Can I use my car in traffic when my car's documents have been mortgaged at the bank in Vietnam?

Can I use my car in traffic when my car's documents have been mortgaged at the bank in Vietnam?

Article 317 of the 2015 Civil Code stipulates the following regarding 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.

According to Point 1 of Official Dispatch 8601/VPCP-CN 2017, regulations on the use of Vehicle Registration Certificates in case of mortgaging vehicles at credit institutions are as follows:

1. Drivers of vehicles participating in traffic may use a certified copy of the vehicle registration certificate , accompanied by an original valid receipt from a credit institution, instead of the original vehicle registration certificate to participate in traffic in the territory of Vietnam while the credit institution holds the original vehicle registration certificate to ensure civil obligations in mortgaging the vehicle.

Thus, when mortgaging a car at a bank, the bank will keep the original documents to ensure you fulfill your civil obligations in Vietnam.

In case the original vehicle documents are retained, you can use a certified copy of the Vehicle Registration Certificate and the original valid bank receipt to continue participating in traffic in Vietnam.

When a traffic accident occurs with a mortgaged car, will the insurance pay insurance money to the bank or car owner in Vietnam?

According to Article 318 of the 2015 Civil Code, mortgaged property is specified as follows:

1. Where entire immoveable property or moveable property having auxiliary objects is mortgaged, such auxiliary objects shall also form part of the mortgaged property, unless otherwise agreed.

2. Where a portion of immoveable property or moveable property having auxiliary objects is mortgaged, such auxiliary objects shall also form part of the mortgaged property, unless otherwise agreed by the parties.

3. With respect to mortgage on land use rights that property on land is owned by the mortgagor, such property shall also part of the mortgaged property, unless otherwise agreed.

4. Where mortgaged property is insured, the mortgagee must notify the insurer that the insured property is being mortgaged. The insurer shall pay the insured sum directly to the mortgagee upon occurrence of an insured event.

If the mortgagee failed to notify the insurer that the insured property was mortgaged, the insurer shall pay the insured sum in accordance with the insurance contract and the mortgagor shall be obliged to make payment to the mortgagee.

If the bank notifies the insurance organization that the insured car is being used as collateral, the insurance organization will pay the insurance money directly to the bank when an insured event occurs in Vietnam.

In case the bank does not notify the insurance organization that the insured car is being used as collateral, the insurance organization will pay the insurance money according to the insurance contract and you are obliged to pay the bank in Vietnam. 

What are obligations of the car mortgagor in Vietnam?

Pursuant to Article 320 of the 2015 Civil Code, obligations of the mortgagor are stipulated as follows:

1. Transfer documents related to the mortgaged property, unless otherwise agreed or prescribed by law.

2. Take care of and preserve the mortgaged property.

3. If the mortgaged property is in danger of losing its value or depreciating in value due to its exploitation, to take necessary remedial measures, including ceasing the exploitation of the mortgaged property.

4. When the mortgaged property is damaged, the mortgagor is obligated to, within a reasonable period, repair or substitute another property with equivalent value, unless otherwise agreed.

5. Provide information about the actual condition of the mortgaged property to for the mortgagee.

6. Deliver the mortgaged property to the mortgagee for realization in one of the cases prescribed in Article 299 of this Code.

7. Notify the mortgagee of any third person rights with respect to the mortgaged property (if any). In the case of failure to provide such notice, the mortgagee shall have the right to cancel the contract of mortgage of property and demand compensation for damage or the right to maintain the contract and agree on the rights of the third person with respect to the mortgaged property.

8. Do not sell, exchange or give the mortgaged property, except in the cases provided in Clauses 4 and 5 of Article 321 of this Code.

With the above regulations in Vietnam, you are the mortgagor of the car and you must fulfill the above obligations with the asset that is your car with the mortgagee, the bank.

Best regards!