PROTECTION OF THE RIGHTS OF BIDDERS FOR ASSETS IN JUDICIAL ENFORCEMENT IN HỒ CHÍ MINH CITY
PROTECTION OF THE RIGHTS OF BIDDERS FOR ASSETS IN JUDICIAL ENFORCEMENT IN HỒ CHÍ MINH CITY
Vũ Thế Hoài
PhD., Deputy Head of Law Faculty, Saigon University
Phan Văn Thụy
MSc, Department of Civil Judgment Enforcement, Hồ Chí Minh City
ABSTRACT
Civil judgment enforcement (CJE) is the activity of enforcing effective legal judgments and decisions in practice. To effectively implement these judgments and decisions, CJE agencies must follow various procedures and legal regulations, especially applying guarantee measures and enforcement measures.
Among the enforcement measures, the attachment and disposal of assets play a crucial role in the strict enforcement of judgments and decisions. The main assets handled by CJE agencies are land use rights, housing ownership, and other assets attached to the land (real estate). The disposal and auction of real estate assets significantly contribute to enhancing the effectiveness of CJE work. This paper focuses on analyzing the current situation, assessing existing issues, and proposing some solutions to protect the rights of bidders for real estate assets in civil judgment enforcement.
Keywords: Protection of the rights of bidders, real estate, civil judgment enforcement.
I. LEGAL PROVISIONS ON CJE RELATED TO THE PROTECTION OF RIGHTS OF BIDDERS FOR REAL ESTATE ASSETS IN JUDICIAL ENFORCEMENT
According to the legal provisions on CJE, real estate assets that have been attached are auctioned by professional auction organizations. Clause 6, Article 5 of the 2016 Law on Property Auction stipulates: “The bidder awarded the property at auction is the person who wins the auction and signs the property purchase contract or is approved by the competent authority for the auction results”. Thus, the appearance of the bidder awarded the property in CJE only occurs when the execution assets are auctioned.
The current CJE Law has dedicated Article 103 to regulate the protection of the rights of the purchaser of auctioned assets: (i) The purchaser of the auctioned assets and the recipient of the assets for execution are protected regarding ownership and use of those assets. (ii) In cases where the purchaser of the auctioned assets has paid the full purchase price but the judgment or decision is protested, amended, or annulled, the civil judgment enforcement agency shall still deliver the assets, including coercive enforcement measures to hand over the assets to the purchaser, except when the auction result is annulled according to legal provisions or the parties agree otherwise.
The CJE Law also stipulates the responsibilities of competent state agencies in recognizing and protecting the ownership and use rights of the purchaser for those assets, even in cases where the previous certificate cannot be found or recovered, the competent authority shall issue a certificate according to government regulations (Article 106 of the CJE Law and Article 28 of Decree No. 62/2015/ND-CP).
Clause 3, Article 27 of Decree No. 62/2015/ND-CP dated July 18th, 2015, guiding the implementation of several articles of the CJE Law amended and supplemented by Decree No. 33/2020/ND-CP dated March 17th, 2020, stipulates: “Within no more than 30 days, in complicated cases not exceeding 60 days, from the date the purchaser has paid the full amount, the civil judgment enforcement agency must organize the handover of the assets to the purchaser, except in force majeure events.
The auction organization is responsible for coordinating with the civil judgment enforcement agency in handing over the auctioned assets to the purchaser. Organizations and individuals that obstruct or illegally interfere leading to delays in delivering the auctioned assets causing damage must compensate.”
In addition, the 2016 Law on Property Auction also stipulates the protection of the legal rights and interests of bona fide purchasers of auctioned properties. Clauses 2 and 3, Article 7 stipulate: “2. In cases where a third party disputes the ownership of the auctioned property, ownership still belongs to the bona fide purchaser of the auctioned property… 3.
In cases where there are judgments or decisions of competent state agencies regarding the partial amendment or annulment of decisions related to the auctioned property before it is auctioned, but the procedures and order of the property auction comply with this Law, the property still belongs to the bona fide purchaser of the auctioned property, except when the auction result is annulled according to Article 72 of this Law.”
Thus, although the legal provisions on CJE have regulations to protect the rights of purchasers of auctioned assets in CJE activities, in practice, there are still cases where purchasers of auctioned assets have paid the full purchase price but have not received the assets or have received the assets but have not been able to complete the procedures for issuing the ownership and use certificates. This creates a reluctance to participate in and purchase auctioned assets in CJE, especially real estate.
II. PRACTICAL PROTECTION OF THE RIGHTS OF BIDDERS FOR REAL ESTATE ASSETS IN JUDICIAL ENFORCEMENT IN Hồ Chí Minh CITY
Hồ Chí Minh City is a key and strategic economic area of Vietnam. Therefore, the civil judgment enforcement (CJE) agencies in Hồ Chí Minh City consistently lead the nation in the total number of cases and the value of assets that must be handled, as well as the number of cases involving the auction of execution assets. The results of the auction of execution assets at CJE agencies in Hồ Chí Minh City are as follows:
* Year 2022:
Regarding auction results: The total number of successful auctions was 122 cases, corresponding to 1,468,826,317,000 VND. Results: assets were delivered to the winning bidders in 86 cases (accounting for 70.49% of the total successful auctions) with a value of 1,080,784,713,000 VND (accounting for 73.58% of the total auction value); assets not yet delivered: 36 cases (accounting for 29.51% of the total successful auctions), corresponding to 388,041,604,000 VND (accounting for 26.42% of the total auction value); auction results annulled: 0 cases (Civil Judgment Enforcement Department of Hồ Chí Minh City, 2022).
* Year 2023:
Regarding auction results: The total number of successful auctions was 116 cases, corresponding to 1,793,697,182,000 VND. Results: assets were delivered to the winning bidders in 81 cases, corresponding to 1,447,908,480,000 VND, accounting for 69.83% of the total number of cases, 80.72% of the total auction value; assets not yet delivered: 33 cases, corresponding to 340,146,342,000 VND, accounting for 28.45% of the total number of cases, 18.96% of the total auction value; auction results annulled: 02 cases (Civil Judgment Enforcement Department of Hồ Chí Minh City, 2023).
* In the first six months of 2024:
Regarding auction results: The total number of successful auctions was 90 cases, corresponding to 848,853,769,000 VND. Results: assets were delivered to the winning bidders in 57 cases, corresponding to 480,756,266,000 VND, accounting for 63.33% of the total number of cases, 26.64% of the total auction value; assets not yet delivered: 31 cases, corresponding to 365,960,303,000 VND, accounting for 34.44% of the total number of cases, 43.11% of the total auction value; auction results annulled: 02 cases (Civil Judgment Enforcement Department of Hồ Chí Minh City, 2024).
According to statistics from the Civil Judgment Enforcement Department of Hồ Chí Minh City, the annual rate of successful asset delivery to the winning bidders in judicial enforcement auctions is around 70%, indicating that the rights of bidders are fundamentally protected, instilling confidence in those interested in registering to purchase judicial enforcement auctioned assets. However, with about 30% of auctioned assets not yet delivered, the rights of the purchasers in these cases are not absolutely protected according to the regulations, as analyzed in section I above (Civil Judgment Enforcement Department of Hồ Chí Minh City, 2024).
Below are some typical cases where the Enforcement Agency could not deliver assets to the purchasers in Hồ Chí Minh City:
(i) First case: The asset could not be delivered to the judgment creditor due to fierce resistance from the judgment debtor:
Case content: Mr. Nguyễn Văn N and Ms. Hồ Văn T had to repay Ngân hàng TMCP Q according to Credit Contracts as of March 4th, 2013, totaling 829,863,961 VND, with the final payment deadline by April 4th, 2013. Enforcement at the competent Civil Judgment Enforcement Sub-department.
By April 4th, 2013, if Mr. Nguyễn Văn N and Ms. Hồ Văn T did not repay the debt, Ngân hàng TMCP Q had the right to request the competent Enforcement Agency to foreclose on the mortgaged property, which is the house and land located at 850 LTK, Ward V, District S, owned by Mr. Nguyễn Văn N and Ms. Hồ Văn T under the property mortgage contract.
During the enforcement process, Mr. N and Ms. T could not repay the bank, and they requested the Enforcement Agency to attach and dispose of the mortgaged property to repay the bank. The bank also agreed to attach and dispose of the property for enforcement. The verification results showed that the house and land at 850 LTK were originally owned by Mr. L, who signed a transfer contract with Mr. N and Ms. T, but in reality, it was a loan contract. The house at 850 LTK, Ward V, District S, was still managed and used by Mr. L.
During the subsequent enforcement process, after several price reductions, on June 23rd, 2016, the asset was auctioned for 1,200,000,000 VND, and the successful bidder was Ms. Đỗ Thị M. On July 20th, 2016, Ms. Đỗ Thị M paid the full purchase amount.
After learning that his house had been successfully auctioned, Mr. L repeatedly filed complaints and accusations to various agencies, refusing to hand over the house, citing that he did not sell the house to Mr. N and Ms. T and that their relationship was merely a loan contract.
When resolving the credit contract dispute between Mr. N, Ms. T, and the bank, the court did not involve Mr. L as a party with related rights and obligations, even though Mr. L was directly managing the property. Therefore, the enforcement of the judgment to deliver the house to the successful bidder could not be carried out due to the lack of consensus and support from the local authorities (Civil Judgment Enforcement Sub-department of Tân Bình District, Hồ Chí Minh City, 2019).
(ii) Second case: The asset could not be delivered due to violations during the enforcement process:
Case content: Mr. Lê A was obligated to repay Mr. Trần B an amount of 6,444,555,000 VND. Mr. Trần B was responsible for returning the original Land Use Rights Certificate, housing ownership, and the assets attached to the land at house number 206 NVT, Ward C, District D to Mr. Lê A.
During the enforcement process, Mr. Lê A did not voluntarily comply with the enforcement, so the enforcement officer attached and disposed of the house and land at 206 NVT, Ward C, District D, valued at 5,500,000,000 VND (the purchaser was Mr. Trần Văn E). After Mr. Trần Văn E paid the full purchase amount, he updated the ownership name and registered the transfer of ownership for the asset.
On June 15th, 2020, the enforcement officer issued Decision No. XX/QĐ-THADS to deliver the asset to the successful bidder. At the same time, the file was transferred to the District D People’s Procuracy for inspection before enforcement. On June 25th, 2020, the District D People’s Procuracy did not agree with the enforcement to deliver the asset to the successful bidder and issued Proposal No. XYZ/KN-VKSQ concerning the following violations:
– Violations in the notice for organizing the property auction
– Violations in the appraisal and auction process of judicial enforcement assets
– Violations in the notice for organizing enforcement
Due to these violations, the civil judgment enforcement agency could not deliver the asset to the successful bidder. The enforcement agency had to negotiate with the successful bidder to cancel the auction results and reorganize the attachment and disposal of the auctioned asset (Civil Judgment Enforcement Sub-department of District 10, Hồ Chí Minh City, 2021).
In practice in Hồ Chí Minh City, there are many reasons why buyers are not keen on assets in judicial enforcement. The main reason is the delay in delivering assets to the purchasers of auctioned properties. According to the regulations, within 30 days from the date the purchaser pays the full purchase amount, and in difficult or complicated cases, no later than 60 days (Clause 3, Article 27 of Decree No. 62/2015/ND-CP as amended and supplemented by Decree No. 33/2020/ND-CP), the CJE agency must organize the delivery of assets to the purchaser of the auctioned property. However, in reality, the delivery process often takes longer than the regulation stipulates.
There are cases where 2-3 years have passed since the purchaser paid the full purchase amount, yet they have not received the asset, and therefore cannot manage, use, or exploit the asset, seriously affecting their legitimate rights and interests. In some instances, the money used to purchase the asset was borrowed, and the delay by the CJE agency in delivering the asset means the purchaser cannot exploit the benefits from their asset but still has to bear the burden of repaying the borrowed money.
The delay in delivering assets by the CJE agency stems from the fierce resistance of the judgment debtor, who is actually managing and using the asset and does not voluntarily hand over the asset, leading to the need for coercive measures by the CJE agency.
However, enforcing asset delivery depends on many other objective factors. Depending on the characteristics and attitude of the judgment debtor, the enforcement officer develops a coercion plan, coordinates with the police force to plan protection for the enforcement; coordinates with local authorities and organizations to persuade the judgment debtor to voluntarily hand over the asset; reports and seeks opinions from the CJE Steering Committee in cases where enforcement affects local security and political situation.
In some cases, the judgment debtor resists by filing complaints and accusations to various agencies from central to local government. Even when these complaints have been resolved, the judgment debtor continues to exploit the filing of complaints to delay the enforcement, extending the time for delivering the asset to the purchaser.
Another reason why buyers are not keen on judicial enforcement assets is the failure to issue ownership and use certificates for the successfully auctioned assets, leading to the cancellation of the purchase contracts. This reason stems from the legal status of the assets. According to the legal provisions on CJE, before attaching and disposing of assets, especially real estate assets, the enforcement officer is responsible for verification (Article 89 of the 2008 Law on Civil Judgment Enforcement, amended and supplemented in 2014).
The verification content related to real estate assets includes determining the ownership and use rights; the form of ownership (joint or sole ownership); whether a certificate has been issued or not, and whether the asset qualifies for certification; if the asset is mortgaged or guaranteed; whether the asset can be divided; the location, area, and who is directly managing and using the asset; the form of use (rental, temporary accommodation, etc.); whether the asset can be transferred; and information about planning.
Although enforcement officers conduct specific verifications of the assets before auctioning them, in reality, there are still various difficulties and obstacles leading to individuals or organizations being unable to register the transfer or the registration process taking a long time, affecting the rights of the bidders.
In addition to the reasons mentioned above, violations in the procedures and processes during the organization of enforcement, the auction of assets, or the annulment of the Court’s judgments and decisions also lead to the cancellation of the auction results due to the failure to deliver the assets.
III. SOLUTIONS TO PROTECT THE RIGHTS OF BIDDERS FOR REAL ESTATE ASSETS IN JUDICIAL ENFORCEMENT
Based on the difficulties and obstacles in organizing the auction of judicial enforcement assets, to enhance the effectiveness of CJE work and protect the legitimate rights of buyers in CJE activities, the authors propose the following solutions:
– First, verifying the assets before attaching and disposing of them is an extremely important step. Therefore, enforcement officers need to conduct thorough, clear, and specific verification; especially clarifying issues that may affect future buyers such as: whether the asset can be transferred, and whether it can be certified according to regulations. They should also verify if there are any changes in the actual state of the asset compared to the certificate (e.g., changes in area and their reasons). Based on this, public announcements should be made so that potential buyers are aware and can make informed decisions, avoiding situations where buyers cannot complete the registration procedures for ownership and use of the asset.
Before signing a contract with the auction organization, the CJE agency needs to coordinate with the competent tax authority to determine the taxes applicable to the auctioned asset, and who is responsible for paying these taxes. Clearly identifying the taxes to be paid and the tax responsibilities should be publicly announced to potential buyers. Additionally, it should be clarified if the judgment debtor (or the person with secured assets) is unable to pay the taxes and fees related to the transfer, which by law they must pay, so potential buyers can be aware and consider agreeing to pay these taxes and fees when purchasing the asset.
– Second, continue to maintain and promote close coordination with relevant agencies and departments, especially with the Land Registration agency in verifying and providing information about the status of real estate assets, and with the Police in coordinating coercive enforcement.
– Third, many cases see judgment debtors exploiting complaints and accusations to delay enforcement or damage the reputation of enforcement officers. However, current laws do not prescribe appropriate sanctions to hold citizens accountable in cases where complainants deliberately make false complaints or accusations. Therefore, it does not limit the widespread and escalated complaints. Many cases have been resolved by enforcement agencies, yet complaints are still sent to multiple levels, sectors, and media outlets. It is proposed to clearly define responsibilities, sanctions, and measures for dealing with deliberate non-compliance, false complaints, and accusations to prevent judgment debtors from exploiting complaints and accusations to prolong and delay the delivery of assets, affecting the rights of the purchasers.
– Fourth, disseminate, propagate, and educate the public on CJE activities to help them have a correct understanding of this work, limiting the misinformation by some media outlets about CJE activities, especially the auction of judicial enforcement assets, which causes anxiety and reluctance for participants in auctions, significantly affecting the effectiveness of CJE work.
Lastly, it is necessary to continue improving the quality of adjudication by the People’s Court, ensuring the feasibility of judgments and decisions that can be enforced in practice so that judgments and decisions are not annulled through cassation or retrial procedures. This contributes to ensuring that enforcement officers and auctioneers follow the legal regulations during enforcement and auction organization, so that auction results are not annulled due to violations by judges, enforcement officers, and auctioneers during the enforcement of court judgments and decisions in practice.
REFERENCES
- Civil Judgment Enforcement Sub-department of District 10, Hồ Chí Minh City (2021), Report on Civil Judgment Enforcement.
- Civil Judgment Enforcement Sub-department of Tân Bình District, Hồ Chí Minh City (2019), Report on Civil Judgment Enforcement.
- Government (2015), Decree No. 62/2015/NĐ-CP dated July 18th, 2015 guiding the implementation of several articles of the 2015 Law on CJE, amended and supplemented by Decree No. 33/2020/NĐ-CP dated March 17th, 2020.
- Civil Judgment Enforcement Department of Hồ Chí Minh City (2022), Report on the results of auctioning judicial enforcement assets at CJE agencies in Hồ Chí Minh City.
- Civil Judgment Enforcement Department of Hồ Chí Minh City (2023), Report on the results of auctioning judicial enforcement assets at CJE agencies in Hồ Chí Minh City.
- Civil Judgment Enforcement Department of Hồ Chí Minh City (2024), Report on the results of auctioning judicial enforcement assets at CJE agencies in Hồ Chí Minh City.
- National Assembly (2008), Law on Civil Judgment Enforcement No. 26/2008/QH12, amended and supplemented by Law No. 64/2014/QH13.
- National Assembly (2014), Law on Property Auction No. 01/2016/QH14, amended and supplemented by Law No. 16/2023/QH15.
- National Assembly (2018), Competition Law No. 23/2018/QH14.
- National Assembly (2020), Law No. 67/2020/QH14 amending and supplementing several articles of the 2012 Law on Handling Administrative Violations.
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