Is the non-certified contract of purchasing housing declared invalid?

In 12/2018, I and Mr. Nguyen Van T mutually signed a contract of purchasing housing which was not certified. At that time, I paid 1 billion VND to him with a receipt. We mutually agreed that by 1/2019, Mr. T has had to complete the conveyancing procedure and I have had to give him the remaining 500 million VND (total value of the contract is 1.5 billion VND). My family moved to the house at the time the contract was signed.

However, Mr. T didn’t carry out the conveyancing despite the expiry of the procedure. He said that he did not want to sell anymore. So, is it legal that he wants to return the sum of money I have given to him and take back the house?

FDVN’s opinion:

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

Firstly, about the legal provisions on contracts for the transfer of land use rights and house ownership:

According to Clause 3 Article 167 Land Law: “a) Contracts on transfer, donation, mortgage or contribution of land use rights as capital or the rights to use land and land-attached assets must be notarized or certified, except the case of real estate business prescribed at Point b of this Clause”;

According to Clause 1,2 Article 122 Law on Housing:

“1. Regarding agreements on housing sale, giving, exchange, capital contribution, mortgage, or transfer of agreement on commercial housing sale, it is required to notarize or authenticate the agreement, except for cases prescribed in Clause 2 of this Article.

Regarding any agreement prescribed in this Clause, the effective date of the agreement shall be the date on which the agreement is notarized or authenticated.

2. Regarding transactions giving houses of gratitude; sale or lease-purchase of state-owned housing; sale or lease-purchase of social housing, housing serving the relocation; contributed housing which one entity of contracting parties is an organization; housing lease, lending, permission for stay, or authorization of housing management, it is not required to notarize or authenticate the agreement, unless contracting parties wish to notarize or authenticate the agreement.”

So, contracts on transfer land use right, housing ownership has to be certified according to applicable law provisions.

Therefore, contracts on transfer land use right, housing ownership between you and Mr. T which was not certified violated the conditions for effectiveness of civil transactions according to Clause 2 Article 117 Civil Code 2015 “The forms of civil transactions shall be the conditions for its effectiveness in cases where it is so provided for by law.”

Secondly, law provisions on resolving civil contracts violate formal conditions:

According to Clause 2 Article 129 Civil Code regulating about the invalid civil transaction:

“A civil transaction violating conditions for validity pertaining to form shall be invalid, except for any of the following cases:

2. If the form of a civil transaction, required to be established in writing, violates against regulations on notarizing or authorization, but a party or the parties has/have to fulfill at least two-third of the obligations in the transaction, a court, at his/her/their request(s), shall issue a decision on recognition of the validity of such transaction. In this case, the parties need not perform the notarizing or authorization.”

As you mentioned above, at the time the contract was signed, you paid 1 billion VND to Mr. T, which was calculated 2/3 of the total contract value. Besides, you have used the house until now. Although the contract between you and Mr. T was not certified under the relevant law provisions, you both performed 2/3 of the contractual obligations. Therefore, in your case, the contract of purchasing housing signed in December 2018 is recognized valid. Thus, it’s illegal that Mr. T take back the house he sold.

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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