Do individuals have the right to mortgage land use rights and house ownership to the other individuals?

My younger brother was about to go to Saigon to set up a business. He asked me to lend him VND 500,000,000. I told him to mortgage his real estate but he told me that an individual cannot mortgage the land use rights at the others. So, can he mortgage land use rights and house ownership to me? Thank you.

FDVN’s opinions:

Thank you for concerning FDVN’s legal services. Regarding your consulting requests, after studying the relevant legal documents, FDVN Law Firm would like to give you the following advice:

1. According to Point g, Clause 1, Article 179 of the Law on Land 2013, one of the rights of households and individuals using land is “To mortgage land use rights at credit institutions which are licensed to operate in Vietnam, or at other economic organizations or individuals under the law.”

At the same time, according to Clause 2, Article 144 of the Law on Housing 2014: “The homeowner is an individual entitled to mortgage his/her house at a credit institution, or an economic organization operating in Vietnam or individuals as prescribed.”

Thus, individuals can mortgage land use rights and homeownership at other individuals according to the provisions of law.

2. Regarding the conditions for the mortgage of land use rights and homeownership

According to Clause 1, Article 188 of the Law on Land 2013, “Land users may exercise the rights to exchange, transfer, lease, sublease, inherit, donate or mortgage land use rights and contribute land use rights as the capital when meeting the following conditions:

a)                      Having the certificate, except the case prescribed in Clause 3, Article 186 and the case of receiving inheritance prescribed in Clause 1, Article 168 of this Law;

b)                       The land is dispute-free;

c)                      The land use rights are not distrained to secure judgment enforcement;

d)                      Within the land use term.”

Besides, in Clause 1, Article 119 of the Law on Housing 2014, housing mortgage conditions are:

“a) He/She is the homeowner, or the person permitted and authorized by the homeowner to enter into housing as prescribed in this Law and law on civil; if the agreement of commercial housing is transferred, he must be the buyer for the housing of the investor or the transferee of the agreement on housing sale;

b) If the entity is a person, he must have the full civil capacity to enter into transactions in housing as prescribed in law on civil; if the entity is an organization, it must have legal personality, except for the organization giving the house of gratitude.”

Currently, the laws on land, housing, notarization, and registration of security interests do not have specific regulations for organizations and individuals when receiving mortgages of land use rights and assets attached to the land. Mortgage of land use rights and land-attached assets means the rights of the land user or owner of the property on land recognized by the land law in case the land is eligible for a mortgage as prescribed in Article 188 of the Law on Land 2013 or of the Law on Housing in case the house is eligible for transactions as prescribed in Article 119 of the Law on housing 2014.

Besides, according to Clause 3, Article 167 of the Law on Land 2013, “Contracts on transfer, donation, mortgage or contribution of land use rights as capital or the rights to use land and land-attached assets must be notarized or certified, except the case of real estate business prescribed at Point b of this Clause.”

According to Article 4 of Decree No. 102/2017/ND-CP providing for the registration of security interest, when mortgaging land use rights, it is required to register the security interest.

Above is FDVN Law Firm’s opinion for your consulting requests based on studying the relevant legal provisions. Hopefully, FDVN’s advice would be helpful to you.

Nguyen Thi Thanh Thanh Tra – FDVN Law Firm