HỢP ĐỒNG CHUYỂN NHƯỢNG QUYỀN SỬ DỤNG ĐẤT VÔ HIỆU DO NHẦM LẪN, GIẢ TẠO TRONG GIAO DỊCH DÂN SỰ: TỒN TẠ

Land use rights transfer contracts are among the most common types of contracts in Vietnam. However, in practice, many contracts are declared invalid by the courts due to misunderstanding or falsification, leading to complex legal consequences. This article analyzes the legal basis and judicial practice (including Case Law No. 11/2017/AL), identifies existing shortcomings, and proposes recommendations to improve the law and ensure legal safety for land transactions. 

1. Introduction 

The strong development of the real estate market imposes high requirements on legal certainty in transactions. Land use rights transfer contracts (LURT contracts) not only have significant economic value but are also closely associated with the fundamental rights of citizens. However, many contracts are declared invalid due to misunderstanding or falsification, resulting in prolonged disputes and adversely affecting the legitimate rights and interests of the parties as well as the stability of the market. 

2. Legal basis and judicial practice 

2.1. Invalidity of land use rights transfer contracts due to misunderstanding 

A civil transaction that is invalid due to misunderstanding is provided for in Clause 1, Article 126 of the 2015 Civil Code, which states that “A civil transaction having misunderstanding shall not be invalid if the parties may meet the objectives of the transaction establishment…” The time limit for requesting the Court to declare such a civil transaction invalid is 02 years from the date on which the mistaken party knows or must know that they are mistaken or deceived.

Accordingly, a civil transaction is invalid due to misunderstanding when one party is mistaken in a way that prevents them from correctly perceiving the content of the transaction, and without such misunderstanding, they would not have entered into the transaction. Misunderstanding the true nature of matters related to the transaction (thinking it is A, while in fact it is B…) may occur to one or all parties, resulting in failure to achieve the purpose of the transaction due to objective reasons or negligence (such as overconfidence or carelessness). If one party intentionally causes the other party to misunderstand the nature of matters related to the transaction when entering into it, then it is no longer a civil transaction due to misunderstanding but a civil transaction induced by deception. 

To determine that a contract is invalid due to misunderstanding, it is necessary to prove that there was a misperception regarding the nature, subject matter, or essential content of the transaction, and that such misperception was the direct cause leading to the conclusion of the contract. 

In the field of land, misunderstanding in land use rights transfer transactions often revolves around misunderstandings regarding area, boundaries, legal status, or the right to transfer.

2.2. Invalidity of land use rights transfer contracts due to falsification 

A civil transaction that is invalid due to falsification is provided for in Clause 1, Article 124 of the 2015 Civil Code, which clearly states that: “If the parties falsely enter into a civil transaction for the purpose of concealing another transaction, the false transaction shall be invalid”. The time limit for requesting the Court to declare such a transaction invalid is not restricted. 

A falsified civil transaction aimed at concealing another transaction or evading obligations is invalid. In practice, parties often establish land use rights transfer contracts to conceal loan agreements, donation contracts, or to evade taxes.

Notably, Case Law No. 11/2017/AL of the Council of Judges of the Supreme People’s Court affirms that a land use rights transfer contract created to conceal a loan agreement is an invalid transaction, while the loan agreement remains valid. This case law serves as an important basis for ensuring consistency in adjudication, but it also raises issues regarding the protection of the rights and interests of bona fide third parties.

2.3. Legal consequences 

Article 131 of Civil Code 2015 states that: “When a civil transaction is invalid, the parties shall restore everything to its original state and shall return to each other what they have received. If the restitution is not able to be made in kind, it may be paid in money.” 

Accordingly, for a contract that is invalid due to misunderstanding, it is necessary to assess the fault of the parties in order to determine responsibility for remedying the consequences, and the parties must return to each other what they have received; if restitution in kind is not possible, it must be made in money.

However, in the field of land, restitution is very difficult to implement when the land has already been built upon, mortgaged, or transferred multiple times. Some cassation decisions of the Supreme People’s Court show that a bona fide purchaser may lose the land use rights, even though they have completed notarization and registration procedures for transfer of title.

3. Current shortcomings 

Firstly, legal provisions remain general: the Civil Code only provides general concepts of misunderstanding and falsification, without specific guidance for land use rights transfer contracts. 

The 2015 Civil Code merely identifies “misunderstanding” (Article 126) and “falsification” (Article 124) as grounds for the invalidity of civil transactions. However, these provisions are general in nature and do not set out specific criteria for identifying misunderstanding in land use rights transfer contracts (LURT). Similarly, what constitutes a “falsified” transfer contract in land relations has not been clearly explained. 

Meanwhile, land use rights are a special type of asset; their transfer is governed not only by the Civil Code but also by the Land Law and laws on notarization and registration. The lack of specific guidance leads to inconsistent interpretation and application among adjudicating bodies, affecting the uniformity of the law. 

Secondly, difficulties in proof: determining a falsified transaction largely depends on evidence of the true intent of the parties. 

One of the major obstacles in resolving disputes over contracts invalid due to falsification or misunderstanding is proving the parties’ true intent. Internal intent is often not directly expressed in writing but can only be inferred from conduct, statements, or surrounding circumstances. This makes the proof of falsified transactions heavily dependent on indirect evidence and the subjective assessment of procedural authorities.

For misunderstanding, the difficulty lies in the thin line between “not correctly understanding the contract’s content” and “knowing but still signing” For falsification, the concealing party often carefully prepares documents and legitimizes them through notarization and registration, making it even more complex to determine the true nature of the transaction.

Thirdly, lack of an effective mechanism to protect bona fide third parties: although Article 133 of the Civil Code provides for the protection of bona fide third parties in cases of invalid civil transactions, its practical application remains inconsistent. 

In disputes over LURT contracts, it is common that the initial transfer contract is declared invalid (due to falsification or misunderstanding), while the transferee has already further transferred or mortgaged the land to a third party. In such cases, the rights of bona fide third parties are put at risk, as courts may adopt different approaches—either strictly protecting the original owner’s rights or recognizing the rights of bona fide third parties.

This inconsistency creates a legal gap and undermines the confidence of parties participating in land transactions.

Fourthly, the requirement that parties restore the original status and return what they have received does not fully ensure the interests of the parties in land use rights sale contracts. For example, where the transferee has constructed houses or works on the land, but the transfer contract is later declared invalid, the court may require the transferee to dismantle such constructions to restore the original condition of the land for return to the transferor. Although this complies with legal provisions, it is economically inefficient and may even cause significant losses and damages to the parties. 

4. Recommendations for improving the laws 

First, it is necessary to issue specific guidelines on criteria for determining misunderstanding and falsification in LURT (through a resolution of the Council of Judges of the Supreme People’s Court). 

Second, enhance the role of notarization and land registration: notarization authorities must provide full advice on the legal status of land parcels to reduce risks for the parties.

Third, develop a clearer mechanism to protect bona fide third parties: where land has been lawfully transferred, bona fide purchasers should be protected, and the party at fault should bear compensation liability.

Fourth, strengthen the application and development of case law: in addition to Case Law No. 11/2017/AL, further case law relating to misunderstanding in LURT should be developed to ensure consistency in adjudication.

Fifth, regarding the legal consequences of invalid transactions: the law should clearly provide for the determination of fault and liability for damages to ensure consistency in legal theory and practice. Additionally, where restitution in kind is impossible and must be converted into monetary value, the law should be amended and supplemented with clearer provisions on determining equivalent value to safeguard the rights and interests of the parties.

Sixth, to avoid entering into falsified civil contracts, individuals should carefully study and seek legal advice on relevant legal issues before signing contracts. When establishing a falsified civil contract, parties may not always be aware of the consequences. In some cases, due to a lack of understanding, individuals may be misled by others. Therefore, the State (local authorities) should strengthen measures to widely disseminate legal regulations on this issue to the public.

5. Conclusion 

Invalid land use rights transfer contracts due to misunderstanding and falsification constitute a complex legal issue that directly affects the rights and interests of the parties and the legal safety of the real estate market. Improving the legal framework, strengthening the application of case law, and protecting bona fide third parties are key solutions to minimize risks and establish a transparent and stable transactional environment. 

Lawyer Nguyễn Thị Hải Nhi