Regulations on disposal of mortgaged asset being asset to be formed in future of credit institutions in vietnam

MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -*** -EXECUTIVE BOARD SPECIAL TRAINING PROGRAMS NGUYỄN NHƯ PHƯƠNG REGULATIONS ON DISPOSAL OF MORTGAGED ASSET BEING ASSET TO BE FORMED IN FUTURE OF CREDIT INSTITUTIONS IN VIETNAM BACHELOR OF LAW – GRADUATION THESIS Faculty: Commercial Law Academic Year: 2013 - 2017 HO CHI MINH CITY 2017 MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -*** -EXECUTIVE BOARD SPECIAL TRAINING PROGRAMS NGUYỄN NHƯ PHƯƠNG REGULATIONS ON DISPOSAL OF MORTGAGED ASSET BEING ASSET TO BE FORMED IN FUTURE OF CREDIT INSTITUTIONS IN VIETNAM BACHELOR OF LAW – GRADUATION THESIS Faculty: Commercial Law Academic Year: 2013 - 2017 Supervisor: Dr Phan Thi Thanh Duong Student: Nguyen Nhu Phuong Student ID: 1353801015219 Class: Advanced Class – CLC38B HO CHI MINH CITY 2017 DECLARATION I declare that this thesis is the result of my own research, which is performed under the instruction of Dr Phan Thi Thanh Duong, ensures the honesty and complies with the rules regarding to quotation, note of reference I hereby take full responsibility for this declaration Author Nguyen Nhu Phuong ACKNOWLEDGEMENT First and foremost, I have to thank my thesis supervisor, Dr Phan Thi Thanh Duong Without her assistance throughout the process, this paper would have never been accomplished I would like to thank you very much for your kind guidance over these past three months I would also like to thank all the staffs of Education Department and Department for Academic Research & International Relations of HCMC University of Law, and all who gave me the opportunity to carry out this thesis Finally, I must express my very profound gratitude to my family and to my friends for providing me with unfailing support and continuous encouragement throughout my years of study in university and through the process of researching and writing this thesis This accomplishment would never have been possible without them Thank you Author ABBREVIATION Abbreviation Civil Code 2005 Civil Code 2015 Decree No 163/2006/ND-CP Decree No 83/2010/NDCP Decree No 11/2012/NDCP Joint Circular No 16/2014/TTLT-BTPBTNMT-NHNN Explanation Civil Code (No 33/2005/QH11) dated on June 14th, 2005 Civil Code (No 91/2015/QH13) dated on November 24th, 2015 Decree of Government No 163/2006/ND-CP on Security transactions dated on December 29th, 2006 Decree of Government No 83/2010/ND-CP on Registration of security transaction dated on July 23rd, 2010 Decree of Government No 11/2012/ND-CP amending and supplementing a number of Articles of Decree of Government No 163/2006/ND-CP of December 29th, 2006 on Security transactions dated on February 22nd, 2012 Joint Circular of the Ministry of Justice, the Ministry of Natural Resources and Environment and the State Bank of Vietnam No 16/2014/TTLT-BTP-BTNMT-NHNN guiding a number of matters on Disposal of security assets dated on June 6th, 2014 Circular of the State Bank of Vietnam No 26/2015/TTNHNN guiding sequence and procedures for Circular No 26/2015/TTmortgaging an investment project for construction of NHNN housing or house(s) to be formed in the future, and release of such mortgages, dated on December 9th, 2015 ERBD Future asset Disposal of future asset UNCITRAL Mortgage Agreement SPA European Bank for Reconstruction and Development Asset to be formed in future Disposal of mortgaged asset being asset to be formed in future United Nations Commission on International Trade Law Mortgage of future asset Agreement Sale and Purchase Agreement TABLE OF CONTENT INTRODUCTION .1 CHAPTER THEORY OF MORTGAGE AND DISPOSAL OF THE FUTURE ASSETS 1.1 Theory of Mortgage of the future assets 1.1.1 Concept of mortgage of the future assets 1.1.2 Relationship regarding validity between Mortgage of future asset Agreement and Loan Agreement .12 1.2 Theory of Disposal of the future assets 16 1.2.1 Disposal of future assets in general 16 1.2.2 Principles for disposal of future assets 20 1.2.3 Roles of Disposal of the future assets 23 CONCLUSION OF CHAPTER 25 CHAPTER PROVISIONS OF LAW AND PRACTICAL APPLICATION OF DISPOSING THE FUTURE ASSETS OF CREDIT INSTITUTIONS 26 2.1 Vietnamese regulations on disposal of the future assets 26 2.1.1 Cases of disposal of future assets 26 2.1.2 The procedures of disposal of future assets 30 2.1.3 Methods of disposing the future assets 34 2.1.4 Order of priority for payment 38 2.1.5 Legal documents for guidance on future assets .41 2.2 Application & Improvement 45 2.2.1 Disposing when the future asset is formed 45 2.2.2 Disposing when the future asset is still in the formulation phase 47 CONCLUSION OF CHAPTER 51 CONCLUSION 52 INTRODUCTION Rationale Banking law plays a very important role in the field of economic law and is an indispensable part of the market economy We all know that business operations, especially in the field of banking, have lots of hidden risks, and at any time such risks are always able to happen However, accepting risks in business is the inevitable rule, this is a parallel rule that “the higher the profit is, the more the risks are implied” Therefore, in the context of the growing market economy, the great increase of risks in business is an unavoidable consequence Risks in the business operations of credit institutions in general and credit risk, in particular, is a latent category Whenever such risks occur, it will often be likely to falsify or negatively reverse the results of banking operations Particularly, the extension of credit in form of lending is always the riskiest operation of credit institutions Of these risks, credit risks is the most serious ones, as a failure of controlling them may lead to many unpredictable consequences that are the collapse of the entire credit system, causing harmful effect the whole national economy Thus, the law must provide certain requirements regarding the security measures of loan as well as specific methods of disposing of the secured property, in order to minimize the risk of loss and ensure the security in the credit operations of the bank In practice of the credit security in credit institutions operating in Vietnam, mortgage of asset is one of the most popular and effective security means for lending operation In addition, the types of assets, which are put on mortgage transactions, are becoming more diverse nowadays, including both existing property and property to be formed in future (hereinafter may refer to “future asset”) Hence, the new legal framework for mortgage lending and the disposal of the new type of mortgaged asset is increasingly being developed and improved by competent state authorities Moreover, the law has officially recognized the property formed in the future as the type of property that can be used to mortgage and secure the obligations of the debtor under Credit Agreement by a series of legal documents such as: Decree of Government No 163/2006/ND-CP on Security transactions (“Decree No 163/2006/ND-CP”); Decree of Government No 11/2012/ND-CP amending and supplementing Decree No 163/2006/ND-CP (“Decree No 11/2012/ND-CP); Decree of Government No 83/2010/ND-CP on Registration of security transaction (“Decree No 83/2010/ND-CP); Joint Circular of the Ministry of Justice, the Ministry of Natural Resources and Environment and the State Bank of Vietnam No 16/2014/TTLT-BTP-BTNMT-NHNN guiding a number of matters on Disposal of security assets (“Joint Circular No 16/2014/TTLT-BTP-BTNMTNHNN”), Circular of the State Bank of Vietnam No 26/2015/TT-NHNN guiding sequence and procedures for mortgaging an investment project for construction of housing or house(s) to be formed in the future, and release of such mortgages (“Circular No 26/2015/TT-NHNN”),… However, the disposal of this type of property mainly applies the general provisions on disposal of mortgaged property as well as the general provisions on security transactions under civil law Because the current law has not yet had a separate legal document with specific and complete provisions for the case of future property, therefore in practice, it does not have the synchronism in application of law by the competent authorities; and the enforcement is not really effective with many obstacles For all the reasons mentioned above, I, as the author, chose the topic: “Regulations on disposal of mortgaged assets being assets to be formed in future of credit institutions in Vietnam” as the topic of my Bachelor thesis With the propose that by the research contents, I will be able to clearly demonstrate the role of the disposal of this special type of mortgaged property in credit operations and contribute to the development of legal regulations to protect the legitimate interests of the parties in the most optimal way Background overview In Ho Chi Minh City University of Law, there are researches that cover one or more aspects related to the regulations on the mortgage of future property as well as the disposal of this property, such as: “Quy định pháp luật chấp tài sản hình thành tương lai hoạt động cho vay Ngân hàng thương mại” (Translated: Regulations on mortgage of future assets in lending operations of Commercial Bank) – Bachelor thesis of Tran Thi Ngoc Diep in 2016; or “Pháp luật tài sản hình thành tương lai thực tiễn áp dụng” (Translated: Regulations and practices regarding assets to be formed in future) – Bachelor thesis of Hoang Ha Tuyen in 2011 However, because the contents of such researches regarding the future property as well as the disposal forms of this property are very general, the authors did not delve into the nature and characteristics, the methods and procedures for disposing of mortgaged assets being future assets They only stop at introducing the generalization of this issue Around the world, the author also found that there are many researches on the future asset and the disposal of this type of asset, such as: Leonard A Jones, A treatise on the law of mortgages on personal property, Boston: Houghton, Mifflin, 1888; S T Douglass, Mortgage of future personal property, 1881; John Carvan & John Gooley, A guide to Business Law (11th edition), 1996; Robert W Emerson, John W Hardwick, Business Law, Barron’s educational series Inc., USA, 1997; Patrick, A Randolph Jr & Lou Lianbo, Chinese Real Estate Law, Kluwer Law International, 2000; European Bank for Reconstruction and Development (EBRD) publications, Mortgages in transition economies, the legal framework for mortgages and mortgage securities, 2008; etc The most outstanding one is the research from EBRD This is a relatively adequate research on mortgaged asset, based on the results analyzed in developed countries, presenting fundamental matters and core principles for disposal of collateral in general However, the content of this research is still general and does not have a thorough analysis of the relevant legal issues Previously, the regulations on the mortgage and disposal of future asset have not really been properly minded in Vietnam In recent years, with the strong development of credit institutions and the real estate market, the legislation on lending with mortgaged assets and the disposal of assets being future assets have become increasingly improved So, there are quite lots of researches related to this subject, of which there are stand out ones such as : “Tài sản chấp xử lý tài sản chấp theo quy định pháp luật dân Việt Nam hành” (Translated: Collateral and disposal of mortgaged assets in accordance with the current civil law of Vietnam) – Doctor thesis of Vu Thi Hong Yen in 2013; or “Pháp luật cho vay chấp nhà hình thành tương lai Ngân hàng thương mại Việt Nam” (Translated: Regulations on mortgage loan by the future asset of credit institutions in Vietnam – Mater thesis of Hoang Thi Hai Ha in 2015 The issues regarding disposal of mortgaged assets are also mentioned in the book “Các biện pháp bảo đảm tiền vay tài sản tổ chức tín dụng” (Translated: Security measures by assets of credit institutions) by Le Thi Thu Thuy However, the book content is still general and does not reflect the nature and characteristics of the disposal of mortgaged assets being future assets, and did not make many concrete recommendations to improve this legal framework Hence, these researches, though have generally mentioned the mortgaging and disposing of mortgaged assets being assets to be formed in future, there has not been any of them that delves into the regulations on disposal of this type of property On the other hand, due to changes in legal regulations such as the Law on Residential housing 2014, the Law on Real Estate Business 2014, and a number of decrees and circulars guiding the implementation for the future property, especially the Joint Circular No 16/2014/TTLT-BTP-BTNMT-NHNN and Circular No 26/2015/TT-NHNN, so far, there is no research has depth analysis of new regulations as well as points out the inadequacies, obstacles in the current law related to this type of property Research objectives This thesis aims to: i Research and determine the nature mortgage of assets being future assets and the disposal of this type of asset in the lending activity of credit institutions ii Analyze and clarify the relationship between the Credit Agreement and the Mortgage Agreement as well as the role of the disposal process of future assets in banking operations of credit institutions iii Research and evaluate the practical application of current provisions of law regarding the disposal of mortgages assets being future assets of credit institutions iv Subsequently, the unreasonable and inadequate provisions as well as obstacles shall be determined in order to give appropriate orientations for the improvement of the national legal system Therefore, ensuring the uniformity in practical application as well as protecting in the most optimal way the rights and legitimate interests of concerned parties in both credit transactions and mortgage transactions Subjects and Scope of the Research 44 mortgaged asset” and stipulates that parties may reach to an agreement on releasing a part of the mortgaged property by reducing the mortgaged asset or by releasing the entire mortgaged asset being the investment project for construction of housing or the houses to be formed in the future.118 The nature of the release is that the mortgagee and the developer come to an agreement for terminating the Mortgage Agreement so that such mortgaged assets being future housing becomes “clean” before entering into the new transaction.119 Current law on residential housing also states that: “Determination that a residential house has been released from a mortgage before entering into a SPA or contract for lease-purchase of a residential house with a customer shall be specified in the written notice of satisfaction by the residential house of the conditions for sale from the provincial residential housing management agency where the residential house is located”.120 To check whether the house has already been released or not, the buyer or lease-purchaser may require the developer to provide the written notice of the house fulfilled the condition of being permitted to be sold, issued by the Department of Construction where the residential house is located.121 Typically, the lending credit institutions only agree to release the mortgage when (i) the developer repays the loan secured by the value of future housing, (ii) the developer adds other security measures or security assets; or (iii) the total amount of mortgaged assets after a revaluations, subtract the value of the mortgaged asset to be release, still ensures that the credit institution is able to fully recover the debt when carrying out the disposal However, as these cases are quite rare, in practice, credit institutions sponsoring the projects normally not agree to release the mortgage Hence, if the buyer, lease-purchaser did not know or knew but still intentionally enter the agreement with the developer; such agreement shall become invalid because of violation of the rules of the law.122 118 Article 10 Circular No.26/2015/TT-NHNN Termination of such Agreement must be in accordance with the provision of Article 327 clause Civil Code 2015 120 Article 147 clause Law on Residential Housing 2014 121 Bui Duc Giang (2017), Nhận bảo đảm bất động sản hình thành tương lai từ chủ đầu tư dự án nhà (Translated: Get secured by the real estate to be formed in future from the developer of Investment project for residential housing), Banking Magazine no 06 (03/2017), page 17 122 Article 123 Civil Code 2015 119 45 Both law on residential housing and Circular No 26/2015/TT-NHNN prohibit the developer from being able to mortgage a dwelling 123 belonging to a project that the developer has mortgaged previously and also is not allowed to mortgage part of the project that includes the housing to be formed in the future that was previously mortgaged Particularly, according to the current law on residential housing, “In case of entering in a SPA, a lease, or lease-purchase agreement of future house in which the buyer, lessee, or lease-purchaser has to pay in advance, 124 the investor must send an application to the Department of Construction of the province in which the future house will be located together with documents proving that the house satisfies conditions;125 in case such property are mortgaged, the developer must send documents proving the release or the agreement between the buyer/lessee/lease-purchaser and the creditor that the release is not required and such house is available” 126 In other words, the improvement of the regulations of this Circular is that the release of a project or part of the project, which is mortgaged, is also needed to be carried out when the developer wishes to make another transaction for the future housing within such project 127 It has solved the obstacle in the previous regulations that such future asset was likely to be mortgaged many times, resulting in the interests of the involved parties, especially the credit institutions, were not ensured Thus, it can be seen that new regulations and guidelines in Joint Circular No 16/2014/TTLT-BTP-BTNMT-NHNN and Circular No 26/2015/TT-NHNN have made the disposal of mortgaged properties as future property be simpler, more feasible and flexible, shortening the time of loan recovery of the credit institutions 2.2 Application & Improvement 2.2.1 Disposing when the future asset is formed a) Arising issues 123 Dwelling means house, apartment, or other place of residence (Oxford Dictionary) https://en.oxforddictionaries.com/definition/dwelling, last access on 02/07/2017 124 Article 69 clause Law on Residential Housing 2014 125 Article 55 clause Law on Real Estate Business 2014 126 Article 19 clause point b Decree No.99/2015/ND-CP 127 Bui Duc Giang (2017), Nhận bảo đảm bất động sản hình thành tương lai từ chủ đầu tư dự án nhà (Translated: Get secured by the real estate to be formed in future from the developer of Investment project for residential housing), Banking Magazine no 06 (03/2017), page 17 46 When performing credit operations, the credit institution will have to anticipate the possibility of bad situations such as the client's obligation of repaying the debts upon Loan Agreement cannot be performed; or failure of performing the agreed obligations; or the mortgagor breaches the obligations under the Mortgage Agreement, resulting in the disposal of security property Regarding future assets, if the time of disposal, such asset is completely formed and the ownership of the mortgagor is also legally recognized, it shall be disposed as a usual asset However, the disposal of such asset also encounters many obstacles in practice In the process of valuation, because the real estate market has been unstable, the valuation of the mortgaged property being housing/building to be formed in future may be inaccurate, sometimes overvalued This results in, when conducting the disposal of assets, the credit institution is unlikely to recover the principal loans because the asset value is actually lower than the debts that clients have to pay Difficulty in the disposal of security assets of the current law is the lack of specific regulations on the role of the competent authorities to support the seizing of security assets for disposal process Therefore, current regulations regarding the disposal of security property are mainly based on the voluntary hand-over of assets of the securer, without mentioning the direct role of law enforcement of the competent authorities in enforcing to seize the property In order to be able to dispose of the mortgaged assets to recover loans, the credit institutions have to bring the lawsuit against clients who fail to perform their obligations as the inevitable method However, the process of trials of the Court levels as well as the implementation of the judgment usually takes a quite long time, causing many disadvantages for these creditors b) Recommendations for improvement When entering into a Loan Agreement and Mortgage Agreement, the credit institution as well as the mortgagor and the clients have not expected the cases that lead to the disposal of security property to happen However, when there are no other options, the parties will have to proceed the disposal to achieve the purpose of recovering the loans In order to improve the efficiency of secured asset disposal in general and assets to be formed in the future in particular, there should be some certain solutions Current law must be supplemented with more regulations to increase the power, creating favorable conditions for the mortgagee when exercising 47 the right to seize the secured property for disposal Although the current law gives the mortgagee the seizure right of property to conduct disposal in case at the expiry of the noticed period the party holding such property fails to delivery for disposing.128 But in fact, the mortgagee has no right to coercion but must request the competent authorities, so the seizure of property is not resolved thoroughly In UK and US law, where the obligee does not intend to cooperate in the disposal of security assets, the creditor has a right called “self-help”,129 which allows for the seizure of property in any way that is not contrary with the law.130 Our national legislators may also learn from the following effective way of seizing secured assets in the law of Federal Republic of Germany: 131 When entering into a Credit Agreement, the parties have agreed that the mortgagee shall have the right to directly seize or coerce the mortgaged property despite the resistance by mortgagor at the time of disposal of the secured property The contents of this commitment need to be notarized and the notary will issue a decision on recognizing this right of the mortgagee and then hand over them this decision German law recognizes this notary's decision with and it shall have the enforcement as a court judgment This solution helps the mortgagee to actively carry out the disposal, meanwhile saving for the parties time and costs during the disposal process 2.2.2 Disposing when the future asset is still in the formulation phase a) Arising issues In addition to the above mentioned problems, in the case of disposing of mortgaged assets being assets to be formed in the future, credit institutions may face much more certain difficulties In fact, there are many reasons for the disposal of collateral being in the formulation phase, which credit institutions obviously not expect to happen The first thing difficulty in this case is choosing the appropriate method for disposing of the asset At the time of disposal, if such future asset has not yet been formed or has not yet been registered for the ownership, no matter 128 Article 301 Civil Code 2015; Article 63 Decree No.163/2006 https://securedtransactions.uslegal.com/personal-property/rights-after-default/, last access on 03/07/2017 130 Nguyen Ngoc Dien (2014), Hoàn thiện quy định quản lý xử lý tài sản bảo đảm (Translated: Improve the regulations on management and disposal of security asset), International Conference on Security measures for the performance of civil obligations on 29/09/2014 in Ho Chi Minh City University of Law 131 Vietnamese – French Law House (2011), Kỷ yếu hội thảo sửa đổi Bộ luật dân (Translated: Records of Amendment to the Civil Code Conference), on 12-13/5/2011, Hanoi 129 48 applying which method of disposal, the credit institution shall always be disadvantaged In consequence, the actual value of the property is not commensurate with the original valuation results, because, at the time of receiving the mortgage, the credit institution has determined the asset value on the basis of such assets will be formed completely If selling such uncompleted assets, credit institutions may not be able to recover all debts, interests and other expenses as agreed in the Loan Agreement Hence, the law could not protect the legitimate interests of credit institutions in this case According to the provisions of Joint Circular No 16/2014/TTLT-BTPBTNMT-NHNN, credit institutions and securing parties may agree on selling prices by written form If the secured property cannot be sold after times of discounts (each time not exceeding 10% of the determined selling price), the credit institutions shall receive such security property However, many credit institutions are concerned that this, somehow, shall make them become the reluctant real estate businesses.When applying the measure of receiving the incompletely formed property in replacement of performance of the obligation, it will be very difficult for credit institutions to transfer or continue to invest in this asset At that time, the principal debts will be “stuck” in such property The longer it lasts, the more damage shall the credit institutions have, because the principal debts can hardly be recovered also cannot profit, the business purpose of the banking operations shall not be performed If the credit institutions choose to sell to another third party, it is very difficult for them to find a home purchaser The sale of unfinished housing or the house lacks of ownership certificates seems to be very unfavorable, because of implying many probable risks, buyers shall likely to choose buying houses that have transparent certification of ownership (more legal and secure) rather than housing that has not been formed completely or of which the ownership has not been recognized Although the parties may gradually find the buyer, the selling price of the unfinished house or the house without any certificates proving ownership will always be lower than the house that has been completely formed and had the ownership registered The method of receiving the actual future asset in lieu of performance of the secured obligations also seems to be not feasible Previously, banking law prohibits 49 the credit institutions to directly carry out the real estate business.132 Under current law, if the mortgaged assets is housing/building to be formed in future, credit institutions still have the right of holding such real estate.133 However, within 03 years, the credit institution must sell or transfer such them Hence, the credit institutions might face with certain obstacle similar to the case if they choose to sale the asset If the credit institutions choose to acquire such real estate in order to ensure the ratios on investment in fixed assets and use purpose of fixed assets, the value of such assets shall not exceed 50% of the charter capital plus the charter capital supplementary fund.134 It is not feasible because such asset normally has a great value that might exceed this limit b) Recommendations for improvement In order to improve the efficiency of the disposal of the future asset and to limit the great losses, the credit institutions should apply the solutions such as: apply measures to ensure that the loan is used for the purpose of forming the asset as agreed in the agreements, in order to establish the ownership of this future asset Besides, the credit institutions may only disburse according to the progress of asset formation rather than conduct the disbursement of all loans at once When assets which have not yet been formed or have been formed but have not yet registered the ownership: the credit institution has two options, or receive the actual mortgaged property for the continued investment, or require the mortgagor to continue the process of completion of the property as committed in the agreements, then proceed the disposal However, the law must regulate a mechanism to force the mortgagor to conduct the process for the completion of property as well as provide specific rights and obligations for the credit institution as the new developer If the assets have been formed but have not been issued the certificate of ownership, the legislators should simplify the procedures of issuing and the time it may take For properties that are residential houses to be formed in the future, right from the time of entering into the Credit Agreement or Mortgage Agreement, the credit institution should propose signing a trilateral agreement (“Tripartite Commitment”) between the developer (the seller of such future houses), the credit institution and 132 Article 73 Law on Credit Institutions 1997 (expired) Article 132 Law on Credit Institutions 2010 134 Article 132 clause 3, Article 140 Law on Credit Institutions 2010 133 50 the mortgagor The content of this agreement should clearly stipulate the responsibilities of the signed parties.135 Credit institutions themselves should also develop their own extension of credit process, with future asset and limit the range of such future assets in their security transaction In addition, when there are difficulties and obstacles during the process, credit institutions should report to the competent authorities in time to ensure their legitimate interests in the best way However, it would be inappropriate to continue to dispose of the future property in the same manner as usual secured property in a security transaction With the particular nature, future property needs to have an effective mechanism for the optimal assurance of the legitimate rights and interests of the involved parties 135 Hoang Thi Hai Ha (2015), Pháp luật cho vay chấp nhà hình thành tương lai Ngân hàng thương mại Việt Nam (Translated: Regulations on mortgage loan by the housing to be formed in future of credit institutions in Vietnam), Master thesis, Vietnam National University, Hanoi – Law Faculty, page 95 51 CONCLUSION OF CHAPTER The current legal regulations are only the foundation for building a legal system of future property more complete The issues of mortgage and disposal of future property have not been specifically guided and still applied the same regulations with usual property Moreover, these regulations are still overlapping and inconsistent This inconsistency shall lead to a myriad of risks for the concerned parties in the transaction of mortgaging the future assets, especially for credit institutions because the banking operations have already implied lots of risks themselves From the above difficulties and obstacles, the issuance of specific and comprehensive guidelines for the mortgages and disposal of future assets to be implemented effectively is essential, having the important role to ensure the legitimate rights and interests of the involved parties Relevant authorities, organizations, and individuals (such as credit institutions, notary offices, security transaction registries, etc.) should also put greater efforts to handle these difficulties and obstacles in the implementation of the mortgage lending, contributing to the development of the national economic and legal system 52 CONCLUSION The concept of assets to be formed in future, which is a big step forward in legal science, has become more popular in Vietnam as time goes by However, the current law on mortgage and disposal of this property type is still unclear and not specific With the nature of a security measure for performance of the obligations, the process of disposal of future asset shall be in the same manner as a usual property in a security transaction The actual application of legal provisions at relevant authorities, organizations, and individuals does not have any uniformity, consistency and encounters many obstacles, resulting in the legitimate rights and interests of the involved parties in the transaction shall not be ensured Therefore, because of the complexity derived from the special characteristics of this type of property, the national legislators are gradually improving the regulations relating to the assets to be formed in future The law needs to be supplemented with provisions on the disposal of mortgaged assets, especially the order and procedures for the disposal in case there is no voluntary co-operation of the mortgagor, and to increase the power, creating favorable conditions for the mortgagee when exercising the right to seize the secured property for disposal In order to solve the difficulties related to future property mortgage, it is not only required to develop uniform and consistent legal system but it also needs to have the coordination, direction, guideline from the heads of all levels, sectors and active participation of the concerned parties Authorities must closely monitor the law enforcement process, detect and strictly punish any acts that abuse of law for personal advantages, such as the mortgagor using the loans disbursed for improper purposes other than the purposes committed in agreements, resulting in the fact that assets are unable to be formed or is formed more slowly than the expected progress For the purpose of reducing risks and problems related to the law on mortgage lending with assets formed in the future, the author has made some recommendations to improve the current legal system and to solve problems arising in practice The proposed solutions in this thesis focus not only on regulations of law regarding the mortgage and disposal of future assets but also relate to many activities of other various levels and sectors, in accordance with the current socioeconomic development BIBLIOGRAPHY ***** A Laws and Regulations Civil Code (No 33/2005/QH11) dated on June 14th, 2005 Civil Code (No 91/2015/QH13) dated on November 24th, 2015 Law on Corporate Income Tax (No 14/2008/QH12) dated on June 3rd, 2008 Law on Enforcement of Civil Judgments (No 26/2008/QH12) dated on November 14th, 2008 Law on State Bank of Vietnam (No.46/2010/QH12) dated on June 16th, 2010 Law on Credit Institutions (No.47/2010/QH12) dated on June 16th, 2010 Law on the Amendment and Supplement of a number of Articles of the Law on Corporate Income Tax (No 32/2013/QH13) dated on June 19th, 2013 Law on Land (No 45/2013/QH13) dated on November 29th, 2013 Law on Bankruptcy (No 51/2014/QH13) dated on June 19th, 2014 10 Law on the Amendment and Supplement of a number of Articles of the Law on Enforcement of Civil Judgments (No 64/2014/QH13) dated on November 25th, 2014 11 Law on Residential Housing (No 65/2014/QH13) dated on November 25th, 2014 12 Law on Real Estate Business (No 66/2014/QH13) dated on November 25th, 2014 13 Law on the Amendment and Supplement of a number of Articles of the Laws on Tax (No 71/2014/QH13) dated on November 26th, 2014 14 Law on Property Auction (No 01/2016/QH14) dated on November 17th, 2016 15 Decree of Government No 163/2006/ND-CP on Security transactions dated on December 29th, 2006 16 Decree of Government No 17/2010/ND-CP on Property auction dated on March 4th, 2010 17 Decree of Government No 83/2010/ND-CP on Registration of security transaction dated on July 23rd, 2010 18 Decree of Government No 11/2012/ND-CP amending and supplementing a number of Articles of Decree of Government No 163/2006/ND-CP of December 29th, 2006 on Security transactions dated on February 22nd, 2012 19 Decree of Government No 76/2015/ND-CP on Guidelines for implementing the Law on Real Estate Business dated on September 10th, 2015 20 Decree of Government No 99/ND-CP on Guidelines for implementing the Law on Residential Housing dated on October 20th, 2015 21 Decree of Government No 62/2017/ND-CP on Guidelines for implementing the Law on Property Auction dated on May 16th, 2017 22 Consolidated documents of the Ministry of Justice No 8019/VBHN-BTP on Security transactions dated on December 10th, 2013 23 Joint Circular of the Ministry of Justice, the Ministry of Natural Resources and Environment and the State Bank of Vietnam No 16/2014/TTLT-BTP-BTNMTNHNN guiding a number of matters on Disposal of security assets dated on June 6th, 2014 24 Circular of the State Bank of Vietnam No 26/2015/TT-NHNN guiding sequence and procedures for mortgaging an investment project for construction of housing or house(s) to be formed in the future, and release of such mortgages, dated on December 9th, 2015 B Reference Materials  Vietnamese Materials Tran Thi Ngoc Diep (2016), Quy định pháp luật chấp tài sản hình thành tương lai hoạt động cho vay Ngân hàng thương mại (Translated: Regulations on mortgage of future assets in lending operations of Commercial Bank), Bachelor thesis, Ho Chi Minh City University of Law Lam Minh Duc (2009), Pháp luật xử ly tài sản chấp hoạt động cho vay Tổ chức tín dụng (Translated: Regulations on disposal of collateral in lending activity of Credit Institutions), Master thesis, Ho Chi Minh City University of Law Vo Tran Khuong (2010), Pháp luật chấp tài sản hình thành tương lai hoạt động cho vay Ngân hàng thương mại (Translated: Regulations on mortgage of future assets in lending operations of Commercial Bank), Bachelor thesis, Ho Chi Minh City University of Law Hoang Thi Hai Ha (2015), Pháp luật cho vay chấp nhà hình thành tương lai Ngân hàng thương mại Việt Nam (Translated: Regulations on mortgage loan by the housing to be formed in future of credit institutions in Vietnam), Master thesis, Vietnam National University, Hanoi – Law Faculty Nguyen Trung Hieu (2015), Thế chấp xử lý tài sản chấp theo pháp luật dân Việt Nam (Translated: Mortgage and Disposal of the collateral under Vietnamese civil law), Master thesis, Vietnam National University, Hanoi – Law Faculty Le Thi Mai Huong (2012), Pháp luật bảo đảm tài sản hình thành tương lai hoạt động cho vay Ngân hàng thương mại Việt (Regulations on security measures with future asset in lending activity of credit institutions in Vietnam), Master thesis, Vietnam National University, Hanoi – Law Faculty Hoang Ngoc Lam (2014), Quy định pháp luật chấp tài sản hình thành tương lai hoạt động cho vay Ngân hàng thương mại (Regulations on mortgage of future asset in lending activity of Commercial Bank), Bachelor thesis, Ho Chi Minh City University of Law Phan Vu Anh Nguyet (2010), Pháp luật chấp hoạt động cho vay Ngân hàng thương mại (Translated: Regulations on mortgage in lending operations of Commercial Bank in Vietnam), Master thesis, Ho Chi Minh City University of Law Tran Thanh Thanh (2011), Xử lý tài sản bảo đảm tiền vay tổ chức tín dụng theo pháp luật Việt Nam (Disposal of loan security asset under Vietnamese law), Master thesis, Vietnam National University, Hanoi – Law Faculty 10 Thế chấp nhà hình thành tương lai theo pháp luật Việt Nam (Translated: Mortgage of housing to be formed in future in accordance with Vietnamese regulations), Master thesis, Vietnam National University, Hanoi – Law Faculty 11 Nguyen Thi Hong Tran (2012), Quy định pháp luật chấp tài sản hình thành tương lai hoạt động cho vay Ngân hàng thương mại (Translated: Regulations on mortgage of future assets in lending operations of Commercial Bank), Bachelor thesis, Ho Chi Minh City University of Law 12 Le Thi Huyen Tran (2015), Thế chấp tài sản hình thành tương lai pháp luật Việt Nam (Translated: Mortgage of future asset in Vietnamese regulations), 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security assets), Banking Magazine no 13 (07/2015), page 16-20 22 Nguyen Thi Gam (2016), Xử lý tài sản bảo đảm tranh chấp Hợp đồng tín dụng Ngân hàng thương mại Việt Nam (Translated: Disposal of security asset in Credit Agreement disputes in Vietnamese Commercial Bank), Banking Magazine no 13 (07/2016), page 30-33 23 Bui Duc Giang (2017), Xử lý tài sản bảo đảm theo Bộ luật Dân 2015 (Disposal of security asset under provisions of Civil Code 2015), Banking Magazine no 01 + 02 (01/2017), page 97-99 24 Bui Duc Giang (2017), Nhận bảo đảm bất động sản hình thành tương lai từ chủ đầu tư dự án nhà (Translated: Get secured by the real estate to be formed in future from the developer of Investment project for residential housing), Banking Magazine no 06 (03/2017), page 15-17 25 Vo Dinh Nho – Tuan Dao Thanh (2009), Luận bàn chấp tài sản hình thành tương lai (Discussion on Mortgage of future asset) , Democracy and Law Magazine no 10 (210) – 10/2009, page 03-11 26 Tran Quang Vinh – Bui Duc Giang (2016), Một số góp ý cho dự thảo Nghị định giao dịch bảo đảm: Góc nhìn từ thực tiễn cấp tín dụng có bảo đảm (Recommendations for the Draft Decree on security transactions: A view from the secured extension of credit in practice), Banking Magazine no 21 (11/2016), page 29-31  Foreign Materials Civil and Commercial Code of Thailand Civil Code of France Douglas J Whaley & Stephen M McJohn (2010), Problems and Materials on secured transactions, Wolters Kluwer Law & Business European Bank for Reconstruction and Development (EBRD) publications (2008), Mortgages in transition economies, The legal framework for mortgages and mortgage securities Henry Cachard (1895), The French Civil Code, with various amendments thereto, Stevens and Sons Limited John Bell, Sophie Boyron, and Simon Whittaker (2008), Principles of French Law, Oxford University Press John Carvan & John Gooley (1996), A guide to Business Law (11th edition) Leonard A Jones (1888), A treatise on the law of mortgages on personal 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