National Assembly Delegate Proposes Fining Auction Winners Who Refuse Deposits

This content was mentioned by many National Assembly deputies when discussing in groups the draft Law amending and supplementing a number of articles of the Law on Property Auction, on the afternoon of November 8.

Proposing to consider and supplement regulations on handling violations against auction participants, auction winners, individuals and related organizations, delegate Nguyen Thi Yen (Permanent Deputy Secretary of Ba Ria - Vung Tau ) stated that in recent times, there have been cases where auction winners have abandoned their deposits and not paid to receive the auctioned assets, especially for assets of great value such as beautiful car license plates and real estate.

Đại biểu Quốc hội đề xuất phạt tiền người trúng đấu giá bỏ cọc - 1 — National Assembly Delegate Nguyen Thi Yen, Standing Deputy Secretary of Ba Ria - Vung Tau (Photo: Hong Phong).

The female delegate cited two typical cases to illustrate this situation. The first was the case of an individual in Ho Chi Minh City who won the auction for the license plate 51K-888.88 for over 32 billion VND but did not pay the auction winning price, losing the deposit of 40 million VND.

Second, the Vietnamese Star Real Estate Company (a unit of Tan Hoang Minh Group) requested to cancel the deposit for the purchase and sale of land use rights lot number 3-12 in Thu Thiem New Urban Area (Thu Duc City), accepting to lose nearly 600 billion VND in deposit.

Ms. Yen said that according to current regulations, bidders have the right to cancel their deposit and there is currently no sanction on this issue. The law only stipulates that those who win the auction but do not pay will lose their deposit.

Therefore, to overcome this situation, the female delegate suggested considering adding regulations that state-managed assets cannot be abandoned when auctioned. "If someone abandons their deposit, it is necessary to supplement and adjust sanctions for this behavior, with measures to impose fines many times higher than the deposit to avoid successful auctions and abandoning deposits," delegate Yen suggested.

Delegate Nguyen Van Canh (Binh Dinh) said that if the auctioneer can prove that there was a force majeure factor that led to the abandonment of the auction, such as loss of property, flood, or accident, then it can be accepted and not be handled. Otherwise, that person should be banned from auctioning the property for a period of time if there is an act of abandoning the deposit.

Nguyen Thanh Hai, Chief Prosecutor of Thua Thien Hue Province, was concerned that the previous draft law had sanctions against auction cancellation, but now it no longer exists. The delegate suggested that the drafting committee consider this issue.

Đại biểu Quốc hội đề xuất phạt tiền người trúng đấu giá bỏ cọc - 2 — Deputy Head of the Delegation Affairs Committee Ta Thi Yen (Photo: Pham Thang).

Deputy Head of the Delegation Affairs Committee Ta Thi Yen also reflected on the recent reality that in asset auctions, there has been a phenomenon of manipulating starting prices, bidding very high and then abandoning deposits to create the effect of creating a virtual price level for profit.

She agreed that the draft Law has amended and supplemented regulations on the cancellation of auction results in the direction of: Clearly defining the subjects and grounds for canceling auction results to ensure feasibility and compliance with legal regulations; clearly defining the responsibility of those who commit violations leading to the cancellation of auction results.

From reality, the female delegate believes that when the behavior of the subject in the course of the auction shows abnormality, or is too unreasonable, there should be regulations to postpone or stop the auction to analyze and evaluate the situation.

In addition, Ms. Yen suggested paying attention to the conditions for registering to participate in the auction, the financial capacity of the auction participants, and the deadline for paying the auction winning price.

According to the delegate, if only amending and supplementing the provisions of the Auction Law is not enough to prevent market manipulation and speculation, especially in the real estate sector, a more comprehensive solution is needed for policies on credit, land, enterprises and asset auctions.

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