In what cases can banks hold real estate in Vietnam?

In what cases can banks hold real estate in Vietnam?

In Article 132 of the Law on Credit Institutions 2010, there are regulations on real estate trading as follows:

Real estate trading

Credit institutions may not deal in real estate, except in the following cases:

1. They purchase, invest in and own real estates used as their business buildings and offices or warehouses in direct service of then- professional operations;

2. They lease part of their own business buildings which are not yet used;

3. They hold real estate as a result of debt handling. Within 3 years after issuing a decision to handle a security asset being real estate, credit institutions shall sell, transfer or purchase this real estate so as to ensure the ratio of investments in fixed assets and the use purposes of fixed assets specified in Article 140 of this Law.

Thus, the bank is allowed to hold real estate in case of debt settlement for a maximum of 03 years from the date of decision to handle real estate security assets in Vietnam.

Within 03 years, the credit institution must sell, transfer or buy back this real estate to ensure the investment ratio in fixed assets and the purpose of using the fixed assets in Vietnam. 

In what cases can banks hold real estate in Vietnam? (Image from the Internet)

How many ways are there to handle mortgaged real estate in Vietnam?

Article 303 of the 2015 Civil Code stipulates the methods of realizing collateral as follows:

Methods of realizing collateral

1. The securing party and the secured party may agree any of the following methods of realizing collateral:

a) Put collateral up for an auction;

b) The secured party sells collateral itself;

c) The secured party accepts the collateral as substitutions for the performance of obligations of the securing party;

d) Other methods.

2. If there is no agreement on methods of realizing collateral as prescribed in Clause 1 of this Article, the collateral shall be put up for auction, unless otherwise prescribed by law.

Thus, there are 4 ways to handle mortgaged real estate in Vietnam:

(1) Asset auction;

(2) The secured party sells the property himself;

(3) The secured party receives the property itself as a substitute for the performance of the securing party's obligations;

(4) Other methods.

When amount of collateral handled is lower than value of the secured obligation, what is handling for unpaid obligation in Vietnam?

In Article 307 of the 2015 Civil Code, there are regulations on payment of the sum of money obtained from the realization of collateral as follows:

Payment of the sum of money obtained from the realization of collateral

1. The sum of money obtained from the realization of the collateral after deducting from the cost of preservation, capture and realization of the collateral shall be paid in order of priority specified in Article 308 of this Code.

2. Where the sum of money obtained from the realization of the collateral, after deducting from the cost of preservation, seizure and realization of the collateral is greater than the value of secured obligations, the difference amount must be paid to the securing party.

3. Where the sum of money obtained from the realization of the collateral, after deducting from the cost of preservation, seizure and realization of the collateral is less than the value of secured obligations, part of the unpaid obligations are defined as unsecured obligations, unless the parties otherwise agree additional collateral. The secured party may request the obligor to perform the unpaid secured obligations.

Thus, in case the amount of mortgage real estate disposal is lower than the value of the secured obligation, the unpaid obligation is determined to be an unsecured obligation in Vietnam.

Except in cases where the parties have agreed to add collateral. The bank has right to request the party with the secured obligation to perform the unpaid obligation in Vietnam.

Best regards!