Vietnam: Is it allowed to lease mortgaged houses? Do lessors of mortgaged houses have the right to terminate housing lease agreements?
Is it allowed to mortgage houses under lease agreements in Vietnam?
Pursuant to Article 146 of the 2014 Law on Housing on mortgage on houses under lease agreements as follows:
Mortgage on houses under lease agreements
1. The homeowner is entitled to mortgage the house under lease agreement provided that he/she notify the lessees of the mortgage in writing in advance. The lessees are entitled to keep renting for the rest of the lease term.
2. In case the house under the lease agreement is settled to fulfill the obligations of the mortgagor, the lessees are entitled to keep renting for the rest of the lease term, unless the lessees commit violations prescribed in Clause 2 Article 131 of this Law or otherwise agreed.
Thus, the homeowner is entitled to mortgage the house under lease agreement provided that he/she notify the lessees of the mortgage in writing in advance. The lessees are entitled to keep renting for the rest of the lease term.
Is it allowed to lease mortgaged houses in Vietnam?
Pursuant to Article 321 of the Civil Code 2015, the rights of mortgagor are as follows:
Rights of mortgagor
1. Exploit, and to enjoy the yield and income derived from, the property, except where the yield and income also form part of the mortgaged property as agreed.
2. Invest in order to increase the value of the mortgaged property.
3. Recover the mortgaged property and related documents held by a third person when the obligation secured by the mortgage is terminated or is substituted by other security.
4. Sell or replace mortgaged property being goods rotating during the production and business process. In the case of a sale of mortgaged property being goods rotating during the production and business process, the right to require the purchaser to pay money, the proceeds received or the assets formed from the proceeds received shall form the mortgaged property in substitution for the property which was sold.
When a warehouse is mortgaged, the mortgagor may substitute goods in the warehouse but must ensure the value of the goods in the warehouse remains the value agreed.
5. Sell, exchange or give mortgaged property not being goods rotating during the production and business process with the consent of the mortgagee or as prescribed by law.
6. Lease or lend the mortgaged property provided that notice must be provided to the lessee and the borrower that the property is being mortgaged and that the mortgagee must also be notified that such notice has been provided.
Thus, the mortgagor has the right to lease a mortgaged house that notify the lessees of the mortgage in writing in advance.
Do lessors of mortgaged houses have the right to terminate housing lease agreements in Vietnam?
Pursuant to Article 131 of the 2014 Law on Housing, cases of termination of housing lease agreements are as follows:
Terminating lease agreement
1. With respect to agreements on state-owned house lease, they shall be terminated if they are subject to one of the cases prescribed in Clause 1 Article 84 of this Law.
2. With respect to agreements on non-state-owned house lease, they shall be terminated in one of the following cases:
a) The lease agreement expires; regarding the unlimited term agreement, it shall terminate after 90 days, from the day on which the lessor notify the lessee of the termination of the lease agreement;
b) Both contracting parties agree to terminate the agreement;
c) The house for lease no longer exists;
d) The lessor does not live with anybody when he/she dies or is declared missing by the court;
dd) Any house for lease which is damaged, in danger of collapse or in the area subject to land withdrawal or housing clearance or demolition according to decisions issued by the competent agency; or any house for lease subject to decision on compulsory purchase order or commandeering issued by the State to use for other purposes.
The lessor must notify the lessee of the termination of the lease agreement in writing 30 days in advance as prescribed in this Clause, unless otherwise agreed;
e) The agreement terminates as prescribed in Article 132 of this Law.
In addition, Clause 2, Article 34 of Decree No. 21/2021/ND-CP stipulates the mortgage related to leased and lent properties.
Mortgage relating to leased properties, lent properties
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2. In case mortgaged properties that are being leased or lent are dealt with according to Article 299 of the Civil Code, lease agreements and loan agreements shall not be terminated, and hiring parties and borrowing parties shall continue to hire and borrow the properties until the agreements expire.
Thus, lessors of mortgaged houses do not have the right to terminate housing lease agreements in Vietnam.
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