Cancel the contract of land use right transfer when the buyer has been transferred, but has not delivered enough money in Vietnam

In the Appellate Civil Judgment No. 378/2019/DS-PT dated October 24, 2019 on the dispute over the contract for the transfer of land use rights and assets attached to the land; The mortgage contract has the following contents:

“ Mr. P signed a contract to transfer land use rights and other assets attached to land in plot 605, plot 609, along with map number 06 with Ms. H, the actual transfer price was 3,300,000,000 VND. Ms. H has paid Mr. P 1,600,000,000 VND, the remaining amount agreed upon by the parties after obtaining the certificate of transfer to Ms. H's name will be fully paid to Mr. P. On November 3, 2016, Ms. H was granted a license, Mr. P knows and does not complain or dispute, but Mr. P has asked Ms. H to pay the remaining amount many times, but Ms. H has not done it. On November 8, 2016, Ms. H signed a contract to mortgage the above land use right with Bank A to borrow an amount of VND 2,500,000,000.

Mr. P thinks that Ms. H's work has directly infringed on his legitimate rights and interests, so he asks the Court to cancel the contract on the transfer of land use rights and assets attached to the land; requests to cancel the mortgage contract between Ms. H and Bank A. "

The People's Court of Dong Thap province has commented: The real estate transfer transaction of Mr. P to Ms. H is real and voluntary; however, the parties have only performed the contract in terms of legal procedures; The main content of the contract has not been implemented, so Mr. P's request to cancel the transfer contract is grounded.

After signing and notarizing the transfer contract, in theory, the real estate transaction has been completed. However, in fact, at this time, most of the buyers have not yet delivered enough money, although they have completed the procedures for transferring the name on the red book, the seller has not yet handed over the house and land to the buyer. This can be considered an unfulfilled contract.

The 2013 Land Law of Vietnam provides:

Article 168. Time to exercise the rights of land users

1. Land users may exercise the rights to transfer, lease, sublease, donate and mortgage land use rights and to contribute land use rights as capital upon receipt of a certificate. In case of exchanging agricultural land use rights, land users may exercise their rights upon receipt of a decision on land allocation or land lease. In case of inheritance of land use rights, land users may exercise their rights upon receipt of a certificate or when they are eligible to be granted a certificate.

A land user who is allowed to delay the performance of, or owe, his/her financial obligations, may exercise his/her rights only after fulfilling all financial obligations.

2…

Therefore, the seller is obliged to fulfill all financial obligations toward the buyer in order to have all the rights of the land user.

In the case like the above judgment, Ms. P has only paid one part (less than 50%) of the amount to be assigned to Mr. P, Ms. P has no intention of continuing to perform the obligation and is also unable to perform the obligation. obligation obligation.  So, Ms. P only completed the transfer procedures but did not complete the contract content. If this is a breach of the contract, then the seller has the right not to deliver the property or when the buyer has grounds to prove his/her rightst and their legitimate interests are infringed, they have the right to initiate a lawsuit to a competent court to request the cancellation of the land use right transfer contract as prescribed in Article 423 of the 2015 Civil Code.

Article 423. Cancellation of contracts

A party has the right to cancel the contract and not have to compensate for damage in the following cases:

a) The other party's breach of the contract is the cancellation condition agreed upon by the parties;

b) The other party seriously violates the contractual obligations;

c)…

Moreover, although the buyer has somehow been granted a land use right certificate when the financial obligations have not been fulfilled, the buyer is not entitled to exercise the rights to donate, mortgage, capital contribution, ... land use rights.

In conclusion, the seller needs to be careful when handing over the notarized contract or transferring the land use right title without receiving enough money to avoid unnecessary troubles later.

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