Navigating the Complexities of Mortgaged Assets: Selling, Legalities, and Consequences

Owning a mortgaged property complicates matters when you consider selling it. The legal intricacies surrounding such transactions can be daunting, leaving you unsure of your rights and limitations. This guide, provided by NT International Law Firm, delves into the Vietnamese legal framework governing the sale of mortgaged assets, empowering you to navigate this complex landscape with confidence.

Navigating the Complexities of Mortgaged Assets: Selling, Legalities, and Consequences

Understanding Mortgages in Vietnam:

The 2015 Civil Code (CC) defines a mortgage (Article 317) as “a measure to ensure the performance of obligations” where a party uses their property (mortgagor) to secure the fulfillment of another party’s (mortgagee) obligations without transferring ownership. This essentially acts as collateral for loans or other debts.

What Can Be Mortgaged?

Article 318 of the CC clarifies the subject of mortgage:

• Entire real estate or movable property: Ancillary items attached to the property are also included unless specified otherwise.
• Part of real estate or movable property: Ancillary objects are included unless otherwise agreed upon.
• Land use rights and attached assets: These are included in the mortgaged property unless specified differently.
• Insured mortgaged property: The mortgagee must notify the insurance company about the mortgage, and the insurance money will be directed to them in case of a covered event.

Restrictions on Selling Mortgaged Property:

Article 320 of the CC imposes limitations on the mortgagor’s ability to sell the mortgaged property. Generally, selling is prohibited, with the following exceptions (Article 321):

• Circulating goods: The mortgagor can sell goods that are actively used in production or business, provided the buyer pays the proceeds to the mortgagee or the proceeds become collateral.
• Warehouse inventory: Mortgagors can replace goods within a warehouse, but the total value must remain as agreed upon.
• Mortgagee consent or legal authorization: The mortgagor can sell non-circulating goods with the mortgagee’s consent or as authorized by law.

Violation of these restrictions renders the sale invalid (Article 123 of the CC), requiring both parties to return to their original state and potentially compensate for damages (Article 131 of the CC).

Legal Consequences of Unauthorised Sales of Mortgaged Assets:

If a mortgagor sells the property without authorization, the following consequences may arise:

• Invalid transaction: The sale is declared null and void.
• Restoration of original state: Both parties must return everything received in the transaction.
• Damage compensation: The mortgagor may be liable for damages incurred by the mortgagee due to the invalid sale.

Protecting Your Interests:

To navigate this complex landscape with confidence, consider these steps:

• Seek legal counsel: Consult a qualified lawyer specializing in property and mortgage law to ensure your transaction complies with legal regulations and minimizes risks.
• Verify ownership: Confirm that the property is legally owned by the mortgagor and not subject to any other disputes.
• Obtain mortgagee consent: Secure written consent from the mortgagee for any permitted sales, ensuring a smooth transaction process.
• Understand legal implications: Be aware of the potential consequences of unauthorized sales and act with caution to avoid legal complications.

Conclusion:

While selling mortgaged property can be possible under specific circumstances, it requires careful consideration of legal regulations and potential risks. By seeking legal expertise and following the outlined steps, you can protect your interests, navigate the legalities with confidence, and ensure a successful transaction.

NT International Law Firm is Here to Help

NT International Law Firm has addressed the question of whether you can sell mortgaged assets or not. If you have any further questions or concerns regarding civil law, please contact our law firm immediately for expert legal advice.

If you require any legal assistance, please feel free to reach out to us via phone at 090 252 4567 or through email: info@ntpartnerlawfirm.com. At NT INTERNATIONAL LAW FIRM, our team is committed to offering you prompt and personalized advice.

You also might be interested in:

• The 2015 Civil Code in English