Pursuant to Official Letter No. 64/TANDTC-PC dated April 30, 2019 and Official Letter No. 02/TANDTC-PC dated August 2, 2021, there are issues that the transferee and mortgagee of real estate should pay attention to such as:
1. Instructions according to Official Letter No. 64/TANDTC-PC dated April 30, 2019
Letter 64 has instructions for questions as follows:
“In case the real estate transfer transaction is invalidated but the transferee has been granted a “red book” and mortgaged the house and land use right to the Bank in accordance with the law. So the mortgage transaction is void?” (first)
The Supreme Court shall base itself on Clause 2, Article 133 of the 2015 Civil Code, in case the civil transaction is invalid but the property has been registered at a competent state agency. After that, the transaction is transferred by another transaction to a bona fide third party who, based on that registration, establishes and performs the transaction, the transaction will not be invalidated.
Mortgage is a security measure. In case such an obligation is not performed by the mortgagor or improperly performed, the mortgaged property must be delivered to ensure the interests of the mortgagee. Therefore, the mortgage of the property must be viewed as a conditional transfer of property. In order to ensure the interests of the righteous mortgagee, it is necessary to understand the provisions of “transfer by another civil transaction”.
Therefore, in case (1), the mortgagee of the house, the land use right in accordance with the law… Then the mortgage transaction is not void.
2. Guidance according to Official Letter No. 02/TANDTC-PC dated August 2, 2021
By 2021, the TANDTC has issued Official Letter No. 02/TANDTC-PC providing more guidance on this issue. Accordingly, Official Letter 02 offers a new and more reasonable legal perspective.
Official letter 02 makes the case that Mr. A is forging Ms. B’s signature to transfer the house owned by Mr. A and B to C. After the transfer, A and B still use that house. Then, C uses this property as collateral for a bank loan. So, is the mortgage transaction void? If disabled, is it contrary to the case above in item 1?
According to Article 123 of the 2015 Civil Code, civil transactions with purposes and contents that violate the prohibition of the law or are contrary to social ethics are invalid.
In this case, the fact that Mr. A forged Mrs. B’s signature to transfer the land, based on the above provisions, the real estate transfer transaction will be invalidated.
After receiving the transfer, C uses this property as collateral for the loan. But when signing the property mortgage contract, the Bank did not appraise and verify it, so it is not known that A and B still use the house. Or have appraised but there are no documents to prove that Mr. A and Mrs. B know about this mortgage… At this time, the Bank is not a sincere third party. Accordingly, the property mortgage contract is also void.
Therefore, buyers and mortgagees of real estate should pay attention to the above guidelines. Because, even if the buyer or mortgagee has a transaction with the holder of the red book, it is not completely legal.
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