Currently, the condition for getting a loan quickly is that the borrower has collateral for the loan, which can be houses, land use rights, or other assets. Can one property secure multiple loan obligations in Vietnam?
Article table of contents
Can one property secure multiple loan obligations in Vietnam? (Source: Internet)
1. What is "collateral"?
-According to Article 105 of Vietnam's Civil Code 2015, property is defined as follows:
Property comprises tangible things, money, valuable papers and property rights.
Property comprises immovables and movables. Immovables and movables can be existing assets or assets formed in the future.
According to Article 8 of Decree 21/2021/ND-CP, collateral is understood as property used for security for obligation fulfillment, including:
+ Current properties or off-plan properties, except for cases where the Civil Code or other relevant laws forbid sale, transfer or other change of ownership at the time of establishing security contracts, security measures;
+ Properties sold under property sale agreements with retention of ownership;
+ Properties considered as subjects of obligations under infringed bilateral contracts in case of lien measures;
+ Properties under general public’s ownership if prescribed by relevant laws.
2. Can one property secure multiple loan obligations in Vietnam?
According to Article 324 of Vietnam's Civil Code 2015, a property can secure multiple loan obligations as follows:
- A property can be used to secure the performance of many civil obligations, if its value at the time of establishment of the secured transaction is greater than the total value of all secured obligations, unless otherwise agreed upon or provided for by law.
- In cases where a property is used to secure the performance of many obligations, the securing party must notify the subsequent secure that the security property is being used to secure the performance of another obligation. Each time of security must be made in writing.
- In cases where property must be disposed of to secure the performance of a due obligation, the other obligations, though being undue, shall be considered being due and all the secures are entitled to participate in the disposal of the property.
The secure that has notified the disposal of the property shall have to dispose of the property, unless otherwise agreed upon by the secures.
In cases where the parties wish to continue performing the undue obligations, they may reach agreement on the use of other property by the securing party to secure the performance of undue obligations.
Thus, if the value of the collateral is greater than the total value of the liabilities, it can be used to secure the debt repayment obligation. At the same time, it is responsible for notifying the next secured party that the security property is being used to secure the performance of other obligations.
Quoc Dat
