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DECREE 12 | PRICE APPRAISALS |

DECREE 12 | PRICE APPRAISALS

Overview

Decree No. 89/2013/ND-CP was promulgated on 6 August 2013 (“Decree 89”) to guide the Law on Prices for price appraisals and it is still in effect. However, recently, the Government made some amendments to Decree 89 through new Decree 12/2021/ND-CP dated 24 February 2021 (“Decree 12”). The following sections break down some outstanding points which are reflected in the new Decree that took effect on 1 May 2021.

Notable amendments in Decree 12

Decree 12 adjusts applications and procedures for the issuance of the Certificate of Eligibility for price appraisal (“COE”). Specifically, the two application forms that are required for the COE issuance and re-issuance procedures under Decree 89 , respectively, have been unified under Decree 12 . Moreover, the application dossier for the COE issuance requires a list of member/shareholder’s capital contributions certified by the appraisal enterprise (only if such details are not included in its Enterprise Registration Certificate) . Another change regarding the procedure of the COE issuance concerns the process period. According to Decree 12, the limit of period for the re-issuance procedure is similar to the issuance procedure, which is within fifteen working days from the receipt of a valid and complete dossier.
Further, Decree 12 changes the definitions of prices of appraisal service (“Service Pricing”). Existing provisions under Decree 89 stating that such Service Pricing shall comply with agreements between the appraisal enterprise and the client, it shall also be described in a contract of price appraisal . Besides, Decree 12 provides other principles to determine Service Pricing, including the counter-balance of actual production and business costs; profitableness and reasonableness in the market.

Additional provisions in Decree 12

According to Decree 12, a practicing price appraiser (except for the legal representative of an appraisal enterprise) must sign at least 10 Price Appraisal Certificates and Price Appraisal Reports in the relevant year if that appraiser has previously informed of their practicing. By 15 December in a practicing year, unless the above-mentioned quantity is fulfilled, such a practicing price appraiser is not allowed to register for practice the following year.
Criteria of requirements for the legal representative and director of a price appraisal enterprise are clearly prescribed in Decree 12. For example, such a person obtaining either of the two listed positions must acquire experience as a price appraiser for at least 36 months prior to the obtaining of that position. He/she must, however, not obtain such positions of a price appraisal enterprise whose COE has been revoked for 12 months prior to the application for the COE issuance for a new price appraisal enterprise . Note that existing enterprises being issued with the COE must manage to meet such requirements of the legal representative and director no later than 31 December 2021.
In addition, for price appraisal enterprises which are not permitted to provide their services, stricter restrictions are applied under Decree 12. Such enterprises that do not satisfy the applicable conditions under the Law on Prices , yet are not subject to suspension of their operations, are still not permitted to enter into any service contracts of price appraisal.
There is a new regulation for the procedure of creating and storage of the property’s price appraisal dossier. A copy of the Price Appraisal Report or conclusion must be sent via official dispatch, by fax or via the electronic reporting system to the Ministry of Finance, except for the case where the properties are on the list of State’s secret properties. This helps to build a database serving for information and the State’s management of price appraisal.
Furthermore, Decree 12 also prescribes a guide for dispute resolution over appraisal results between appraisal enterprises and clients. Accordingly, such disputes shall be resolved adopting applicable methods, including negotiation and conciliation based upon the appraisal contract, commercial arbitration, and lodging a lawsuit at a Court .

Conclusion

As promulgated as a supplement legal provision although not completely replacing Decree 89, some regulations under Decree 12 are necessary to be read and applied with relevant provisions in Decree 89 and other laws. Meanwhile, a number of new regulations in Decree 12 require the attention of practicing appraisers and appraisal enterprises because these provisions focus on standards and requirements of providing the service of price appraisal.

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