WILL PROPERTY ON LAND BE REALIZED IF IT HAD NOT EXISTED WHEN THE LAND USE RIGHT WAS MORTGAGED?

FDVN’s Opnion

Thank you for reaching out and expressing your interest in the services of FDVN Law firm. Regarding your inquiry, we have considered the relevant regulations and here is some information that you may find helpful:

In order to have the accurate answer for your question, it is necessary that you look into the agreements you signed with Bank A to see whether or not there is a clause providing that the mortgaged property also consists of off-plan property on existing property? And a clause on realization of mortgaged property... In case the parties have an agreement on these contents and this agreement does not violate the prohibition of the law and is not contrary to social ethics, the two parties will settle according to this agreement.

If there was not an agreement on these issues, Article 325 of the Civil Code 2015 will be applied as follows:

1. If the land user is also the owner of the property on land: “With respect to mortgage on land use rights without mortgage property on that land but the land user is also the owner of the property on land; such property shall also part of the realized property, unless otherwise agreed” (Clause 1, Article 325, Civil Code 2015).

2. If the land user is not also the owner of the property on land: “With respect to mortgage on land use rights that the land user is not also the owner of the property on land, such owner may keep using such land within his/her rights and obligations during the realization of the land use rights. The rights and obligations of the mortgagor in relation with the owner of the property on land shall be transferred to the transferee of the land use rights, unless otherwise agreed” (Clause 2, Article 325, Civil Code 2015).

Therefore, depending on the agreement between you and the bank and whether or not you are both the land user and the owner of the property on the land, the law will be applied for realization of mortgaged property as we provide above.

This is FDVN's legal advice regarding your question based on our research on relevant regulations. We hope this advice will be useful to you and feel free to contact us if you have any further questions.