Hello lawyer, I have the following problem that needs your advice on. I lent a friend an amount of 900 million dongs. I asked my friend to mortgage his house to ensure solvency, but my friend replied that we could only mortgage property at banks. Is that true or false? I am looking forward to hearing from you.
Hello, thank you very much for trusting and sending your question to PL & Partners Law Firm.
Mortgage of assets to borrow money such as mortgages over houses, cars, motorbikes are very common. Usually, people will mortgage at credit institutions but many still wonder whether individuals can receive mortgages of real estate or not.
1. First, it is necessary to understand what a mortgage is.
Article 317 of the Civil Code 2015 stipulates: Mortgage means the use of property by one party under its ownership (hereinafter referred to as the mortgagor) to secure the performance of an obligation without handing over the property to the other party (hereinafter referred to as the mortgagee). The Parties may assign a third party to hold the mortgaged property upon mutual agreement.
Pursuant to Article 179 of the 2013 Land Law, households, and individuals are entitled to mortgage land use rights and land-attached assets at credit institutions licensed to operate in Vietnam, other economic organizations, or to individuals as prescribed by law.”
From the above regulations, it can be seen that, Individuals are allowed to receive the mortgage of land use rights and house ownership from individuals. Your friend’s opinion that we can only mortgage property at credit institutions is incorrect.
2. Mortgaging real estate shall be made into a contract and shall be notarized, certified.
Pursuant to Article 167.3 of the Land Law 2013: “Contracts on transfer, donation, mortgage and capital contribution of land use rights, ownership of houses and properties attached to land must be notarized, or certified, except for the case of real estate business specified at Point b of this Clause”. Accordingly, when an individual mortgages land use rights, ownership of houses and other assets attached to land, a contract must be drawn up and must be notarized or certified.
3. Mortgage of real estate is required to be registered.
Pursuant to Article 319.1 of the Civil Code 2015, a mortgage contract shall take effect from the time it is signed, unless otherwise agreed upon or otherwise provided by law.
As for the mortgage of land use rights, Article 188.3 of the Land Law 2013 clearly stipulates:
“The exchange, transfer, lease, sub-lease, inheritance, donation, mortgage of land use rights or capital contribution of land use rights shall be registered at the land registration agency and take effect from the date of registration in the cadastral book”.
Thus, the mortgage of land use rights must be registered at the land registration agency (Land Registration Authority) and takes effect from the time of registration in the cadastral book.
***Some notes when implementing regulations on the mortgage of land use rights and house ownership by individuals.
Pursuant to Article 188.1 of the Land Law 2013: Land users may exercise the rights to mortgage land use rights when meeting the following conditions:
- Have a certificate;
- There is no dispute over the land;
- The land use right is not distrained for judgment enforcement;
- Land use term still remains.
Article 119.1 of the Law on Housing 2014 stipulates the conditions for mortgaging housing:
- Being the house owner or the person authorized by the owner to carry out transactions on housing;
For individuals, they must have full civil act capacity to conduct transactions on housing.