Can individuals mortgage land use rights from other individuals?
According to Article 317 of the 2015 Civil Code, property mortgages are the use of property owned by the mortgagor to ensure the fulfillment of obligations and not handing over the property to the mortgagee.
Accordingly, mortgaging land use rights is an act in which the owner of the land use right uses his/her land use rights as collateral to fulfill his/her obligations, and does not have to hand over the land to the mortgagee. The land use right is still the property of the mortgagor throughout the mortgage process, and the mortgagor still has the right to use the land within the scope of its rights.
Pursuant to Article 35 of Decree 21/2021/ND-CP, the mortgage of individuals who are not credit institutions for land use rights of land users must meet the following conditions:
- If the mortgagee is an individual, it must be a Vietnamese citizen with full civil act capacity.
- mortgaging to ensure the fulfillment of obligations not to violate the prohibitions of the Civil Code, other relevant laws, not to be contrary to social ethics in the relationship of contracts for investment projects, construction, lease, lease-purchase, services, and other transactions.
- In case the obligation is guaranteed to include interest payment, the interest rate arising from late payment, interest on principal in the term, interest on overdue principal, interest on unpaid interest or other interest rates applicable must not exceed the agreed limit on interest and interest rates as prescribed in Clause 2, Article 357, Clause 5, Article 466 and Article 468 of the 2015 Civil Code. In case there is an agreement on handling the act of not paying the debt on time by the person with the obligation and there are no other provisions of law, only one time shall be handled for each act of not paying the debt on time.
Thus, individuals have the right to mortgage land use rights from other individuals under certain conditions. Specifically, the mortgagee must be a Vietnamese citizen with full civil act capacity and the mortgage payment must not violate legal regulations and social ethics. Moreover, these transactions must also comply with regulations on interest rates and handle debts according to the provisions of the Civil Code.
Does an individual who mortgages land use rights from another individual need to register for security measures?
Pursuant to Article 292 of the 2015 Civil Code, mortgaging land use rights is regulated as one of the measures to ensure the performance of obligations, in which the mortgagor uses its land use rights to secure obligations to the mortgagor without having to hand over assets to the recipient. This is a popular form of guarantee and has high legal value in civil transactions.
To protect the legitimate rights of contract participants and ensure the transparency of transactions, registering for a guarantee measure is an important step.
According to Clause 1, Article 3 of Decree 99/2022/ND-CP, the registration of the measure of guarantee is the competent authority recording and updating information in the Registration Book or Database on the measure of guarantee for assets used as collateral for the obligations of the guaranteeor, the guaranteeor or both for their obligations and others.
Pursuant to Point a, Clause 1, Article 25 of Decree 99/2022/ND-CP, if an individual receives a mortgage for land use rights from another individual, registration of security measures is mandatory.
This is a legal requirement to ensure the rights of the mortgagee, helping to clearly identify the rights and obligations between the parties, while creating safety and protecting the legitimate rights of the parties in the mortgage transaction.
Thus, individuals who mortgage land use rights from other individuals are required to register for security measures.
