Is mortgage transaction invalid in Vietnam? If I buy a car with an oral contract, will contract be invalid in Vietnam?

Is mortgage transaction invalid in Vietnam? If I buy a car with an oral contract, will contract be invalid in Vietnam?

I received a transfer of real estate from an acquaintance for VND 2.5 billion, I was granted a Certificate of land use rights for this transferred house, Then I took this property to mortgage the bank to get 2 billion to invest. I invested in securities and earned nearly 4 billion, but it was only a year since my house was declared an untraded property, and my previous home sale contract was declared invalid by the court. After all, the bank heard about the news asking me to sell shares urgently to pay them. Would you tell me if my mortgage transaction in this case would automatically be invalid? Do I have to sell the shares to return the original two billion to the bank?

Reply:

Pursuant to Clause 2, Article 133 of the 2015 Civil Code stipulates:

2. In cases where a civil transaction is invalid but the transacted property is registered at a competent authority and such property has already been transferred to a bona fide third party through another transaction which is established according to that registration, such transaction shall remain valid.

In cases where the transacted property which is required to be registered has not registered at a competent authority, the transaction with the third party shall be invalid, except for cases the bona fide third party received such property through an auction or a transaction with an another party being the owner of such property pursuant to a judgment or decision of a competent authority but thereafter such person is not the owner of the property as a result of the judgment or decision being amended or annulled.

Thus, the purpose of a mortgage is that the obligor uses the property under his/her ownership to secure the performance of an obligation towards the mortgagee, in case such obligation is not performed or performed by the mortgagor. If it is incorrect, the mortgaged property must be handed over to the mortgagee for handling in order to ensure the interests of the mortgagee. Therefore, in this case, the mortgage of the property must be considered as a conditional asset transfer transaction; In order to ensure the interests of the righteous mortgagee, it is necessary to understand that the provisions of "transfer by another civil transaction" in Clause 2, Article 133 of the Civil Code are applicable even in the case of mortgage transactions. 

Therefore, in case the house and land transfer transaction is invalidated, but the transferee has been granted a certificate of house ownership and land use right and has mortgaged such house and land use right to the Bank in accordance with the law in Vietnam. According to the law, that mortgage transaction is not invalid, so you do not have to sell your shares to return 2 billion to the bank immediately but follow the agreement of the mortgage contract.

If the person signing the contract to use the ID card expires, will the contract be invalidated?

I bought a car from another person with an oral contract. Is my contract invalid?

Reply:

Pursuant to Clause 2, Article 119 of the 2015 Civil Code:

2. In cases where it is provided for by law that a civil transaction must be expressed in writing, notarized, authenticated, registered or permitted, such provisions must be complied with.

Article 129 of the 2015 Civil Code clearly states: A civil transaction violating conditions for validity pertaining to form shall be invalid, except for any of the following cases:

1. If the form of a civil transaction, required to be established in writing, does not comply with regulations of law, but a party or the parties has/have fulfill at least two third of the obligations in the transaction, a court, at his/her/their request(s), shall issue a decision on recognition of the validity of such transaction.

2. If the form of a civil transaction, required to be established in writing, violates against regulations on notarizing or authorization, but a party or the parties has/have fulfill at least two third of the obligations in the transaction, a court, at his/her/their request(s), shall issue a decision on recognition of the validity of such transaction. In this case, the parties need not perform the notarizing or authorization.

Compared with your case, your oral car sales contract will in principle be formally invalid according to this provision in Vietnam. However, it is necessary to consider in fact how far the parties have performed the transaction, if one or both parties have performed at least 2/3 of the obligations, if the parties ask the Court to recognize the validity of the transaction, this transaction is still valid.

If a person uses an expired ID card to sign a contract, will the contract be invalid in Vietnam?

I signed a contract to buy goods with someone in another province, but when I read the contract carefully, I found that this person had used the expired ID card. I am very worried whether my contract signed with this person will be invalid? Please advise me.

Reply:

According to the provisions of Article 116 and Article 117 of the 2015 Civil Code:

Article 116. Civil transactions

Civil transaction is a contract or a unilateral legal act which gives rise to, changes or terminates civil rights and/or obligations.

Article 117. Conditions for effective civil transactions

1. A civil transaction shall be effective when it satisfies all of the following conditions:

a) Participants in the transaction have legal personality and/or legal capacity in conformity with such transaction;

b) Participants in the transaction act entirely voluntarily;

c) The purpose and contents of the transaction are not contrary to the law and/or social ethics.

2. The forms of civil transactions shall be the conditions for its effectiveness in cases where it is so provided for by law.

According to this Article, an invalid civil transaction is a transaction without one of the above factors. In addition, the contract is void when the following conditions are not met:

- Civil transactions are invalid due to violation of the prohibition of the law or against social ethics.

- Civil transactions are invalid due to forgery.

- Civil transactions are invalidated and performed by minors, people who have lost their civil act capacity, people with difficulties in cognition and behavior control, or people with limited civil act capacity. 

- Civil transactions are invalid due to confusion.

- Civil transactions are invalid due to deception, threats or coercion.

- Civil transactions are invalid because the originator is not aware of and controls his/her actions.

- Civil transactions are invalid due to non-compliance with regulations on form.

Therefore, in case the people's identity card has expired, it has no value to prove identity when transacting, but if it is still guaranteed about the subject of the contract, it will not affect the signing of all kinds of contracts and the contract shall not be deemed invalid in Vietnam.

Best regards!