Deposits for buying mortgaged real estate must be approved by a credit institution

According to Lawyer Ta Thi Thuan (Tin Duc Law Firm, Ho Chi Minh City Bar Association), the purchase and sale of mortgaged real estate at banks is not uncommon, and in many cases, transactions have been successful.

Most transactions are conducted in the following order: initially, the deposit contract is signed. Then, the mortgage is cleared at a credit institution; then a sales contract is signed; money is handed over and a Land Use Rights Certificate (red book) is handed over; changes are registered and transactions are completed. However, there are still potential risks right from the deposit step, leading to transactions becoming invalid.

Although the law does not prohibit buying and selling agreements between the parties, Clause 8, Article 320 of the 2015 Civil Code stipulates: for assets being mortgaged, owners are not allowed to sell, replace, exchange, or donate mortgaged assets.

Clause 5, Article 321 of the 2015 Civil Code stipulates that owners are allowed to sell, replace, exchange, or donate mortgaged assets when the mortgagee agrees.

Therefore, according to the above regulations, the parties are free to negotiate a sale, but if there is a written consent of the credit institution that is mortgaging the property, the signing of a real estate transaction deposit contract will be valid. If not, the deposit contract is likely to be invalidated when a dispute arises, affecting the parties and the transaction process.

In addition, the Department of Judicial Assistance (Ministry of Justice) has also sent a document to the Ho Chi Minh City Department of Justice regarding the notarization of the deposit for real estate being mortgaged at a credit institution. In particular, it is noted that when notarizing, there must be the consent of the mortgagee; as well as based on other legal regulations to determine this is a legal transaction.

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