Law on Secured Transactions Provide an overview of the legal framework applicable to pledges over property

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HANOI LAW UNIVERSITY
LAW OF HIGH QUALITY
Question: Provide an overview of the legal framework applicable to pledges
over property.

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I.

INTRODUCTION

In many civil transactions, in order to bind the performance of an obligation, the
parties have used security. In fact, the obligation to secure the obligations is being
used more and more and one of the most common security measures we come
across is a mortgage. So, what is a mortgage? What are the provisions of the
current Civil Code on the pledge of property? To answer the question, let’s take a
look at topic: “Provide an overview of the legal framework applicable to pledges
over property”.

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BODY

II.

1.

Definition of pledges over property

According to Article 309, Civil Code 2015, pledge of property means the delivery
by one party (hereinafter referred to as the pledgor) of property under its ownership
to another party (hereinafter referred to as the pledgee) as security for the
performance of an obligation. Therefore, pledge of property means that one person
pre-holds (pre-holds) an asset of another to secure his / her rights and interests.
2.

The legal framework applicable to pledges over property

The legal framework applicable to pledge of property is specified from Articles
309 to Article 316 and Article 303, 304, 307 of the Civil Code 2015.
2.1.

Form of pledge of property

The Civil Code does not clearly define the form of the pledge of property, but it
can be understood from Article 310 that if the pledge is movables, it can be oral or
in writing form. If the pledge is real estate, it must be in writing.
The pledged document is not required to be notarized, authenticated, or registered
unless required by law.
2.2.

Features of property mortgage relationship

The mortgage relationship of pledges has its own legal characteristics compared to
other security measures as follows:

(i) The pledge relationship requires the transfer of the collateral from the pledge to
the management pledge during the term of the pledge contract;

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(ii) Agreement on a pledge of property shall take effect from the time of
concluding, unless otherwise agreed or prescribed by law;
(iii) A pawn relationship is the development of a professional pledge relationship in
the form of a money trading service with a pledge of security; called pawn. The
pawnbroker must be the subject registered for the pawn business, must comply
with the provisions of the law on lending interest rates, preservation, and handling
of pawns ...
2.3.

The object of pledge over property

The object of pledges over the property can only be property. The object of the
pledge is called the pledge.
Considering the nature of the pledge is that the pledge party must hand over the
property to the pledged party, so the pledged property can only be available at the
time the pledge transaction is established. Valuable papers can only be collateral if
the papers are themselves an asset.
Objects used as pledge can be movable property or immovable property, but must
meet the following conditions:
(i) The pledged object must be in the possession of the pledger;
(ii) The pledged object must be an object permitted to be transferred.
2.4.

Effectiveness and term of pledge over property

Agreement on pledge of property shall take effect from the time of concluding,
unless otherwise agree or prescribed by law. The pledged property has an

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antagonistic effect with the third person from the time the pledgee holds the
pledged property. If the real estate is the object of the pledge in accordance with
the law, the pledge of immovable property shall have an antagonistic effect against
a third person from the time of registration.1
The term of property pledge shall be agreed upon by the parties. In the absence of
an agreement, the mortgage term shall be calculated until the termination of the
obligation secured by the pledge.
2.5.

Subject of pledged over property

The pledge can be the pledge, the pledge or a third party with related rights and
obligations.
The pledgors and the pledgees both have different rights and obligations which are
clearly defined from Article 311 to Article 314 of the Civil Code 2015.
2.6.

Dispose of the pledged property and terminate the pledge

When the time is due to perform the obligations but the pledge does not or
improperly perform the obligations, the pledged party has the right to dispose of
the pledged property to compensate for the benefits of the other party not really
performed, improperly or incomplete2.

If upon agreement on the pledge, the parties have agreed on the method of
handling the pledged property, the pledge recipient shall treat the property
according to that method. In the case, the parties have not yet agreed on the method
1 Kim Phượng, Cầm cố tài sản như thế nào để đúng quy định pháp luật, Bạc Liêu Online, p.3
2 Nông Thị Thùy Linh, Quy định của pháp luật về cầm cố tài sản, Public Security People Publishing, p.5

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of handling the pledged property, the pledged property will be auctioned in
accordance with the law.
When the pledged property is disposed of the pledge will terminate. In addition,
the pledge of property is considered terminated when the obligation secured by the
pledge ends; The pledge of the property has been canceled or substituted by other
security or by agreement of the parties (Article 315).
2.7.

Return of pledged property

The return of the pledged property upon termination of the pledge is only
applicable to the termination of the pledge due to the termination of the mortgage
obligations or the termination of the pledge due to the pledge. property is destroyed
or replaced with another security. At that time, the pledged party is responsible for
returning the pledged party, the certificate of ownership including the yield and
income from the pledged property if the parties do not have an agreement related
to this issue.

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III.

CONCLUSION

Thus, a pledge of property is often placed in addition to a civil contract but may
also be placed in addition to an out-of-contract obligation. In all cases, a pledge of
property is an agreement between the parties on the parties' property and
obligations, and the obligor must hand over to the obligee an asset under its
ownership to secure the obligation of the civil.

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LIST OF REFERENCES
1.
2.
3.

Civil Code 2015
Civil Law Curriculum
Nông Thị Thùy Linh, Quy định của pháp luật về cầm cố tài sản, Public

4.

Security People Publishing
Kim Phượng, Cầm cố tài sản như thế nào để đúng quy định pháp luật, Bạc
Liêu Online

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TABLE OF CONTENTS

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