Collect A First-Instance Or Appellate Judgement Concerning A Dispute On.pdf

INTRODUCTION In recent years, off-plan property, especially off-plan housing, have received widespread attention, especially with the use of off-plan houses as collateral, security for t

MINISTRY OF JUSTICE HANOI LAW UNIVERSITY

GROUP ASSIGNMENT COURSE: LAW ON SECURED TRANSACTIONS

TOPIC 6: Collect a first-instance or appellate judgement concerning a dispute on charge of off-plan property which your group consider as inappropriate and

provide your answers

Hanoi, 2023

GROUP ACTIVITY REPORT

Group: 03

Class: N01 – TL3

Progress

Result Yes No average Below Average Good attended Fully Active Contributive

453416 Nguyễn Quỳnh Trang

453417 Nguyễn Thị Ngọc Chi

453418 Lê Nguyên Hoàng

453419 Phạm Hà Minh Giang

453420 Nguyễn Đức Tiến

453421 Nguyễn Quốc Nhật Dương

453422 Phí Hồng Anh

453423 Hoàng Thanh Trúc

Hanoi,……… , 2023 Group leader

TABLE OF CONTENTS

INTRODUCTION 4

CONTENT 5

1 Summary of the case: 5

2 Theoretical issues of off-plan property and mortgages of off-plan property 7

3 Identification and analysis of the inconsistencies in the case 9

4 Appropriate solutions for contents of the case 12

5 Recommendations to improve current Vietnamese relevant laws 14

CONCLUSION 17

INTRODUCTION

In recent years, off-plan property, especially off-plan housing, have received widespread attention, especially with the use of off-plan houses as collateral, security for the performance of obligations or for a loan The regulations on off-plan housing and related transactions have had many positive changes compared to the previous regulations, but there are contracts formed from the time when there were not many regulations on mortgages of off-plan housing Although, disputes and the consequences of such contracts remained valid in research and adjudication practice with current law Recognizing the importance of off-plan housing mortgage regulations, the group chose the judgment to analyze, evaluate and thereby propose solutions

to improve the existing legislation related to this institution

CONTENT

1 Summary of the case:

Plaintiff: X Joint Stock Commercial Bank

Defendant: Ms Nguyen Thuy Thuy H3

Persons with related rights and obligations:

¥ N Real Estate Trading and Construction Company Limited (Company N)

¥ Hoang Thi G

¥ Mrs Le Dinh N

¥ Mr Hoang Hai Đ

Contents of the case:

On 08/09/2010, Ms Nguyen Thuy Thuy H3 and Company N signed a Purchase and Sale Contract for Apartment No 7G, Apartment P, Ho Chi Minh City On 25.09.2010, Mrs H3 was handed over the apartment by the Company

Ms H3 has paid 95% of the contract value, the rest is unpaid pending the completion of the apartment ownership procedure On 12/11/2010, Bank X lent

Ms H3 VND 1,000,000 to pay for the 7G apartment through the Credit Agreement Debt Acceptance Agreement and Mortgage Agreement The above secured contract is secured by the off-plan property which is a 7G apartment

At the time of borrowing, the above Secured contract is not notarized and registered as a secured transaction because there were no mandatory regulations Due to trusting Mrs H3, the Bank did not ask her to provide a value-added invoice for the purchase amount of the apartment and did not come annually to inspect the mortgaged apartment In September 2018, Ms H3 began

to violate her debt repayment obligations, after discovering that Ms H3 was not the person using the apartment, the Bank registered a secured transaction at the property transaction registration center in Ho Chi Minh City Joint Stock Commercial Bank X then initiated a lawsuit against Ms H3 over the credit contract dispute

Meanwhile, on 05/05/2011, Mr Hoang Hai Đ and Ms Nguyen Thi Hong T2, who are buyers of the 7G apartment from Company N, paid 95% of the purchase value of the apartment and did not know that Company N had sold this apartment to Ms H3 On 23/06/2014, Mr D, Ms T2 transferred the contract of sale and purchase of the above apartment to Mr Le Dinh N and

Mrs Hoang Thi G, the transfer was confirmed by Company N, Mr N and Mrs

G have used the 7G apartment since 2014 and there has been no dispute The trial court granted part of the Bank's claim to compel Mrs H3 to pay the principal, interest and delinquent debts under the Credit Agreements Refusing

to accept the request to realize the property as flat No 7G, declaring the contract secured by the off-plan property between Mrs H3 and the Bank null and void Recognition of the Apartment Purchase and Sale Contract between Company N and Mr Hoang Hai Đ and Ms Nguyen Thi Hong T2, declaring the apartment purchase and sale contract between Company N and Ms H3 invalid

Appeal:

- On 25.01.2022, the plaintiff, Joint Stock Commercial Bank, appealed in part

the Judgment of First Instance, asking the Court of Appeal to modify the said

judgment of first instance, granting the petition in its entirety

- On January 27, 2022, the respondent's legal representative appealed the entire judgment of first instance on the grounds that the Court of First Instance tried Company N in absentia and requested the Court of Appeal to modify the judgment of first instance, recognizing the Contract of Sale of Luxury Apartments

Decision of the Court of Appeal:

1 Partially accept the lawsuit request of Joint Stock Commercial Bank X, forcing Ms Nguyen Thuy Thuy H3 to pay to Joint Stock Commercial Bank X a total amount of VND 1,083,316,127 and temporary interest as

of January 24, 2022 under the credit contract cum debt receipt contract

2 Refuse X Commercial Bank's request for the issuance of collateral as 7G Apartment

3 Cancellation of the apartment purchase and sale contract between N Real Estate Construction and Trading Co., Ltd and Ms Nguyen Thuy Thuy H3 on the purchase and sale of 7G apartments

4 Recognition of the Apartment Purchase and Sale Contract between N Real Estate Construction and Trading Co., Ltd and Mr Hoang Hai Đ and the Transfer Document of the Apartment Purchase and Sale Contract between Mr Hoang Hai Đ and Nguyen Thi Hong T2 with Mr Le Dinh

N and Mrs Hoang Thi G

2 Theoretical issues of off-plan property and mortgages of off-plan

property

The group will cover the theoretical issues that are directly relevant to the case:

“Property” is regulated in Article 105 of the Civil Code as:

“1 Property comprises objects, money, valuable papers and property rights

2 Property includes immovable property and movable property Immovable property and movable property may be existing property or off-plan property.”

“Land use right” is the right of entities to exploit their uses, enjoy profits

and profits from the use of land assigned, leased or transferred from other entities through conversion, transfer, lease, sublease, inheritance, gift from the subject who has the right

Article 317 of the 2015 Civil Code provides for "mortgage of property"

as follows: " Mortgage of property means the use by one party (hereinafter

referred to as the mortgagor) of property under the ownership of the obligor

as security for the performance of an obligation to the other party (hereinafter referred to as the mortgagee) without transferring such property to the mortgagee."

Thus, a mortgage is the act of a party using property in its possession, in case the property is eligible for mortgage, to secure the performance of obligations and not to deliver the property to one or more other parties

Clause 2, Article 108 of the 2015 Civil Code stipulates off-plan property

as follows: " Off-plan property includes:

a) Non-formed property;

b) Formed property that the entity has established his/her ownership rights after

the time of transaction establishment "

Accordingly, off-plan property are understood as assets that do not yet exist, are being invested in, built at the time of consideration but will definitely have and form in the future or are assets that have been formed but are newly owned at the time of entering into transactions and have not yet transferred ownership In the case of the above case, the off-plan property is real estate or, more precisely, housing

According to the provisions of Clause 1, Article 3 of the Law on Housing

2014, "Housing means any building in which households or individuals live"

The definition of off-plan housing is stipulated in Clause 19, Article 3 of the Law on Housing as " any house which is under construction and has not been permitted to put into operation."

Previously, when there was no concept of " off-plan housing", the Civil Code 2005 approached this concept through the provisions of Article 320 as " Objects used to secure the performance of civil obligations", specifically:

" 1 Objects used to secure the performance of civil obligations must be under the ownership rights of the securing party and be permitted for transaction

2 Objects used to secure the performance of civil obligations are the existing objects or objects to be formed in the future Objects to be formed in the future are movable property or immovable property under the ownership of the securing party after the time the obligations are established or the security transactions are entered into."

Currently, an asset is determined to be eligible to become a collateral when satisfying the conditions stipulated in Article 295 of the Civil Code 2015 including 1 Collateral must be under the ownership rights of the securing party, except for the cases of lien on property or title retention

2 Collateral may be described generally but must be identified

3 Collateral may be existing property or off-plan property

4 The value of collateral may be greater, equal or smaller than the value of the secured obligation

Such assets need to be identified in one of the cases mentioned in Article

8 of Decree 21/2021/ND-CP

According to the Law on Housing, conditions for mortgage of off-plan property or, more specifically, mortgage of off-plan houses must fully comply with the requirements of Article 148 According to the judgment, the group determined that the above mortgage case belongs to the case of an individual buying an off-plan house in a housing construction investment project of the investor who mortgaged this house at a credit institution operating in Vietnam

to borrow capital for the purchase of that housing itself

Therefore, according to the current law, in order to mortgage an off-plan housing, it is necessary to have a certificate of legal land use right, a housing purchase contract signed with the investor, a document proving that the purchase money has been paid to the investor according to the schedule agreed

in the contract and is not subject to complaints, lawsuits or disputes about the housing purchase contract or the transfer of this housing purchase contract Any off-plan housing mortgage contract that is not in accordance with the provisions

of the Housing Law has no legal validity

In terms of characteristics, the off-plan housing is the subject of a mortgage in order to secure the fulfillment of the obligation is the one that has not yet formed at the time of establishment of the mortgage measure, the mortgagor must have sufficient documents to determine that the house will definitely form in the future such as documents recording the progress of construction house; is a house that has not established title to the mortgagor at the time of establishing the mortgage; The conditions and purpose of the mortgage for off-plan houses are limited due to the potential for many legal risks, placing strict requirements on both physical and legal aspects of the house For the same reasons, in practice, the law also limits the mortgage purpose of off-plan houses only to borrow capital for investment in the construction of the house itself

3 Identification and analysis of the inconsistencies in the case

Throughout the research process, evaluation of judgments as well as judgments of the Court, the group found that there are inconsistencies as follows:

Firstly, regarding the validity of the 7G apartment purchase contract between Ms H3 and the Bank, according to the provisions of Article 122 of the Civil Code 2005, a civil transaction takes effect when all the following conditions are met:

1 Civil transactions take effect when fully meeting the following conditions: a) Transaction participants have civil act capacity;

b/ The purpose and contents of the transaction do not violate the prohibitions

of law or social morals;

c) Participants in transactions are completely voluntary

2 The form of civil transaction is a condition for the validity of a transaction

in cases prescribed by law

Regarding the form of such civil transactions must satisfy the conditions specified in Article 124, including:

1 A civil transaction shall be expressed verbally, in writing, or through specific acts

Civil transactions through electronic means in form of data messages shall be considered transactions in writing

2 In cases where it is provided for by law that a civil transaction must be expressed in writing, notarized, authenticated, registered or permitted, such provisions must be complied with

Comparing the sales contracts between Company N and Ms H3 and Company N with Mr D, the key factor that led the court to determine that the transaction between Ms H3 and Company N was not as valid as the other transaction lies in the validity of the above sales contracts based on the signed documents and value-added invoices to prove that the purchase between the 2 parties is well-founded

First of all, it should be pointed out that the Court's argument in respect

of these two contracts is that, relying on the value-added invoice to determine that one contract of sale is more valid than another, the Court points out that the value-added invoice is the basis for securing the interests of the Bank but the Bank has not requested it Mrs H3 provided this invoice On the other hand, the group agreed with the Court's judgment on the importance of value-added invoices, but the issuance of invoices was an obligation that Company N had

to perform That is, when Company N should have fulfilled its invoicing obligations in the transaction with Mrs H3, Company N's breach and non-issuance of value-added invoices had no connection to the sales contract that this Company signed with Mr D, therefore, the Court cannot rely on this detail

to annul the contract of sale between Company N and Mrs H3

Moreover, in comparison with the Apartment Purchase and Sale Contract between Ms H3 and Company N, this contract entered into by Ms H3 and Company N are both subjects with capacity for civil acts voluntarily and without coercion At the same time, there is no content and purpose that violates the prohibitions of the law, is not contrary to social morals In form, the above contract was in writing and Company N even confirmed the formation of that contract In fact, both parties complied with the contract, even Mrs H3 performed up to 95% of the value of the contract, Company N also signed to hand over the house to Mrs H3 Both parties have done enough in