REAL ESTATE MORTGAGE AGREEMENT UNDER VIETNAM CIVIL CODE 2015

 In order to overcome the limitation of Civil Code 2005, The Vietnam Civil Code 2015 provides details and transparent regulations on mortgage on land use right and property attached on land. In general, The Vietnam Civil Code 2015 respects freedom of agreement of the parties, however, in cases where the parties have not agreed upon or failed to discuss upon, these issues will be handled according to the law as follows:

In principle, the land owner is also the owner of property attached on land. In case the property attached on land is not legally registered under the law of Vietnam, such property shall not be considered as mortgaged property and shall be executed separately.

Mortgage on land use rights without mortgage of property attached on land:

- if the land user is also the owner of the property attached on land; such property shall also part of the realized property;

- If the land user is not also the owner of the property attached on land, such owner may keep using such land within his/her rights and obligations during the realization of the land use rights. The rights and obligations of the mortgagor in relation with the owner of the property attached on land shall be transferred to the transferee of the land use rights.

Mortgage of property attached on land without mortgage on land use rights

- If the owner of the property attached on land is also the land user, such land use rights shall also part of the realized property;

- if the owner of the property attached on land is not also the land user, the transferee of property on land may keep using such property within the transferred rights and obligations from the owner of the property attached on land during the realization of the land use rights.

PURCHASING REAL ESTATE IN VIETNAM – HOW TO ACQUIRE ESSENTIAL INFORMATION?

Generally, when approaching a properties in Vietnam, foreign investors might easily collect some generic information as stipulated by Law on Real estate 2014, they are:

- Type and location of the real estate;

- Information about planning related to the real estate;

- Scale, characteristics, utilities and quality of the real estate; information about each utility and general use area if the real estate is a mixed-use building or an apartment building.

- Actual conditions of constructions or services related to the real estate;

- Documents on ownership of buildings and land and documents related to real estate construction; guarantee agreement, written permission for off-the-plan building sale or lease purchase transactions granted by competent agencies;

- Restrictions on ownership of or rights to use real estate (if any);

- Real estate sold, transfer, lease, sublease, lease purchase price.

Various information about certain real estate could be found in public. A cautious purchaser might invest a lot of time and effort in analyzing and evaluating the investment return rate (IRR) or revenue and turnover. Moreover, a prudent purchaser also understand that the public information is only used for reference. What they actually need is valuable information from real estate experts. Such information is unique and distinguished depend on the ability and experiences of the expert. For example:

From a local real estate broker:

- quasi transactions in the same areas;

- history of transaction related to the property;

- analyze and comment on commercial documents;

- local practice in a real estate transaction;

- the advantages and disadvantages of property;

From a local real estate lawyer:

- evaluate the legality of property, project or seller, investor;

- explain the relevant state policy in the near future;

- consult on how to legally perform the transaction?

- provide consultancies on paper works;

- provide tips

“A wise investor always ask for consultancies from brokers and lawyers prior decisions on property matters” 

For conclusion, there are many ways to accquire information to purchase properties in Vietnam. The more information, the more prudent decisions and actions. Among all, the two most essential factors are price and legality. It will be a good deal if purchaser can handle such factors wisely.