Mortgage of land use rights and assets attached to land at commercial banks in Hue city

Risks from the mortgagor, limiting the transactions of the mortgagor when the property has been mortgaged at a credit institution. The risks can be predicted if the commercial bank does not hold the land use right certificate, the property attached to the land as the mortgagor can use the above documents when mortgaged at the bank to transfer, mortgage or even mortgage at another credit institution.

Registration of secured transactions through mortgage registration is an important legal procedure and is mandatory for all parties. Mortgage registration is carried out at the land use rights registration office.

The mortgagor is obliged to register the mortgage, cancel the mortgage registration (release the mortgage) when the loan obligation has expired or with the agreement of the mortgagee. Registration of secured transactions is the act of the secured transaction registration agency recording in the secured transaction registration book or entering into the database of secured transactions the use of assets by the secured party to secure the performance of civil obligations towards the secured party (Clause 1, Article 2 of Decree 83/2010/ND-CP dated July 23, 2010). Mortgages of land use rights must be registered (Clause 1, Article 3, Decree 83/2010/ND-CP), in addition, assets attached to land must also be registered, with full information declared on the basis of the agreement of the parties (Article 4, Decree 83/2010/ND-CP).

Mortgage registration is a necessary prerequisite for the parties to sign and execute a credit contract. Mortgage registration must comply with legal regulations. The land use rights registration agency may refuse to register a mortgage in the following cases:

+ Not within the registration authority;

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+ Invalid registration form;

+ The applicant does not pay the registration fee or does not pay the fee on time;

+ Request for registration of changes, registration of written notices on handling secured assets, correction of errors in case of deletion of secured transaction registration;

+ When the information in the registration file is found to be inconsistent with the information stored at the registration authority;

+ When discovering that the information in the registration file for secured transactions using aircraft, ships, land use rights, and assets attached to land is untrue or contains forged documents. (Clause 1, Article 11 of Decree 83/2010/ND-CP)

According to the regulations on mortgage of land use rights and properties attached to land in the 2005 Civil Code, the owner of the above property can continue to use the mortgaged property but must not destroy or change the current status of the property. Any change in the status of the mortgaged property must have the consent of the mortgagee. For example, Mr. TNV mortgages the land use rights and the house attached to the land at ACB bank. During the mortgage period, he wants to lease part of the facade to another person for gas business. Mr. V must have the written consent of ACB to carry out the expansion and lease to the lessee.

During the mortgage period, the mortgagor is not allowed to conduct transactions such as converting, transferring, leasing the mortgaged property without any alternative security measures or without the consent of the mortgagee. At the end of the loan term, the borrower has fully performed the debt repayment obligation, which also means the termination of the mortgage contract for land use rights and property attached to land with the commercial bank. However, the mortgage is only truly terminated when the mortgagor performs the mortgage cancellation at the mortgage registration agency.

Regarding the profits, the income obtained from the mortgaged property during the mortgage term belongs to the mortgagor. For the profits generated from the mortgaged property that the parties agree is the mortgaged property, the parties shall comply with that agreement.

- Rights and obligations of the mortgagee:

The rights and obligations of the mortgagee of land use rights are specifically stipulated in Article 719 and Article 720 of the 2005 Civil Code. Accordingly.

The mortgagor of land use rights has the following rights: 1. To inspect and remind the mortgagor of land use rights to protect, preserve and use the land for the right purpose; 2. To be given priority in debt payment in case of handling of mortgaged land use rights.

The mortgagee of land use rights has the following obligations: 1. Register the mortgage with the mortgagor; 2. Return the land use rights certificate when the mortgagor has fulfilled the obligations secured by the mortgage.

The rights and obligations of the mortgagee are specifically stipulated in the mortgage contract of land use rights and assets attached to land to ensure the interests of the mortgagee, who is also the credit provider. The most important purpose of the mortgage in the mortgage contract of land use rights and assets attached to land is to ensure that the mortgaged assets are securing the debt repayment obligations of the borrower. This asset must be within the control of the mortgagee. Accordingly, the above assets are debt repayment instruments, with priority for payment in secured transactions.

The order of payment priority is an effective legal tool to ensure that transactions are used by parties to confirm the solidity of the transaction. The order of payment priority when handling secured assets is determined as follows: 1. In case the secured transaction is registered, the order of payment priority when handling secured assets is determined according to the order of registration; 2. In case an asset is used to secure the performance of many civil obligations, with registered secured transactions and unregistered secured transactions, the registered secured transaction has priority for payment; 3. In case an asset is used to secure the performance of many obligations

In civil cases where the secured transactions are not registered, the order of payment priority is determined according to the order of establishment of the secured transaction (Article 325, Civil Code 2005). In case the mortgagor dies or the borrower becomes unable to repay the debt, other debts to individuals and legal entities will also be included in the order of payment priority (Clause 8, Article 683, Civil Code 2005).

In short, the regulation of rights and obligations of the parties in the mortgage contract of land use rights and assets attached to land is the recognition of the content of the contract that the parties have agreed to in order to establish rights and obligations to ensure the repayment of the debt of the borrower, ensuring the debt recovery ability of the lender, who is also the mortgagee of the secured assets being land use rights and assets attached to the land of the mortgagor.

- Regulations on termination of mortgage contracts on land use rights and assets attached to land:

Normally, mortgage contracts on land use rights and assets attached to land terminate in the following cases:

First , when the security obligation has been fulfilled. This means that the borrower has fully performed the financial obligation. In this case, the parties release the rights and obligations that have been established. The commercial bank is responsible for returning the documents, land use right certificates, and assets attached to the land held by the mortgagor.

Second , the termination of the mortgage contract for land use rights and assets attached to land is subject to the agreement of the parties. The mortgagor and the mortgagee agree that the mortgage contract for land use rights and assets attached to land shall terminate before the due date when the borrower has not fulfilled the debt repayment obligation. In this case, the secured loan shall be converted to an unsecured loan. In addition, there are cases where the mortgage contract for land use rights and assets attached to land is replaced by a security measure.

other. This is due to the parties' agreement to replace this mortgaged property with another mortgaged property or change the security measure such as a guarantee. When the parties change the security measure, the signed mortgage contract of land use rights and property attached to land will terminate.

When the parties change the security measure, they must re-register the security transaction as a new case. Regarding the cancellation of the security measure, according to Clause 3, Article 154 of Decree 181/2004/ND-CP dated October 29, 2004, "The order and procedures for registering the cancellation of mortgage registration, registering the cancellation of guarantee registration using land use rights; registering the results of handling mortgaged assets using land use rights, registering the results of handling guaranteed assets using land use rights are carried out according to the order and procedures for canceling mortgage registration, canceling guarantee registration using land use rights". This case also terminates the guarantee between the parties.

Third , the mortgage contract for land use rights and assets attached to land shall terminate in the event that the land use rights and assets attached to land have been disposed of to fulfill the debt repayment obligation to the mortgagor. The contract always includes an agreement on the obligations of the mortgagor that if the loan secured by the mortgage of land use rights and assets attached to land is due and the borrower or mortgagor fails to fully perform, the assets will be disposed of according to the agreement of the parties through the form of property auction or the mortgagee may file a lawsuit at a competent People's Court to dispose of the assets to recover the debt.

Fourth, Cases of termination of mortgage contracts for land use rights and assets attached to land according to the provisions of law. According to the provisions of Clauses 1, 3, 4, Article 65 of Decree 181/2004/ND-CP dated October 29, 2004, if the mortgaged land is recovered by a State agency, the mortgage contract for land use rights and assets attached to land will be terminated. Clause 1, Article 65 stipulates

"The mortgagee, the guarantor, and the capital contributor shall be compensated for damages by the person whose land is recovered according to the provisions of civil law."

The mortgage of land use rights and assets attached to land is only a security measure, so the issue of compensation for damages is difficult to determine. In this case, the parties agree to change the secured assets or terminate the loan, collect the debt early if the secured assets no longer exist.

Fifth, the mortgage contract on land use rights and assets attached to land is declared invalid by the Court.

With the current overlapping and dense regulations on mortgage of land use rights and assets attached to land, the case of mortgage contracts of land use rights and assets attached to land being declared invalid by the court is quite common, such as cases of violating regulations on the status of subjects, forms, and objects of contracts violating the prohibitions of the law. Declaring a mortgage contract of land use rights and assets attached to land invalid will terminate the security measure using the mortgaged assets themselves but will not change the credit contract signed between the borrower and the credit institution. However, when there is no more property to secure, the credit contract is difficult to continue because of the great risk for the lender, which is the credit institution.

- Regulations on handling assets such as land use rights and assets attached to land when the mortgagor or borrower violates their obligations to the mortgagee .

Article 721 of the 2005 Civil Code stipulates that when the deadline for performing the obligation secured by the mortgage of land use rights has come and the mortgagor fails to perform or improperly performs the obligation, the mortgaged land use rights shall be handled according to the agreement; if there is no agreement or the mortgage cannot be handled according to the agreement, the mortgagee has the right to file a lawsuit at the Court.

Regulations on handling of mortgaged land use rights and attached assets

attached to land is an open regulation, creating a legal framework for the mortgagee to handle the property when the borrower or mortgagee fails to perform or improperly performs the committed obligations. With the above regulation, the mortgagee can:

Carry out the property settlement according to the agreement. This option requires the cooperation of the mortgagor. The settlement of mortgaged property is regulated in Decree 163/2006/ND-CP and Decree 17/2010/ND-CP on property auctions. To settle the property in this case, the parties can agree on the price, the method of handing over the property or selling it to a third party. If the buyer and the price cannot be agreed upon, the enterprise can be requested to auction the property according to the regulations on auctions.

File a lawsuit at a competent people's court when the borrower or mortgagee violates the debt repayment obligation. This option is often used by commercial banks after applying negotiation measures and unilaterally handling the mortgaged property but without results due to the non-cooperation of the mortgagee. The dispute in this case is a dispute over the debt repayment obligation from the credit contract and accordingly the property to secure the execution of the judgment is the mortgage of the right to use residential land, the property attached to the land being mortgaged at the bank is the lender and the mortgagee.

Chapter 2

CURRENT STATUS OF LAW ON MORTGAGE OF LAND USE RIGHTS AND ASSETS ATTACHED TO LAND

2.1. PROVISIONS IN THE CIVIL CODE

- On the concept of mortgage and pledge of assets

Pledge of property is the act of one party transferring property under his/her ownership to another party to secure the performance of a civil obligation, Article 326 of the 2005 Civil Code, Mortgage is the act of one party using property under his/her ownership to secure the performance of a civil obligation towards the other party and not transferring that property to the mortgagee (Article 342 of the 2005 Civil Code) . Thus, the two security measures are distinguished by the transfer or non-transfer of property by the securing party to the secured party without distinguishing whether the pledged property must be movable property and the mortgaged property must be real estate as prescribed in the 1995 Civil Code. According to Clause 1, Article 329: Pledge of property is the act of the obligated party transferring property under his/her ownership to the entitled party to secure the performance of a civil obligation; If the mortgaged property has registered ownership, the parties may agree that the mortgagor will retain the mortgaged property or entrust it to a third party; Clause 1, Article 346 stipulates: Mortgaging property is when the obligated party uses real estate property owned by him/her to secure the performance of obligations to the entitled party.

According to Article 12, Decree 163/2006/ND-CP, the mortgage of land use rights must be registered as a secured transaction, while the pledge of land use rights is not required to be registered. On the other hand, the above two measures do not distinguish between individuals or organizations. This creates loopholes for fake transactions and even "black credit" activities. Taking advantage of the fact that there is no need to register a mortgage contract, the mortgagee is still on the

Mortgage of land use rights and assets attached to land at commercial banks in Hue city - 5

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