There are many cases in which a lessee suffers a hard time due to unilateral termination of a lease contract by the lessor even when the contract is not expired yet. Especially, when house prices rise significantly, some owners fabricate notifications (e.g. the house has been sold) to cancel the contract and lease the house at a higher price to the new occupant. Nevertheless, many endure these unreasonable claims because of unclear local policies/systems/ knowledge of Vietnamese laws,and local citizen-biased administrative customs (if any).
Including residential lease contract, general contract & transaction matters in Vietnam are subject to the Civil code, Housing law&Commercial law. Unilateral termination of a civil contract is only allowed in the cases when there was such agreement between the parties or as permitted under the laws. Upon satisfying such ground, the unilaterally terminating party has to notify directly to the other party immediately, if not, must compensate for the losses of the other party. The termination only takes effect when such notification is received by the other party. Also, when the other Party properly implemented the lease contract without any breachprior to the unilateral contract termination, the non-terminating party has the right to request the value for the non-terminating party’s implementation of its obligations against the terminating party, and the terminating party has to compensate for all and any kind of losses caused due to the unilateral termination of the contract.
Civil code and Housing law specifically refer to the unilateral termination of residential contract which apply even in the absence of such agreement in the contract, providing details of permitted situations when the lessor or lessee can unilaterally terminate the lease contract. Unless agreed otherwise, in all cases, the terminating party is required to notify termination to the other party at least one month prior to the expected termination date. Therefore, in principle, it is possible to request penalty or compensation to the terminating party for illegal unilateral termination of the contract. To avoid unnecessary disputes, it is important to insert detailed agreement regarding unilateral termination when signing a contract. Another point we advise is that residential lease contracts with duration for no less than 6 months must be notarized (of which the lessors generally hesitate to do due to tax issues). If not, the contract will be considered invalid in which case the lessee cannot base on the contract to claim the lessee’s rights under the lease contract.
The laws specify the cases in which the lessor can unilaterally terminate the lease contract including when the tenant does not pay the rent for 3 months continuously without appropriate reasons (the Civil code or the Housing law does not provide the definition of ‘appropriate reasons’ therefore, we advise that the parties agree to the definition in the lease agreement to avoid any dispute on this issue), or when the lessee uses the house for the purpose not agreed, the lessor has leased the house which is under state ownership or a social house not according to its/his/her competence, to an ineligible subject or without satisfying the conditions prescribed in the law, the lessee breaks, expands, renovates or demolishes the leased house without permission, the lessee exchanges, lends or sub-leases the leased house without consent of the lessor, or the lessee causes disorder or environmental in sanitation, seriously affecting the daily life of the neighborhood and fails to stop his/her act after having been warned in writing for the third time by the lessor. The lessor has no right to unilaterally terminate it based on the reason that the house has been sold. For your information, the law also specifies cases when the lessee can unilaterally terminate the lease contract as well: when the lessor does not repair the house even when severe damages are made to the house, when lessor raises the rentwith or without notice if agreed as such by contract, or if the lessee’s rights as a tenant are unreasonably restricted due to a third party.
Sometimes tenants are unable to resist illegal unilateral termination by the lessor. This is mainly because of the ignorance of the Vietnamese laws and inconveniences as foreigners living in Vietnam. However, we urge the lessees to get lease contract requiring notarization procedures under the law for validation notarized to prevent future damages, and specify the cases in detail for unilateral termination in the lease contract. And it is recommended to make note of the cases in which the lessee can unilaterally terminate the contract as provided under the laws as well, even if not mentioned in the lease contract, in order to cope with such unexpected situations.
JP LAW GROUP (HCMC)
34th Floor Unit 2 BitexcoFinancial Tower
2 Hai Trieu, Ben Nghe Ward
District 1, Ho Chi Minh City, Vietnam
Tel: +84 8 3910 0618~9
Fax: +84 8 3910 0620
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