1. mortgaging real estate that must be registered
Regarding the rights and obligations of the parties when signing a mortgage contract, the 2024 Land Law has added cases where changes must be registered. The content of registration of changes related to mortgage of land use rights is clearly regulated in Clause 1, Article 133 of the 2024 Land Law:
- Registration of fluctuations shall be carried out for cases of land use rights or certificates of housing ownership and land use rights or housing ownership certificates or certificates of ownership of construction works or land use right certificates, ownership of houses and other properties attached to land or land use right certificates, land ownership attached to the following land change assets:
+ Land users and owners of assets attached to land shall exercise the right to mortgage land use rights and assets attached to land.
Accordingly, regarding registration of changes, the 2024 Land Law has added cases that must register changes, including mentioning the content of land users and owners of assets attached to land exercising mortgage rights to land use rights and assets attached to land.
Obligations of the mortgagor
Article 320 of the 2015 Civil Code clearly stipulates the obligations of the mortgagor as follows:
- Hand over documents related to mortgaged assets in case the parties have an agreement, except where otherwise provided by law (hand over the red book to the mortgagee, ...).
- Preserving and maintaining mortgaged assets.
- Apply necessary measures to overcome, including stopping the exploitation of mortgaged assets if the exploitation results in the risk of losing value or reducing value.
- When the mortgaged property is damaged, within a reasonable period of time, the mortgagor must repair or replace it with another property of equivalent value, unless otherwise agreed.
- Providing information on the status of mortgaged property to the mortgagee.
- Deposit the mortgaged property to the mortgagee for handling.
- Notify the mortgagee about the rights of a third person to collateral, if any; In case of not notifying, the mortgagor has the right to cancel the property mortgage contract and claim damages or maintain the contract and accept the third person's rights to the mortgage property.
- Not allowed to sell, replace, exchange, or donate mortgaged property that is real estate.
2. Can I sell real estate to deduct debt?
When the mortgagor fails to pay (does not fulfill its obligations), the mortgagee has the right to handle the property. Article 299 of the 2015 Civil Code stipulates the following cases of handling mortgaged assets:
- When the due date for performance of the guaranteed obligation is reached, the party with the obligation shall not perform or shall not fulfill the obligation.
- The party is obliged to fulfill the secured obligation ahead of schedule due to violating the obligation according to the agreement or according to the provisions of law.
- Other cases agreed upon by the parties or as prescribed by law.
Pursuant to Article 303 of the 2015 Civil Code, the method of handling mortgaged assets is divided into 2 different cases:
- Case 1: There is an agreement
According to Clause 1, Article 303 of the 2015 Civil Code, the mortgage parties have the right to agree on one of the following handling methods:
+ Real estate auction.
+ mortgages transfer real estate (sell real estate).
+ The mortgagor receives the property itself in exchange for performing the mortgage party's obligations (mending the red book to stand in his/her name).
+ Other methods.
- Case 2: No agreement
If there is no agreement on the method of handling mortgaged property as prescribed above, the real estate can be auctioned, unless otherwise provided by law (according to Clause 2, Article 303 of the 2015 Civil Code).
