Consequences of buying a home without a mortgage check and how to avoid it in Vietnam

Some provisions on collateral are provided for in the Civil Code 2015 of Vietnam 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.

Article 321. Rights of the mortgagor

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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.

Therefore, unless otherwise agreed by the mortgagee or as prescribed by law, the mortgaged real estate sale and purchase contract will render the contract null and void.

Below is the judgment 456/2017/DS-ST dated September 27, 2017 on the dispute over the house purchase and sale deposit contract to show the content of the deposit contract being invalidated because the seller of the mortgaged property has not with the consent of the Mortgage Bank.

“Mrs. N makes a deposit to buy Mr. L's house in Thu Duc district, with a deposit of 40,000,000 VND and an agreement on a deposit penalty of 120,000,000 VND if the seller does not sell. When making a deposit, Ms. N did not look at the original land use right certificate (LURC) but only looked at the copy, and at the same time did not check whether the property was mortgaged at the Bank or not.

At the time of depositing the property being mortgaged at the bank and Mr. L's sale to another person without the consent of the mortgagee, caused the court to declare the deposit contract null and void.

There are many cases where the seller, despite being mortgaged by a bank, still intentionally sells real estate without telling the buyer, in addition to the basic information that must be checked before buying land such as seller information, planning, land plot boundaries... then the condition of the land plot is mortgaged or not is equally important. Here are some methods that people can perform their own check on the condition of a property for low mortgages:

First: Check the information in the book 

When the bank accepts the mortgage, the bank can write it directly on the certificate of land use right or will attach a separate paper (between this sheet and the certificate there is a border stamp of the land registration agency). This information is shown on the sides of the certificate, number 3 or number 4 of the book.

Normally, the property that is legally mortgaged is kept the original by the mortgagee and stamped by a competent authority with the words: "Land use right mortgaged to the bank...according to contract no.. .”. If the seller wants to hide the mortgage information, they may show you a photocopy or remove the sheet. When observing, you will see that in a corner, a certain edge of the window has only half a border mark or a stamp of a stapler, you need to pay attention to these points.

Second: Look up information at notary offices

Information on bank mortgages can also be looked up at notary offices, you only need a copy of the certificate to ask them to look up information about the mortgage or some other information related to the blocking of transactions of real estate, this search is usually free or very low cost, depending on the notary office.

Third: Check the information at the authorities

You will usually check information about mortgaged property at the Land Registry Office or a Branch of the Land Registry. We ask the seller to take a photo of a certificate to check the condition of the real estate mortgaged or not

Fourth: Ask people who live adjacent to the property you plan to buy

Finding out information about the local people is also an effective way. And sometimes the people who live in the locality where the real estate is expected to buy has very complete information about the condition of the property as well as the security of that place. These are also important information before you make a buying decision.

The sale of mortgaged real estate is happening a lot nowadays, so everyone needs to equip themselves with some basic knowledge to protect themselves in transactions.