RISKS ASSOCIATED WITH PROPERTY RIGHTS 

In real estate project financing, banks are increasingly accepting property rights arising from off-plan residential units as collateral, such as receivables under sale and purchase agreements, rights to receive handover of the property, or cash flows from buyers.

However, due to the absence of clear and consistent regulations under the Civil Code and specialized laws regarding the registration of property rights as collateral, significant legal risks remain.

First, the most critical risk concerns enforceability against third parties. While real estate assets benefit from a well-established registration system, property rights lack a transparent and unified registration mechanism. This creates the possibility that a single property right may be used to secure multiple obligations without a clear priority ranking. As a result, the legal position of the bank may be substantially weakened in enforcement scenarios.

Second, the certainty and enforceability of such property rights depend heavily on the progress of the project and the developer’s performance. If the project is delayed, suspended, or subject to disputes, the underlying rights may not yet exist or may not be enforceable, preventing the bank from realizing the collateral as intended.

In addition, valuation of property rights and control over cash flows remain challenging due to the lack of clear legal standards, particularly in relation to future receivables. This directly affects credit quality and the bank’s ability to recover debts.

Therefore, improving the legal framework governing the registration and enforcement of property rights is essential to mitigate risks and enhance the effectiveness of project financing activities in the banking sector.