Are we able to buy-back our property sold?

On January 1st, 2017, I and Ms. B mutually signed the contract of purchasing housing under Ms. B’s ownership with a value of 2 billion VND (conveyancing procedure was completed). There is a contract’s term that Ms. B is allowed to redeem the house at the market price at the time of redemption but there is no term about the redeem period. On May 19^th, 2017, I have established a loan contract with Mr. A with a loan amount of 1 billion VND. The payment term is 1 year from May 19^th, 2017. Besides, we mutually agreed in the contract that I shall transfer the house to Mr. A in the case the payment is due but I can not comply with the contractual obligation. Now, due to the unfavorable business, I have not performed my payment for the debt. Mr. A forced me to carry out the procedure to transfer the house to him. So in this case, am I entitled to sell the house to perform my obligation related to the debt? What consequences shall be led to?

FDVN’s opinion:

Sincerely thank you for your concerning our legal consulting service. We are glad to give you our advice for your question. 

First, law provisions about buy-back property sold

According to Article 454 Civil Code 2015 regarding buying back the property sold: 

“1. A seller and purchaser of the property may agree that the seller has the right to buy back the property within a period of time following the sale (hereinafter referred to as the buy-back period).

The buy-back period for the property shall be as agreed by the parties but shall not exceed one year in respect of moveable property, and five years in respect of immovable property, from the time of delivery of the property, unless otherwise prescribed by law. During this period, the seller may buy back the property at any time provided that reasonable prior notice is given to the purchaser. The buy-back price shall be the market price at the time when and place where the buy-back occurs, unless otherwise agreed.

2. During the buy-back period, a purchaser may not sell, exchange, give, lease, mortgage or pledge the property, and shall bear all risks with respect to the property unless otherwise agreed.”

As you mentioned above, you and Ms. B established a contract of purchasing housing which contained conditions of buy-back the housing but it keeps silent about the period for buy-back. Thus, according to the above provision, in case of no term of the period for buy-back housing, it shall not exceed five years from the time of delivery of the housing. In the other side, you shall not be allowed to sell the housing to another one for 5 years.

Secondly, law provisions about the contract for loan of property.

According to Article 463 Civil Code 2015: “Contract for the loan of property means an agreement between parties whereby a lender delivers the property to a borrower. When the loan falls due, the borrower must repay the lender property of the same type in accordance with the correct quantity and quality, and must pay interest if so agreed or so provided by law.”

According to Article 466 Civil Code 2015 regarding the obligations of borrowers:

“1. Where the property lent is a sum of money, the borrower must repay the lender the loan in full when due. If the property is an object, the borrower must deliver to the lender an object of the same type, quantity, and quality, unless otherwise agreed.

2. Where a borrower is not able to deliver an object, it may, with the consent of the lender, repay the value of the borrowed object, in cash, as at the time and place of delivery.

3. The place for repayment of a loan shall be the place of residence or head office of the lender unless otherwise agreed.

4. If a borrower fails to repay all or any installment of an interest-free loan, in whole or in part, when payment falls due, the borrower must, if the parties so agree, pay interest on the overdue amount from the due date until the date on which payment is made, at the basic interest rate prescribed in Clause 2 Article 468 of this Code, unless otherwise agreed or otherwise prescribed by law.

5. If a borrower fails to repay, in whole or in part, a loan with interest, the borrower must pay:

a) Interest on the principal as agreed in proportion to the overdue loan term and interest at the rate prescribed in Clause 2 Article 468 in case of late payment;

b) Overdue interest on the principal equals one hundred and fifty (150) percent of the interest rate in proportion to the late payment period unless otherwise agreed.”

            You and Mr. A mutually signed the contract of loan property and agreed that the housing sold by Ms. B shall be used as collateral. However, according to law provisions, you shall not be allowed to choose another type for the security for performance of obligations to accept 9 types in accordance to Article 292 Civil Code 2015: 1. Pledge of property; 2. Mortgage of property; 3. Deposit; 4. Security collateral; 5. Escrow deposit; 6. Title retention; 7. Guarantee; 8. Fidelity guarantees; 9. Lien on property.

            According to Clause 2 Article 454 Civil Code 2015: “ During the buy-back period, a purchaser may not sell, exchange, give, lease, mortgage or pledge the property, and shall bear all risks with respect to the property unless otherwise agreed”. Thus, in case that you and Ms. B mutually agreed about buy-back the housing, you shall not be allowed to sell the housing to Mr. A.  

In this case, Mr. A shall be allowed to sue you to pay the loan amount and request payment of the interest during the late payment period but not to sign a housing purchase contract to assign the debt. If during the period for buy-back of the sold property, you still proceed to sell the housing to Mr. A or to any other entity without Ms. B’s consent, you shall bear the risks and responsibilities with Ms. B.

Above are the advice of FDVN Limited Law Firm base on studying law provisions and theories. We hope that our opinions would be useful.

 Legal Expert: Duong Hoai Thuong

                                                                                FDVN Law Company

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