Effective Time of Land Use Rights Mortgage Contract

Certification and authentication aim to facilitate the State in managing the transfer of a special type of property, especially land, of which the State is the representative owner and is meaningful for the State to control land use and land fluctuations.

Thus, the mortgage contract of land use rights must comply with the form prescribed by law and if it does not comply with the provisions of law in terms of form, the contract will be invalid due to violation of form.

Although the law does not specifically stipulate that the land use rights mortgage contract must be made in a separate document, not together with the credit contract, but according to the provisions of Clause 1, Article 689 of the 2005 Civil Code " the transfer of land use rights is carried out through a contract " and Clause 1, Article 153 of Decree 181/ND-CP stipulates " .... within no more than 05 days...., the parties to the land use rights mortgage contract,..... must submit a set of documents including: Mortgage contract.... ", it can be affirmed that the land use rights mortgage contract must be made in a separate document from the credit contract.

2.1.3.5. Effective time of land use rights mortgage contract

According to Clause 4, Article 146 of Decree 181/ND-CP, the land use rights mortgage contract is effective from the time of registration at the Land Use Rights Registration Office.

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According to the provisions of Article 153 of Decree 181/ND-CP, the procedures for registering mortgages of land use rights are as follows:

Within no more than five working days from the date of signing the credit contract, the parties participating in the mortgage of land use rights must submit a set of documents including: Mortgage contract of land use rights, Certificate of land use rights... at the Land Use Rights Registration Office under the Department of Natural Resources and Environment at the district level. In which case,

In case the parties to the mortgage contract of land use rights are organizations, overseas Vietnamese, foreign organizations, or foreign individuals, they must submit the registration dossier to the Land Use Rights Registration Office under the Department of Natural Resources and Environment; For individuals and households using residential land in wards and overseas Vietnamese who are allowed to buy houses attached to land use rights according to Article 121 of the 2003 Land Law, the land use rights mortgage registration dossier shall be submitted to the Land Use Rights Registration Office under the Department of Natural Resources and Environment at the district level; For households and individuals using residential land in communes and towns, the land use rights mortgage dossier shall be submitted to the People's Committee at the commune level and after 03 working days from the date of receiving complete and valid dossiers, the People's Committee of the commune shall be responsible for transferring the dossiers to the Land Use Rights Registration Office under the Department of Natural Resources and Environment at the district level. Within no more than 05 working days from the date of receiving a complete and valid dossier, the Land Use Rights Registration Office shall register the mortgage in the cadastral records and correct the Land Use Rights Certificate or carry out the procedure for granting a Land Use Rights Certificate in cases where a new Land Use Rights Certificate must be issued ( handling administrative procedures according to the one-stop mechanism ).

Thus, according to the above provisions, the land use rights mortgage contract is effective from the time of registration, which is the time when the Land Use Rights Registration Office registers the mortgage in the land records.

Registration of mortgage of land use rights is very important because it is related to the order of priority of payment. The order of priority of payment is determined by the order of registration at the Office of Land Use Rights Registration. The mortgagee who registers the mortgage at the Office of Land Use Rights Registration first will have priority of payment in case the mortgagor cannot pay the debt and has to file a lawsuit in Court. And it also has the meaning of

The meaning of information to a third party about the mortgaged land use right, the value of information is shown in the case of transferring land use right during the mortgage period or the mortgage of land use right is mortgaged to many people.

2.1.3.6. Contents of land use rights mortgage contract

The content of a land use rights mortgage contract is the rights and obligations of the parties in the case of land use rights mortgage. These rights and obligations are expressed in the form of terms agreed upon by the parties in the contract such as the rights and obligations of the parties participating in the land use rights mortgage contract, land area, land plot location, mortgage term, method of handling land use rights, etc.

2.1.3.6.1 . Rights and obligations of the mortgagor of land use rights

* Rights of the mortgagor of land use rights:

- The person mortgaging the land use right is allowed to continue using the land during the mortgage period. Based on the special characteristics of land, the law stipulates that the person mortgaging the land use right continues to use the land during the mortgage period. This is the fundamental difference between mortgaging the land use right and applying other security measures. Thus, in addition to ensuring the implementation of the purpose of land use, it also ensures the rights of the mortgagor to still have a place to live, continue to exploit the benefits, profits, and value of the land.

- Receive loan from mortgaging land use rights according to the agreed method. This is the purpose and benefit that the mortgagor aims to achieve when mortgaging his land use rights. The value of land use rights that the land user can exploit while still exploiting the land use value.

- Enjoy the benefits and profits obtained from land use rights, except

In case the income also belongs to the mortgaged land use right such as exploiting the values ​​of gardens, fish ponds...

- Convert, assign, lease, or sublease the mortgaged land use rights if the mortgagee agrees. In case the mortgagee agrees, the mortgagor of the land use rights can exercise these rights and thus the land use rights mortgage contract will change in the direction of terminating the land use rights mortgage contract or the subject of the land use rights mortgage will be changed... for cases of transfer, conversion, or change in the method of handling land use rights when the mortgagor leases or subleases the land use rights.

- Receive back the Land Use Rights Certificate after fulfilling the debt repayment obligation. After fulfilling the debt repayment obligation, the mortgagor receives back the Land Use Rights Certificate that was delivered to the mortgagee. And at this point, in principle, the land use rights mortgage contract has terminated.

* Obligations of the land use rights mortgagor:

- Hand over the Land Use Rights Certificate to the mortgagee. The Land Use Rights Certificate is a legal document, proving that the land use rights have been mortgaged, and are the property of the mortgagor, so when mortgaging the land use rights, the mortgagor must hand over his Land Use Rights Certificate to the mortgagee. This is very important: The Land Use Rights Certificate not only proves to the mortgagee that the land is truly owned by the mortgagor, but also ensures the rights of the mortgagee, ensuring that the mortgaged property cannot be transferred to another person. Because for land use rights, only when there is a Land Use Rights Certificate can the land user be allowed to transfer the use.

- Carry out mortgage registration procedures; delete mortgage registration when legal

The mortgage contract is terminated. This is a mandatory condition for the transfer of land use rights. The mortgage registration determines the effective date of the contract, while the cancellation of the mortgage registration determines that the land use rights are no longer assets that must be secured for the performance of debt repayment obligations, are no longer restricted from being transferred, and the mortgagor has full rights of a land user as prescribed by law.

- Use land for the right purpose, do not destroy or reduce the value of mortgaged land.

- Pay the loan on time and in the correct manner as agreed in the loan contract. This is the main obligation of the mortgagor and is determined in the main contract.

2.1.3.6.2 . Rights and obligations of the mortgagee of land use rights:

* Rights of the mortgagee of land use rights:

- Check and remind the mortgagor of the land use rights to protect, preserve and use the land for the right purpose. This is essentially the mortgagee's control of the mortgaged property.

- Priority in debt payment in case of handling mortgaged land use rights. This is a common right of secured creditors and the security here is the land use rights. This is meaningful in case the mortgagor cannot repay the debt and there are many other creditors who are not secured by the land use rights that the lender has accepted as mortgage.

* Obligations of the mortgagee of land use rights:

- Register the mortgage with the mortgagor of the land use right. This ensures that the mortgagee knows whether the land use right he/she receives as mortgage is legal or not? Does a third party have rights to this land use right or not? This is to determine the effective date of the mortgage contract and thereby exercise the rights and obligations of the main contract.

- Return the Land Use Rights Certificate when the mortgagor has fulfilled the obligation secured by the land use rights mortgage (fulfilled the debt repayment obligation). When the mortgagor has fulfilled the debt repayment obligation, the mortgagee must return the Land Use Rights Certificate to the mortgagor.

In summary: The rights and obligations of the parties in a land use rights mortgage contract are the content of the contract that the parties have agreed to in order to ensure the debt repayment obligation of the mortgagor as established in the credit contract. The terms agreed upon by the parties in the contract must comply with the provisions of civil law and land law and with the general standards of society.

2.1.3.7. Termination of land use rights mortgage contract

The land use rights mortgage contract terminates in the following cases:

- When the mortgagor has fulfilled the debt repayment obligation secured by the land use right ( fulfilled the debt repayment obligation under the property loan contract ). In this case, the mortgage contract automatically terminates after the mortgagor has fulfilled the debt repayment obligation and registered the mortgage cancellation.

- The land use right has been processed to fulfill the mortgagee's obligations. If the debt secured by the land use right is due and the mortgagor fails to pay or does not fully pay the amount borrowed in the property loan contract, the land use right will be processed according to the agreement of the parties. If the mortgagors refuse to process according to the agreement, the mortgagee has the right to file a lawsuit in court to request the mortgagor to properly perform the debt repayment obligation.

- The land use rights mortgage contract can also be terminated by agreement of the parties in the following cases:

+ The land use rights mortgage contract is replaced by another measure to secure obligations. During the term of the land use rights mortgage, the parties agree to replace the land use rights mortgage measure with another measure to secure obligations (such as guarantee, pledge, etc.), then the land use rights mortgage contract will automatically terminate.

+ The mortgagee and the mortgagor agree that the land use rights mortgage contract is terminated before the due date, even though the mortgagor has not yet performed or has only partially performed the debt repayment obligation. At that time, the mortgagee from a secured creditor becomes an unsecured creditor.

According to the provisions of Clause 3, Article 154 of Decree 181/ND-CP, the parties may request to cancel the registration of mortgage of land use rights; this procedure is carried out in the same order as the registration of mortgage cancellation. Thus, according to this provision, when the parties change the measure of securing the debt repayment obligation by another measure, they must register the cancellation of the registration of mortgage of land use rights. When the registration of cancellation of the registration of mortgage of land use rights is carried out, the mortgage contract of land use rights is terminated.

- The land use rights mortgage contract can also be terminated in the following cases as prescribed by law:

+ Clauses 1, 2, 3, Article 65 of Decree 181/ND-CP stipulate: If the land is mortgaged but is reclaimed by the State, the mortgage contract for the land use right shall terminate.

+ The land use rights mortgage contract is declared invalid by the Court (due to violation of legal provisions on form, on the status of the contracting parties, on the subject of the contract or due to violation of the prohibitions of the law...). However, the fact that the land use rights mortgage contract is declared invalid by the Court does not affect the validity of the asset loan contract.

In summary, the land use rights mortgage contract may be terminated by

The parties may agree or as prescribed by law to terminate the loan contract at the same time as the loan obligation is fulfilled, or may terminate the loan contract before the loan contract is completed.

2.1.4. Handling of mortgaged land use rights

According to the provisions of Article 721 of the 2005 Civil Code, when the debt payment deadline (the debt repayment period agreed by the parties in the property loan contract or the period extended by the mortgagee after the expiration of the period agreed by the parties in the contract) is secured by the land use right, but the mortgagor of the land use right does not pay or does not fully pay the amount borrowed in the property loan contract, the land use right will be handled according to the agreement to perform the obligations of the mortgagor; If there is no agreement or it cannot be handled according to the agreement, the mortgagee has the right to file a lawsuit.

2.1.4.1. Method of handling mortgaged assets is land use rights

According to the provisions of the 2005 Civil Code and the 2003 Land Law, when handling secured assets such as land use rights to recover debts, the parties agree on different methods such as: Banks, credit institutions... receive the secured assets, the parties sell them together, hand them over to the mortgagor for sale... In case the agreement cannot be implemented, the mortgagee can proactively transfer the land use rights or request the competent State agency to auction the assets.

2.1.4.2. On the right to unilaterally transfer the right to use mortgaged land when handling the mortgagee's property

According to the provisions of Clause 3, Article 130 of the 2003 Land Law: When the mortgagor or the party guaranteed by the land use right fails to perform or improperly performs the debt repayment obligation under the credit contract, the mortgaged land use right shall be handled according to the agreement in the mortgage contract; in case