Project legal due diligence: Checklist and valuation guide

Project legal due diligence refers to the review of all documents, permits and decisions issued by competent state authorities that demonstrate whether a project is being developed in compliance with applicable regulations. It is a fundamental factor affecting investment security, financing capacity and project asset value.

In practice, more than 70% of project investment risks are often attributed to incomplete or non-compliant legal documentation rather than market conditions.

Quick overview of project legal due diligence

• Project legal documentation generally covers 5 key groups: investment approval – land – planning (1/500) – construction – environment/fire prevention and fighting

• General legal process: 6 steps from investment approval → planning → land → environment → permits → acceptance

• 1/500 detailed planning is a key condition for project implementation and commercialization

• Incomplete legal documentation may result in project being discounted by 10 – 50% in value or becoming ineligible for financing.

• In valuation, legal documentation is a key input for determining asset value and assessing investment risks

What does project legal documentation include?

A project may be considered legally complete when the required documentation under the following five groups has been properly obtained:

1. Investment approval and registration documents

• Decision on approval of investment policy

• Investment Registration Certificate

• Written approval of the investor

2. Land documentation

• Decision on land allocation / land lease

• Certificate of land use rights

• Compensation and site clearance documentation

• Approval for change of land use purpose, if applicable

3. Planning documentation (a key component of project legal due diligence)

• 1/2000 zoning plan

• 1/500 detailed planning as a basis for construction procedures and relevant project development activities

4. Construction documentation

• Construction permit

• Approved technical design documents

• Design appraisal documentation

5. Environmental – fire prevention and fighting documentation

• Environmental impact assessment report

• Fire prevention and fighting design appraisal documents

In valuation, missing or incomplete documentation may be recorded as a risk factor that could affect the asset value.

Legal documentation for construction investment projects

A complete set of documents may generally include:

• Decision on approval of investment policy

• 1/500 planning documents

• Land documentation and Certificate of land use rights

• Environmental Impact Assessment report

• Construction permit

• Construction acceptance documentation

This is an important legal document checklist for investment projects used by:

• Banks when reviewing credit applications

• Appraisal organizations when conducting valuation

• Investors when assessing and controlling risks

Legal documentation for real estate and land subdivision projects

1. Legal documentation for real estate projects (housing/urban development)

Key items to review include:

• Approved 1/500 detailed planning

• Legal status of the land

• Conditions for capital mobilization and real estate business activities

2. Legal documentation for land subdivision projects

Particular attention should be paid to:

• Whether 1/500 detailed planning has been approved

• Whether subdivision and sale of land plots are permitted

• Whether infrastructure has been completed

• Whether the land has a clear legal status

Legal grounds for developing an investment project

A legally compliant project is generally developed based on the relevant provisions of:

• Law on Investment

• Land Law

• Law on Construction

• Law on Real Estate Business

• Local planning regulations

These legal frameworks provide the basis for ensuring that a project:

• Receives the required approvals

• Is implemented in accordance with applicable regulations

• Has a sufficient legal basis for development and commercial activities

Legal process of an investment project

1. Approval of investment policy

2. Preparation & approval of planning (1/2000 → 1/500)

3. Land allocation/lease and completion of land procedures

4. Environmental and fire prevention and fighting procedures

5. Application for construction permit

6. Construction – acceptance – eligibility for operation

This is a general framework for real estate, infrastructure and energy projects. Additional sector-specific permits may be required depending on the nature of the project.

Why does legal status affect project value?

In valuation, legal status is always a fundamental factor because it may significantly affect whether a project can be developed, transferred, financed or commercially exploited.

• Complete and consistent legal documentation: May support stronger marketability, financing capacity and value

• Incomplete legal documentation: May require adjustments depending on the nature, severity and expected time needed to complete the required procedures

• Legal violations or disputes: May materially affect value, marketability and financing eligibility

As the market increasingly emphasizes transparency, Indochina International Appraisal provides project valuation services combined with a review of relevant legal information to help businesses and investors identify potential risks at an early stage.

​When using project valuation services at Indochina International Appraisal, clients can receive support in:

• Reviewing key legal documents according to each stage of the project

• Identifying factors that may affect value and transaction feasibility

• Analyzing the potential impact of legal issues on cash flow and investment performance

• Preparing clear valuation reports suitable for relevant banking and M&A purposes

Are you preparing to purchase, sell or transfer a project, obtain bank financing, raise capital or conduct an M&A transaction? Contact Indochina International Appraisal for:

• Preliminary consultation on project documentation

• Guidance on an appropriate valuation approach

• Prompt quotation and implementation according to the required schedule

Indochina International Investment & Appraisal JSC (SunValue)

• Address: Indochina International Appraisal System

• Hotline/Zalo: 081 519 8877

• Email: contact@sunvalue.vn

• Facebook: Indochina International Appraisal

• Website: inavn.vn

Conclusion

Project legal documentation is a fundamental factor affecting project value and investment security. Valuation should therefore be closely linked to the assessment of legal factors so that relevant risks and the asset’s potential can be properly reflected. Choosing a specialized appraisal organization such as Indochina International Appraisal can help businesses and investors obtain a reliable valuation, manage risks and improve transaction efficiency.