2. Long Term Lease Agreement (LTLA):
The Long Term Lease Agreement (LTLA) is a type of lease contract where the lease term is significantly longer compared to typical short-term lease agreements. Generally, LTLAs have lease periods ranging from several years to decades.
Purpose: LTLA is typically used when one party (the lessor or owner) allows another party (the lessee or tenant) to use their property for a longer period and for a specific purpose.
Nature: LTLA defines the rights and obligations of the lessor (landlord) and the lessee, including the rental fee, lease term, and conditions of property use.
Rights and obligations of the parties
1. Sale and Purchase Agreement (SPA):
The buyer obtains ownership rights to the property after making full payment according to the terms of the SPA. The seller must deliver the property as agreed upon.
What does the buyer receive?
The buyer will receive the Certificate of Land Use Rights, also known as "Red Book", and be recognized as the owner with the right to freely transfer the property.
The buyer has long-term ownership, with a duration of 50 years from the date of issuance of the Certificate of Land Use Rights and can be extended.
For foreigners, proof of legal entry into Vietnam is required, demonstrated by providing evidence of legal entry.
The buyer has the right to sell or lease the real estate after purchase to foreigners or Vietnamese individuals. Transactions are conducted through a notary public with a small fee and payment of property transfer taxes.
2. Long Term Lease Agreement (LTLA):
The tenant has the right to use the property during the lease term and must adhere to the terms and conditions specified in the contract. The owner (lessor) has the obligation to ensure that the property is handed over in the best condition for use.
It is important to note that the tenant will only receive the Long Term Lease Agreement, considered as a tenant, and will not be issued the Certificate of Land Use Rights.
The lease period typically spans 50 years from the date of issuance of the Investment Certificate of the project and can be extended, subject to the discretion of the Investor.
For foreigners, the tenant does not need to prove legal entry into Vietnam and can stay on a visa.
However, under this type of contract, the tenant does not have the advantage of , cannot freely transfer the lease rights without the consent of the Investor, and is subject to the regulations set by the Investor.
Timeframe and flexibility:
1. Sale and Purchase Agreement (SPA):
Typically a one-time transaction with no specific timeframe after the transfer of ownership. After payment and completion of legal procedures, the buyer becomes the permanent owner of the property without being constrained by lease terms or other legal requirements.
2. Long Term Lease Agreement (LTLA):
Generally has a specified duration, such as 5 years, 10 years, and can be extended by mutual agreement. This contract allows the tenant to use the property for a longer period but does not grant ownership. The lease period and conditions of property use depend on the agreement between the lessor and the lessee, and the lessee does not have ownership rights as in the case of SPA.
Achieve Realty VN is currently distributing real estate projects of the new Thu Thiem urban area. If you need more information, please get in touch with the address:
Hotline: +8486 888 2539
Email: sales@achievereal.com
