It has unilaterally announced that the deadline is next Monday. In its announcement, Empire Group, the project's developer, stressed that its customers need to select one of the three options the company had offered in place of the cancelled annual return payments, before the end of December 30, 2019.
Should a customer fail to select an option by this deadline, the company will ask its lawyers to resolve issues regarding the cancellation of their contracts between January 2-19, 2020.
Last month, the group had informed its 1,700 buyers that it would stop paying them the 12 percent annuity from next year, despite having guaranteed these payments until 2026 earlier. Instead, it offered three alternative options for the buyers.
In the first option, buyers could opt to have their condotel units converted into apartments after paying a conversion fee, which is 15 percent of the unit's purchase price. After the conversion, buyers could either move into their apartments or let the Empire Group operate the apartment for a share of the profits.
Alternatively, buyers could choose to keep their units as condotels, in which case they would not need to pay the conversion fee but would not be allowed to move into their units. Additionally, they would have to sign a contract with Empire Group allowing the company to operate the condotel units for 10 years, in return for either a fixed income or an 80 percent share of the profit.
In the second option, buyers would receive and operate their condotel units by themselves without receiving any guaranteed return from the developer. In this option, buyers would receive land use rights for their units by the fourth quarter of next year, and must still pay certain operation and usage fees.
The third option would have both sides cancel the condotel contracts, and Empire Group would refund the entire purchase price of the condotel units as stated in the contracts minus a number of fees. The deadline for the refund process would be September 30, 2020.
Speaking to VnExpress Wednesday, a representative of the Empire Group said most of the buyers had replied to the company, but many did not specify which option they had decided on; or included additional conditions that the company was still negotiating.
As for Empire Group's claim that it would cancel contracts after December 30, Phung Viet Vinh of the Hanoi Bar Association it would be a unilateral action and buyers who disagree could sue it.
Cocobay is a 51-hectare hospitality and entertainment complex in Ngu Hanh Son District, Da Nang City. Construction began in 2016 at a budgeted cost of around $5 billion. Empire Group had planned to build 10,000 three- to five-star rooms, but has so far built just 3,000.
It has been reporting losses since 2017, accumulating VND134 billion ($5.78 million) as of last year. It has debt obligations of VND10.17 trillion ($438.3 million).
Condotels became popular in Vietnam in 2016-2017, but there is no legal framework that deals specifically with this kind of property.
Ownership of a condotel unit is merely an agreement between a buyer and the developer, and the buyer does not have a pink book, which is the title deed to apartments and houses. This means buyers don't have strong legal protection in a conflicts with developers.
In the third quarter of this year, 3,680 condotel units came online, 46 percent lower than the first quarter, according to the Vietnam Association of Realtors.