TRANSFER LAND-USE RIGHTS WITHOUT OWNERSHIP OF HOUSE AND ASSETS ATTACHED TO THE LAND

Posted date: 31/08/2020

When the parties participated in an agreement on transferring the land and assets attached to it, before the deposit is paid or the agreement is established, it is necessary to carefully check if the ownership of the house shown in the Certificate and the content of the Certificate is realistic (construction area, house level, number of floors…). There is a case where there are 03 floors but only 01 floor shown in the Certificate due to the reconstruction.

Legal Situation

In reality, there are a lot of cases that the parties sign the agreements on transferring the land-use rights notarized and authenticated without the content of transferring the house and assets attached to the land despite their agreements about the transfer of the land and the assets attached to it. One of the common reasons for this issue is when the Certificates of land-use rights and the ownership of houses and assets attached to the land were granted (Hereinafter is “Certificate”), the ownership of houses and assets attached to the land were not recognized (because at that time, there was no house on the land or the owner had no request about it). After that, the owner built a house without updating the house information in the Certificate. When the agreements were signed and notarized, due to the lack of house information in the Certificate, the Notary office couldn’t mention such information in the agreement¹. Then, for some reasons, the dispute related to the contractual obligations arose (for examples: late payment, house price increase leading to the transferee’s unilateral contract cancellation…) …

(Hereinafter is “Transfer the land without the house”)

Judicial Practice

In this situation, there are many different solutions in judicial practice, but most of them tend to declare the above land use right transfer contract invalid. However, the Courts made different opinions on the reasons for the agreement's invalidation.

In 2012, Civil Court – The Supreme People’s Court – issued the Decision on the cassation procedure No. 191/2012/DS-GDT judging that the reasons for the invalidation of the agreements on "Transfer land without the house" are confusion. In 2018, the Department of Legal and Scientific Management - The Supreme People's Court – proposed to develop this Decision into a Case Law. Then, this Decision became the draft of case law and the survey has been made but there has been no approval so far.

In reality, there was a Court determining that the agreement on "Transfer land without the house" was invalid due to "impossibility of performing subject matter².

Recently, the Judicial Council of the Supreme People's Court (JD-SPC) has been determined that an agreement on "Transfer land without the house" was invalid due to the impossibility of performing subject matter. Specifically, in that case, the First-instance Court of Van Giang District and the Appellate Court of Hung Yen Province both recognized the validity of the agreement. After the Judgments came into effect, the Head of the Collegial People’s Procuracy in Ha Noi requested on the institution of cassation procedure but that request was rejected by the Collegial People’s Court and the judgment remained in effect. Then, the Chief Judge of the Supreme People's Court requested on the cassation review and the case was reviewed under the cassation procedure by JD-SPC. Accordingly, the Decision on Cassation Review of the Collegial People’s Court in Ha Noi, the First-instance and the Appellate Judgment were all cancelled. The First-instance Court was assigned to re-try this case³.

It is said by the author that in this situation, even though there is no agreement on the house established by the parties, the house is actually and immovably attached to the land. Thus, the contractual obligations cannot be performed if the house is not transferred along with the land because the land-use rights are owned by the transferee while the house attached to it is owned by the other. Therefore, the holding of the Court on the invalidity of the agreement due to the impossibility of performing subject matter is grounded and complies with the provisions of Article 408, Civil Code 2015 (formerly Article 411 of Civil Code 2005).

Lesson learned

Notwithstanding the confusion or the impossibility of performing subject matter, in general, the holding of the Court tends to declare the agreements on “Transfer the land without the house” invalid. Thus, when establishing a civil agreement, the parties, especially the transferee, should pay attention to this issue to protect their rights and avoid the invalidity of the agreement.

If accurate information on houses and properties on the land has not been shown or shown in an incomplete or incorrect manner on the current Certificate, the transferee should request the transferor to update. Only when the update is made should the deposit agreement and/or the transferring agreement be signed.

Footnote:

[1] According to point a, Clause 1, Article 118, Law on Housing 2014, there must be a certificate of house for any house regarding transactions in housing sale, lease purchase, gifting, mortgage, or capital contribution

[2] Judgment No. 05/2017/DS-PT dated 05 Jan, 2017 of the People’s Court of Binh Duong Province on the case of “Dispute related to the agreement on transferring the land-use right”.

[3] https://tapchitoaan.vn/bai-viet/nghien-cuu/mot-so-van-de- nghiep-vu-tu-cac-phien-toa-thang-6-2020 cua-hoi-dong-tham- phan, accessed on 20/8/2020.

Lawyer Le Hong Son – FDVN Law Firm

Link for download: TRANSFER LAND-USE RIGHTS WITHOUT OWNERSHIP OF HOUSE AND ASSETS ATTACHED TO THE LAND

Lawyers in Da Nang:

99 Nguyen Huu Tho, Quan Hai Chau, Da Nang city

Lawyers in Ha Noi:

45C Tran Quoc Toan, Tran Hung Dao Ward, Hoan Kiem District, Ha Noi

Lawyers in Hue:

336 Phan Chu Trinh, Hue City, Thua Thien Hue

Lawyers in Phu Quoc:

65 Hung Vuong, Duong Dong town, Phu Quoc island district

Lawyers in Quang Ngai:

359 Nguyen Du, Quang Ngai City, Quang Ngai Province.

Website: www.fdvn.vn www.fdvnlawfirm.vn và www.diendanngheluat.vn

Email: fdvnlawfirm@gmail.com luatsulecao@gmail.com

Phone: 0935 643 666 - 0906 499 446

Fanpage: https://www.facebook.com/fdvnlawfirmvietnam