The contract for the transfer of land use rights is invalid due to forgery in Vietnam

Typically, the situation of lending money and then making fake house and land purchase and sale contracts to secure the loan or want to avoid debt repayment obligations and make fake contracts to disperse assets. So what are the legal consequences of that transaction?

Civil transaction is understood as a unilateral legal act or contract aimed at giving rise to, changing or terminating the civil rights and obligations of the parties.

For example, in Judgment 05/2019/DS-PT dated January 15, 2019 on the requirement to declare the contract of land use right transfer invalid, according to which:

“Mr. Le Minh H, Ms. Huynh Thi G and Ms. Vo Thi L participated in the donation and owed Ms. L an amount of VND 422,400,000. She filed a lawsuit on May 5, 2017 and was settled by the People's Court of Trang Bang district, Tay Ninh province by Judgment No. 27/2017/DS-ST dated June 30, 2017 forcing the decision that Ms. G and Mr. H is obliged to pay her the above amount.

She asked for judgment enforcement, but Ms. G and Mr. H did not voluntarily execute the judgment and the judgment enforcement agency informed that Mr. and Mrs. G had no assets to execute the judgment. Mr. H and Mrs. G have a house and land located in GN hamlet, PL commune, TrB district, Tay Ninh province, but they transferred it to Mr. Huynh Van D, who is Mrs. G's brother, on January 19, 2017. According to Ms. L, this contract is just a fake to avoid the obligation to pay her debt because Mr and Mrs. G still live on this house, Mr. D is very difficult economically, so he cannot have the money to pay the bills of land transfer.

The trial panel found that in 2017, Mr.G and Mrs. G owed money to the bank and many people, totalling up to about 8 billion VND. Mr. S sued Ms. G, Mr. H was accepted by the court on January 13, 2017, then on January 19, 2017, Ms. G and Mr. H transferred the house to her brother, Mr. D. Ms. G, Ms. L, Mr. S all confirmed that Ms. G owes money to Mrs. L and Mr. S before transferring the house and land in plot No. 322, map sheet No. 10, the land is located in GN hamlet, PL commune, TrB district, Tay Ninh province for Mr.D. However, Ms. G and Mr. H did not use the money gained from the land transfer to pay Ms. L and Mr. S but paid debts to other people who have not filed a lawsuit but also have no evidence to prove that they have paid anyone.

The court declared the land use right transfer contract between Mr. Le Minh H, Ms. Huynh Thi G and Mr. Huynh Van D dated January 19, 2017 to be forged and declared null and void according to the provisions of Clause 2, Article 124. Social legal.

 According to the provisions of law in Articles 124 and 131 of the 2015 Civil Code of Vietnam:

Article 124. Invalidity of civil transactions due to falsification

1. If the parties falsely enter into a civil transaction for the purpose of concealing another transaction, the false transaction shall be invalid and the concealed transaction remains valid, unless it is also invalid under the provisions of this Code or relevant laws.

2. If the parties enter into a civil transaction falsely for the purpose of evading responsibilities to a third person, such transaction shall be invalid.

Article 131. Legal consequences of invalid civil transactions

1. An invalid civil transaction shall not give rise to, change or terminate any civil rights and obligations of the parties as from the time the transaction is entered into.

2. When a civil transaction is invalid, the parties shall restore everything to its original state and shall return to each other what they have received.

If the restitution is not able to make in kind, it may paid in money.

3. A bona fide person in receiving yield and/or income is not required to return such yield and/or income.

4. The party at fault which caused damage must compensate therefore.

5. The settlement of consequences of invalid civil transactions regarding personal rights shall be prescribed in this Code and relevant laws.

When it is proved that a transaction is fake, that transaction will be invalidated in accordance with the law. But in fact, to prove a fake transaction to evade the debt payment obligation is not simple and depends a lot on the creditor himself because often the court rarely considers what assets the debtor previously had. Or did they just sell a property?

In the above case, it was the creditor's suspicion that helped her investigate and discovered that her debtor had made a fake transaction in advance, from which she filed a lawsuit in court to declare the transaction of transferring land use rights of Mr. H, Mrs. G and Mr. D invalid.

Regarding legal consequences: An invalid civil transaction does not give rise to, change or terminate the civil rights and obligations of the parties from the time of establishment; the parties must restore the original condition, return to each other what has been received; if it is not possible to return it in kind, it must be refunded in cash… The party at fault for causing damage must compensate. The parties involved in the sale and purchase transactions of the house that are declared invalid have the right to initiate another lawsuit to protect their legitimate rights and interests.