Is the certificate of land use rights in Vietnam a property? Is it possible to pledge? Should I pledge the certificate of land use rights at a pawnshop or a bank?
Is the certificate of land use rights in Vietnam a property? Is it possible to pledge?
(1) Pursuant to Clause 16, Article 3 of the 2013 Land Law of Vietnam as follows:
“16. Certificate of land use rights and ownership of houses and other land-attached assets is a legal certificate in which the State certifies the lawful land use rights and ownership of houses and land-attached assets of the person who has land use rights and ownership of houses and land-attached assets.”
(2) Pursuant to Article 105 of the 2015 Civil Code of Vietnam on property as follows:
“1. Property comprises objects, money, valuable papers and property rights.
2. Property includes immovable property and movable property. Immovable property and movable property may be existing property or off-plan property.”
(3) Pursuant to Article 309 of the 2015 Civil Code of Vietnam stipulating as follows:
“Article 309. Pledge of property
Pledge of property means the delivery by one party (hereinafter referred to as the pledgor) of property under its ownership to another party (hereinafter referred to as the pledgee) as security for the performance of an obligation.”
Thus, certificate of land use rights and ownership of houses and other land-attached assets (also known as red book, pink book) is a legal certificate in which the State certifies the lawful land use rights and ownership of houses and land-attached assets of the person who has land use rights and ownership of houses and land-attached assets. Therefore, the certificate of land use rights is not subject to property pledge.
Is the certificate of land use rights of Vietnam a property?
Is pledge of certificate of land use rights considered invalid civil transaction?
(1) Pursuant to Article 122 of the 2015 Civil Code of Vietnam stipulating invalid civil transactions as follows:
“Civil transactions which fail to satisfy any one of the conditions specified in Article 117 of this Code shall be invalid.”
(2) Pursuant to Article 123 of the 2015 Civil Code of Vietnam stipulating invalidity of civil transactions due to breach of legal prohibitions or contravention of social ethics as follows:
“Civil transactions with objectives and contents which breach legal prohibitions or which contravene social ethics shall be invalid.
Legal prohibitions mean provisions of law which do not permit entities to perform certain acts.
Social ethics are common standards of conduct as between persons in social life, which are recognized and respected by the community.”
As mentioned above, the certificate of land use rights is not subject to a pledge because it is a legal certificate... If the pawnshop accepts your certificate of land use rights as a pledge, the transaction will be considered invalid for violating the prohibition of the law under Article 123 of the 2015 Civil Code.
If not pledged, can I mortgage the certificate of land use rights?
(1) Pursuant to Article 167 of the 2013 Land Law of Vietnam stipulating the right to exchange, transfer, lease, sublease, inherit, donate, mortgage land use rights and contribute land use rights as capital as follows:
“1. Land users may exercise the rights to exchange, transfer, lease, sublease, inherit, donate, mortgage land use rights and to contribute land use rights as capital in accordance with this Law.
2. A group of land users sharing land use rights have the following rights and obligations:
a/ A group of land users including households and individuals have the same rights and obligations as households and individuals in accordance with this Law.
In case one member of the group of land users is an economic organization, that group of land users has the same rights and obligations as economic organizations in accordance with this Law;
b/ For a group of land users sharing land use rights which can be split into portions for each member in the group, if every member wants to exercise his/her land use rights over such portion, they shall carry out the prescribed procedures to have the common land parcel split into different parcels of their own and apply for the certificates of land use rights and ownership of houses and other land-attached assets. Those members will then have the rights and obligations of land users in accordance with this Law.
In case land use rights of the group of land users can not be split into portions, the group shall authorize its representative to exercise the rights and perform the obligations of the group.
3. The notarization and certification of contracts and documents on the exercise of the rights of land users shall be conducted as follows:
a/ Contracts on transfer, donation, mortgage or contribution of land use rights as capital or the rights to use land and land-attached assets must be notarized or certified, except the case of real estate business prescribed at Point b of this Clause;
b/ Contracts on lease or sublease of land use rights or the rights to use land and land-attached assets, a contract on exchange of agricultural land use rights, a contract on transfer of land use rights or the rights to use land and land-attached assets in which one party or all parties involved in the transaction is/are a real estate business organization or organizations must be notarized or certified at the request of the parties;
c/ The documents on inheritance of land use rights or the rights to use land and land-attached assets must be notarized or certified under the civil law;
d/ The notarization shall be conducted at notarization-practicing organizations and the certification shall be conducted at commune-level People’s Committees.”
(2) Pursuant to Article 317 of the 2015 Civil Code of Vietnam stipulating as follows:
“Article 317. Mortgage of property
1. Mortgage of property means the use by one party (hereinafter referred to as the mortgagor) of property under the ownership of the obligor as security for the performance of an obligation to the other party (hereinafter referred to as the mortgagee) without transferring such property to the mortgagee.
2. The mortgaged property shall be held by the mortgagor. The parties may agree to deliver the mortgaged property to a third person to hold.”
Thus, according to Clause 1, Article 167 of the 2013 Land Law of Vietnam and Article 317 of the 2015 Civil Code of Vietnam, you have the right to mortgage the land use right of that lot to a bank or other person to borrow money. According to that, in this case, you will commit that if you fail to pay the borrowed debt as agreed, the mortgagee has the right to take that land from you to deduct the borrowed debt.
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