LAW ON SECURED

TRANSACTIONS
N01.TL4 – GROUP 2
 TOPIC 02
You are working at a law firm. One of your clients is a newly created bank. Your client has
instructed you to provide it with an overview of charges over land use rights.

● What types of land the use right over which may be charged to the bank and what types of
land may not be made subject of a charge?
● Who may take security over land use rights?
● When does the security become enforceable against the parties and against third parties?
Present registration rules.
● Present enforcement ways under the land legislation and the general law. What is the most
used enforcement way in practice?
● May the bank take a charge over the land use right of a parcel of land on which there is a
building owned by a third party? If yes, indicate how to enforce it.
● Provide an overview of charges over land use rights owned by companies leasing land in
an industrial zone.
 Table of Contents

01 02
OVERVIEW REGULATIONS

03 04
APPLICATION IN ADVICES FOR NEWLY
SOME SITUATIONS CREATED BANK IN
CASE OF BAD DEBTS
OVERVIEW OF
CHARGES OVER
LAND USE
RIGHTS
DEFINITION
Charge
The use by one party of
property under the ownership
of the obligor as security for
the performance of an
obligation to the other party
without transferring such
property to the chargee
Charges over land
use rights
When the chargor uses its
land use rights to secure the
performance of its
obligations and does not
assign land to the chargee
 The role of charges over land use
rights in bank’s loan

Customers can
still exploit the
land

Banks can easily

foreclose if custormers
with large loans default
Customers can
in performing their
easily charge with
obligations
great value as to
secure large loans
 REGULATIONS
OF CHARGES OVER
LAND USE RIGHTS
 01
Conditions to charge
over land use rights in
bank’s loan
 SUBJECT

The chargor The chargee

Regulated in Article • Having an establishment and
174, 176, 178 in operation license issued by the
Vietnam Land Law State Bank
2013 • Having a charter approved by the
State Bank
• Having a legal business registration
certificate
• Having a qualified and competent
representative to contracting with
clients
 Exercising the right to
charge land use rights
Having the certificate, except the case
Clause 1, Article
188 of the Law on
1 prescribed in Clause 3, Article 186 and the
case of receiving inheritance prescribed in
Land 2013 Clause 1, Article 168 of this Law

2 The land is dispute-free

3 The land use rights are not

distrained to secure judgment
enforcement

4 Within the land use term

 Examples
TYPES OF LAND
CAN BE CHARGED
The A Company that is leased land
with full one-off payment for the
entire lease period by the State
charging the land use rights at the
Vietnam Industrial and Commercial
Bank to secure its debt repayment
obligation
TYPES OF LAND CAN
NOT BE CHARGED
The B Company leasing land with
annual rental payment for the lease
period from the State can only
charge their assets attached to the
leased land in the bank
 02
Perfection of security
interest of charge over
land use rights
 Procedure of security interest
• Decree No.102/2017/ND-CP: the scope of security interest which can be registered with the
National Registration Agency for Secured Transactions
• The registration of security interest in land use rights will become valid when the registry
records the registration contents in the register
• Security interest registration dossiers are submitted by one of the following methods:

1 2 3 4

Via the online Via email in case the

Direct requester has been
registration By post
submission issued a code to use
system
the database of
security interests
 03

Ways of Realisation of
secured assets
Realisation under the general law

Following Clause 1 Article 303 Vietnam Civil Code

2015, the parties may agree on the following
enforcement methods:
● Auction
● The secured party sells collateral itself
● The secured party accepts the collateral as
substitutions for the performance of obligations of
the securing party
● Other methods
Most used and popular way of selling collateral and
judgment enforcement property is property auction
Realisation under Vietnam Land Law
2013
 Land Law 2013 does not directly regulate the
foreclosure, but demonstrating it through the
recognition of the rights of subjects

 If the chargor falls into one of the cases of

collateral realisation regulated in Article 299
Civil Code 2015, the chargee will have the rights
to change registration even if the certificates
have been granted before, according to the
agreement in the mortgage contract to settle the
debt
THE APPLICATION OF
CHARGES OVER
LAND USE RIGHTS IN
SOME SITUATIONS
 A complicated charge over land use
rights
Case: Owners A, B, and C are tenants in
common. A owns a 50% interest in the
property while B and C each own a 25%
interest. All three have an equal right to
possess or use the entire property while they
are living in it. A wants to charge a portion of
a land to the bank in order to lend money to
invest in his own company.

Will the bank accept this charge of land use

rights with only a part of the land?
 The circumstances of this case:

The bank does A does not specify which part of the

not accept this land he will charge
charge of land use The consent and acceptance of
rights both B and C in writing are
compulsory when charging land
use rights on that land

The bank accepts Procedure

this charge of
land use rights According to Article 168, 188
Vietnam Land Law 2013 and
Decree No. 102/2017/ND-CP on
Registration of Security
 Charges over land use rights owned by
companies leasing land in an industrial
zone
Article 174 and 175 Vietnam Land Law
2013: charges over land use rights owned by
companies leasing land in an industrial zone
depend on the method of land rental payment
which are: the form of

• annual rental payment

• full one-off rental payment

Under this regulation, there can be 02 cases

 Annual rental
payment
Point (b) Clause 1 Article 175
Vietnam Land Law 2013: companies
cannot charge with land use rights in
an industrial zone
Full one-off rental
payment
Point (d) Clause 2 Article 174 Vietnam
Land Law 2013: companies can both
charge with land use rights and asset
attached to land to the bank
 ADVICES ABOUT CHARGES
OVER LAND USE RIGHTS FOR
NEWLY CREATED BANK IN
CASE OF BAD DEBTS
Building a strong customer evaluation and
assessment system
Carefully perform a precise evaluation on
these aspects of their clients:

• Legal aspect
• Collaterals
• Recent business status, data in
enterprises
• Annually financial reports
• Industry information, industry policy
• Others such as stabilization,
competitors...
Some actions can be taken in case
disbursement occurs

01 02 03 04
Monitoring and Controlling Evaluating the Building
controlling the use of enterprises’ cash value of provisions
capital for the right flow collaterals
purpose
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