WHAT ISSUES SHOULD INVESTORS PAY ATTENTION TO BEFORE SIGNING THE CONTRACT FOR LEASE OF FACTORY, OFFICE?

One of the factors to implement an investment project is that the investor must choose a location for the project […]
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22/12/2021

One of the factors to implement an investment project is that the investor must choose a location for the project implementation. In other words, the choice of office and factory is one of the issues that investors need to pay attention to from the beginning. The following article will help customers find out the issues investors need to pay attention to before signing a contract to rent a factory or office.

CONDITIONS OF FACTORY, OFFICE FOR LEASE

Before signing a lease contract, investors need to consider the office or factory satisfy the following conditions:

  • Owning registered ownership of houses and construction works attached to land in the certificate of land use right. For existing houses and constructions in real estate investment and business projects, a certificate of land use rights is required following the provisions of the law on land;
  • There is no dispute over land use rights, ownership of houses, and construction works attached to the land;
  • Not to be distrained to ensure judgment enforcement.

Based on the above conditions, investors need to carefully check the documents proving the ownership and right to lease the factory, office, and related licenses.

CONDITIONS OF THE LEADER OF FACTORY, OFFICE

In addition to checking the condition of the property, the investor also needs to verify the situation of the lessor as follows:

The Organizations and individuals doing real estate business must establish enterprises or cooperatives (hereinafter referred to as ” enterprises”), except for the case specified  as below :

Organizations, households, and individuals that lease real estate on a small or irregular basis are not required to establish an enterprise but must declare and pay tax following the law.

LOCATIONS THAT ARE NOT ALLOWED TO BE THE HEAD OFFICE OF THE ENTERPRISE

Many foreign investors rent offices to serve as headquarters for businesses. However, many investors have already rented an office, only to find out that the location cannot be allowed to register for headquarters. Therefore, to avoid such troubles, investors should note the cases as below are not allowed to have headquarters.

The address of the office is unknown

The address of the head office must be defined at four levels administrative units. However, the change of administrative units or other reasons cause the address cannot be identified at level 1 (House number, niche, alley, street /group /neighborhood) /hamlet/village). So it is difficult for state agencies to identify and manage, so they will refuse to allow businesses to locate their headquarters at these addresses. Therefore, when establishing an enterprise, investors need to choose an address with completed 4-level information.

The office is an apartment building with residential purposes

According to the provisions of Clause 3, Article 3 of the Law on Housing 2014, apartment buildings are divided into two types: apartment buildings with residential purposes and apartment buildings with mixed-use for residential and business purposes.

Clause 11 Article 6 of the Law on Housing 2014 prohibits the following acts: “Using the apartment for non-residential purposes”

Thus, the law prohibits the use of the apartment to live as an office, do business, or set the address of the company’s headquarters. In case the enterprise locates its head office in an apartment building, it must be able to determine that the apartment building is a mixed-use apartment for living and doing business and at the same time provide documents to prove it.

The office does not satisfy other conditions

For several specific lines of business, an enterprise that chooses an office as its headquarters and at the same time as a place to conduct business must meet specific requirements to conduct operations. For example, depending on each business line, it may or may not require specific conditions for the head office of the business, investors should pay attention to consider other specialized laws to choose a location of headquarters.

NOTES IN FACTORY, OFFICE LEASE CONTRACT

  • Factory or office lease contract is a commitment between the party wishing to rent the workshop and the lessor to ensure that the parties properly and fully perform their obligations. Therefore, when renting factories and offices, the contract-making process plays an important role. Investors should note the following terms in the lease contract:
  • Handover equipment and materials: enterprises need to check carefully before completing the handover procedure. The contract should clearly state the equipment and items to be handed over and the problems arising when the equipment and items are damaged. 
  • Note: during the handover, a handover record is required.
  • Deposit, the form of deposit reimbursement: clearly state the deposit amount and the form of deposit. This amount is to secure the association of the contract and not used to pay for the rental. If the enterprise correctly and fully performs the obligations in the contract, the enterprise will receive the deposit back at the end of the contract.
  • Factory and office rental term: investors carefully check the term agreed by both parties in the contract. After the expiration contract, businesses can extend the contract if needed.
  • Annual rental rate increase: the amount of rent for factories and offices each year may change to match the development of the market economy, so the two sides need to pre-determine the expected annual rate of the price increase in the contract.
  • In addition, the lessee can sublease all or part of the surface

Enterprises can quickly go into production and business without taking too much time to prepare when renting factories and offices. One of the first and most important legal procedures for renting a factory or office is a lease contract. So, if you have any questions or need help drafting a lease, please don’t hesitate to contact AZLAW for the most specific advice.

AZLAW LAWFIRM & ACCOUNTING

K28, Alley 68 Trung Kinh, Yen Hoa, Cau Giay, Hanoi

Tel: 0987.748.111

Email: info@azlaw.com.vn

Website: https://azlaw.com.vn/

0987.748.111