Should The Deposit After Winning a Property Auction Be Increased?

The issue of setting a deposit amount, especially when considering further research on high-value assets, is being raised when amending the Property Auction Law.

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On March 14, during Session 31, the Standing Committee of the National Assembly expressed its opinions on the explanation, reception, and amendment of the Draft Law amending and supplementing certain articles of the Auction of Assets Law.

“Everyone wants to participate in auctions but then withdraws.”

In the report on some major issues of the draft law, Mr. Nguyen Minh Son, Vice Chairman of the Economic Committee, reported that according to the Standing Committee of the Economic Committee, increasing the deposit amount for certain special assets such as land use rights for land transfer cases, land leasing for investment projects, mining rights, and other assets is not appropriate because special assets usually have very high values.

Vice Chairman of the Economic Committee Nguyen Minh Son

According to the report of the drafting agency, the implementation of the current regulation on deposit amounts ranging from 5% to 20% is fundamentally appropriate and creates conditions to attract many participants in the auctions.

International practice does not have specific regulations on the deposit amount for auction participation. Accordingly, auction companies set their own deposit amounts depending on the type of auctioned asset and the auction format.

“Therefore, increasing the deposit amount doesn’t solve the problem of winning bidders withdrawing their bids, and it also limits the number of qualified participants, especially small-scale investors with potential. Handling the issue of winning bidders withdrawing their bids should be done through other means rather than just raising the deposit amount,” said Mr. Nguyen Minh Son.

However, some opinions suggest studying the increase in the deposit amount to prevent abnormally high bidding during auctions.

Furthermore, the draft law has been amended to clearly stipulate the deposit amount for certain special assets to ensure consistency with the current laws on minerals, land, radio frequencies, and the practical application of auctions for certain types of assets.

Regarding this content, Chairman of the National Assembly Vuong Dinh Hue stated that “we should perhaps differentiate certain high-value assets by continuing to review and increase the amount of the deposit to ensure feasibility during the auction organization process (the current law stipulates a minimum of 5%, maximum of 20%), because everyone wants to participate in auctions, but in the end, they withdraw their bids.”

The Chairman of the National Assembly also proposed reviewing and possibly adding additional provisions. For example, the issue of reclaiming the deposit amount before changing auction information. “I have made the deposit, but suddenly you change something, and I no longer want it, so how do I get back this deposit? I have the right to make changes because you changed the information, so I have the right to change my decision. If there are no provisions for this issue, it will be difficult to resolve,” Mr. Vuong Dinh Hue highlighted.

Chairman of the National Assembly Vuong Dinh Hue

According to the Chairman of the National Assembly, there should also be provisions for re-auctioning when the initial auction is unsuccessful; otherwise, there will be disadvantages. Currently, the draft law handles unsuccessful auctions differently for each type of asset. Therefore, it is recommended to study additional provisions to allow for a reduction in the starting price of assets after each unsuccessful auction.

“There must be regulations for re-auctions and how to reduce the price for each subsequent auction. This issue requires regulations and frameworks from the Government. We cannot predict all the actual market developments in life without regulations. This law is highly technical and specialized, involving administrative reform procedures, rights, interests of parties, and many other heavy technical bills,” the Chairman of the National Assembly emphasized and requested relevant agencies to continue reviewing to resolve bottlenecks.

Enhancing online auctions with state assets

Regarding online auctions and the application of online auctions to state assets, Vice Chairman Nguyen Minh Son stated that the Standing Committee of the Economic Committee proposes to incorporate additional provisions on online auctions based on the legalization of regulations on online auction forms that are consistent with the reality in Decree No. 47/2023/NĐ-CP amending and supplementing certain articles of Decree No. 62/2017/NĐ-CP by the Government

At the same time, it is stipulated that for cases where the auction of state assets is conducted through online auctions, the National Asset Auction Portal established, managed, and operated by the Ministry of Justice is required to strengthen the application of information technology, promote digital transformation in auction activities, ensure cybersecurity, and on the other hand, this is considered as a solution to minimize collusion, price suppression, negative impact, and loss of state assets in auction activities.

However, Mr. Nguyen Minh Son said that there is also a suggestion that it should not be compulsory to use the National Asset Auction Portal to conduct online auctions, as individuals with assets should have the right to choose and decide because more than 15 auction organizations currently have approved online auction information pages. The mandatory regulation mentioned above is not suitable for social orientations, does not ensure equal competition, and may lead to the abandonment of online auction information pages established and operated by auction organizations, causing waste to society because most auctioned assets are state assets.

Regarding this matter, Minister of Justice Le Thanh Long said that the government’s proposal is to build and consolidate the portal or auction page within the ministry; later, according to the socialization plan, a software application for online auctions would be developed.

“The spirit of the government’s proposal and the viewpoint of the Ministry of Justice is that we do not require all state assets to go through the ministry’s portal to ensure civil principles and the market,” emphasized Mr. Le Thanh Long.

SOURCEcafef
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