1. What is a mortgage?
In an obligation relationship, to ensure that the rights and interests of the obligee are not violated, the parties can agree to establish an object security measure, whereby the obligor must hand over to the obligee. the right to a property under one’s ownership. In case the obligor fails to perform or improperly performs the obligation, the obligee already has an asset that the obligor has given to him or her to deduct the unfulfilled obligation. Therefore, in terms of semantics, pledging property is the act of one person holding (holding) another person’s property to ensure his or her rights and interests.
A mortgage of property is often placed next to a civil contract but can also be placed next to a non-contractual obligation. In any case, a mortgage of property is the result of an agreement between two parties and is intended for the obligor or a third person to use their assets to ensure the performance of that obligation before entitled party.
Pledging property is when one party hands over property under its ownership to the other party to ensure the performance of an obligation. Pledge measures are prescribed from Article 309 to Article 316 of the 2015 Civil Code.
2. Form of property mortgage
The 2015 Civil Code does not clearly define the form of pledging property, however, according to the provisions of Article 310 of the 2015 Civil Code, it can be understood that if movable property is pledged, it can be in the form of oral or written form, if real estate is pledged, it must be in writing.
According to the provisions of the above law, the mortgage document does not need to be notarized, authenticated or registered, unless otherwise prescribed by law. Normally, if the mortgaged property does not require ownership registration, the parties do not need to have it notarized or authenticated. However, to improve legal safety, the parties can agree that the mortgage must be notarized or authenticated.
3. Objects of property mortgage
If the object of security measures in general can include many types of assets, work to be performed, reputation), then the object of property pledge can only be property. Therefore, the object of a mortgage is also called the mortgaged property.
Although current law does not have regulations on mortgaged assets, considering the nature of a mortgage, the pledgor must hand over the assets to the mortgagee, so the pledged assets can only be available items. at the time the mortgage transaction is established. Valuable papers can only be mortgaged assets if the paper itself is a type of asset.
The object used for mortgage can be movable property or real property (if required by law) but must meet the following conditions:
First, the mortgaged object must belong to the pledgor
When the obligee hands over the mortgaged property to the obligee, from that moment on they have limited rights over their property. The pledgor takes possession of that property and has the right to dispose of it when the deadline for performing the obligation comes and the pledgor fails to perform or performs the obligation incorrectly (if agreed).
Therefore, the property that is the subject of the mortgage must belong to the mortgagor. If the property is jointly owned by many people, the mortgage of that property must be approved by all co-owners. | In fact, determining whether the mortgaged property belongs to the mortgagor or not will be relatively easy if the property has documents certifying ownership. But it will be an extremely difficult job if the object of the mortgage is an asset without registered ownership. In these cases, the pledgor must be very careful and only accept the object when there is sufficient basis to confirm that the object belongs to the pledgor so that his or her rights will be guaranteed.
As a rule, properties without registered ownership are presumed to be owned by the actual possessor. On the other hand, in order for the other party to accept, the mortgagor always affirms that the property belongs to him. Therefore, it is difficult for the mortgagee to have a basis to determine whether the property belongs to the mortgagee or not? And therefore, the fact that the law stipulates that the mortgaged property must be owned by the pledgor is a relatively disadvantageous thing for the pledgor. If the property is not owned by the mortgagor, even if it is due to deception by the mortgagor (for example, a person borrows something from another person and lies about it as his/her own to pawn it), the mortgagor is still the first to must bear the consequences. If the property is recovered and returned to its true owner, the mortgagee will no longer have anything to secure his or her rights, and will no longer have priority in paying the debt from the property. pledge.
However, the principle that the property must be owned by the pledgor is excluded in cases where the pledgor is a state-owned enterprise. The assets that businesses manage are assets owned by the entire people, of which the State is the owner. In order for its businesses to operate normally in carrying out their functions and purposes, the State has assigned
giving these businesses assets and asset management rights. Therefore, state-owned enterprises, although not the owners of assets, can still use assets under their management to pledge to ensure the performance of obligations.
Second, the pledged object must be an object that is allowed to be transferred
When an obligation secured by pledge reaches its maturity and the obligor fails to perform or performs incorrectly or insufficiently, the pledgor has the right to sell the pledged asset. However, the mortgagor can only sell the property if that property is property that is allowed to be transferred in a civil transaction. Therefore, if the mortgaged asset is an asset that is prohibited by law from being transacted, not only is the mortgage transaction invalid, but the mortgagee cannot handle that asset.
4. Subject of mortgage
4.1. Pledging party
The pledgor is the party that must hand over the property to ensure the performance of the obligation. Normally, the pledgor is the obligor in the obligation relationship secured by that pledge. For example, B gives his property to A to keep in order to borrow money from A. In many other cases, the mortgagor may be a third person. A third person pledging assets is a person who is not a member of the parties in the secured obligation relationship and is entitled to hand over his/her assets to the obligee to ensure the performance of the obligee’s obligations in the obligation relationship. there. For example, C delivers his property to A to ensure B’s payment of the money B borrowed from A.
4.2. The mortgagee
The pledgee is the party that receives property from the pledgor to ensure its rights and interests in case the obligor fails to perform or performs incorrectly or insufficiently. The pledgee is always the party with rights in the relationship of obligations secured by that pledge.
5. Validity and term of mortgage
The mortgage contract is effective against the parties to the contract from the time of conclusion and is effective against third parties from the time the mortgagee takes possession of the mortgaged property. In case the mortgaged asset is real estate and the mortgage is registered for a secured transaction, it will be effective against third parties from the time of registration.
The term of property mortgage is agreed upon by the parties. If the parties do not have an agreement, the property mortgage term is calculated from the time the pledgor receives the property until the termination of the obligation secured by the mortgage.
6. Rights and obligations of parties in mortgaging property
6.1. Rights and obligations of the mortgagor
6.1.1. Obligations of the mortgagor
– Must hand over the mortgaged property according to the agreement
The mortgagor must hand over the property in the agreed manner to the mortgagee for possession and management during the mortgage term.
– The mortgagor must notify the pledgee of the third party’s rights to the mortgaged property.
The right of a third person to the mortgaged property is understood as another person’s subjective right to the mortgaged property, which existed before the parties agreed on the prohibition measure. Therefore, the above obligation requires the mortgagee to notify the mortgagee of the condition of the mortgaged object, as well as its limitations, to the mortgagee right at the time the parties agree to establish the mortgage. try. Therefore, if after the mortgage measure has taken effect, the pledgor notifies of the above situation, they will still be considered to have breached their obligations. In these cases, the mortgagee has the right to cancel the mortgage contract and request compensation for damages or maintain the contract and accept the third party’s rights to the mortgaged property.
– The mortgagor must pay the mortgagee the necessary expenses to preserve the mortgaged property, unless otherwise agreed.
The owner is the person who enjoys the benefits of the property he owns and at the same time has to spend the costs to preserve and preserve that object. Therefore, whether the property is directly held by the mortgagee or kept and preserved by a third person, payment of related costs still belongs to the mortgagor. However, in cases where a third person holds the mortgaged property according to a property deposit contract established between them and the mortgagee, the mortgagee acts as an intermediary in paying the mortgaged debt. this cost.
6.1.2. Rights of the mortgagee
– Request the mortgagee to suspend the use of the mortgaged property if, due to use, the mortgaged property is at risk of losing value or decreasing in value.
In cases where the parties agree that the pledgee has the right to use the property, but if the use risks causing the mortgaged property to be lost or reduced in value, the pledgor has the right to request The mortgagee suspends the use of that property.
– Require the mortgagee to return the mortgaged property after the obligation has been performed.
The basic purpose of a mortgage is to ensure the performance of obligations and the security is only placed when the obligations have not been performed. Therefore, when the pledgor has properly and fully performed its obligations, the mortgagee or the second person will be responsible
You must return the mortgaged property. If the mortgagor hands over the ownership registration documents, the mortgagor may request the pledgee to return those documents along with the return of the mortgaged property.
In case the mortgage is registered with a competent state agency, the parties must notify that agency of the termination of the mortgage.
In cases where the mortgagee sells, exchanges, donates, leases, lends the mortgaged property, or pledges the mortgaged property to secure the performance of other obligations contrary to the provisions of law, the pledgor may the right to reclaim that property and request the mortgagee to compensate for any damage that occurs. If the pledgor does not have the right to reclaim the property in cases prescribed by the law on ownership, he or she has the right to request the pledgor to compensate for damages.
– Request the party holding the mortgaged property to compensate for damage caused to the mortgaged property.
The mortgagee must preserve and preserve the mortgaged property. Therefore, in case the mortgagee fails to preserve or does not preserve the property well, causing damage, compensation must be paid to the mortgagee.
6.2. Rights and obligations of the mortgagee
6.2.1. Obligations of the mortgagee
– Preserve and preserve assets.
The mortgagee’s possession of the mortgaged property for a certain period of time creates an obligation on that person to preserve and preserve the property throughout the period of possession.
– Do not sell, exchange, donate, donate, lease or lend mortgaged assets; Assets may not be pledged to secure the performance of other obligations.
The mortgagee only has the right to possess the mortgaged property. Therefore, during the mortgage term, if they commit the above acts, it will be considered an illegal act and the mortgagor can reclaim the property from the person in actual possession, even if it is property that I have pawned. However, the above actions will be considered legal if there is an agreement or it is the content of the measures to handle the mortgaged property, performed by the pledgee after the due date but the obligation is not fulfilled. performed, performed incorrectly or incompletely.
– Do not exploit the uses, enjoy the fruits and profits from the mortgaged property without the consent of the pledgor.
The mortgagee is not the owner of the mortgaged property. Therefore, besides the right to possess, they have no other power, without the consent and permission of the owner of the property. In principle, the act of “not” exploiting the use of the property is an obligation of the mortgagee. However, if there is an agreement and consent of the pledgor, then exploiting the uses and enjoying the yields and income from the property is the right of the pledgor.
– Return the mortgaged property when the mortgage security obligation terminates or is replaced by another security measure.
Pledge is just a secondary obligation placed next to a main obligation to ensure the performance of the main obligation. When the primary obligation terminates, the mortgage becomes unnecessary. Therefore, immediately after the main obligation ends, the pledgee must return the property to the pledgor in the same condition as when the mortgaged object was received. Normally, mortgaged assets are specific objects because the mortgagee must return the property they received. If the property is an object of the same type, the mortgagee must return the property of the same quality, quantity, and weight as received. In addition, if the parties have agreed on another security measure to replace the mortgage, then from the time it is considered a replacement, the pledgee must return the pledged property to the pledgor.
– The mortgagee must compensate the mortgagee for any loss or damage of the mortgaged property.
This obligation is a form of liability for damages. Therefore, according to the general principle of compensation, the mortgagee only has to compensate if they are at fault in damaging or losing the property.
6.2.2. Rights of the mortgagee
– Request the person who illegally possesses or uses the mortgaged property to return that property.
This is the right of the mortgagee in particular and the right of the legal possessor in general of a property. As the legal possessor of the mortgaged property, the mortgagee has the right to reclaim that object from anyone. This right is essentially an element in the content of the ownership rights that the mortgagor has transferred along with the transfer of the property to the mortgagee.
– Request to handle the pledged property according to the agreed method or according to the provisions of law to fulfill the obligation, if the pledgor fails to perform, performs incorrectly, or does not fully perform the obligation.
This requirement is only imposed when the time comes when the main obligation is not performed or is performed incorrectly, thereby satisfying the mortgagee’s right to payment of material benefits.
– To be paid reasonable costs of preserving the mortgaged property when returning the property to the pledgor.
During the term of holding the mortgaged property, the owner of the property must preserve and preserve it so that the property is not damaged or lost. However, when the mortgagee must spend c
When it comes to preserving the property, they actually perform a job on behalf of the mortgagor (maintaining and maintaining the property on behalf of its owner). Therefore, they have the right to request the mortgagor to pay them back the necessary expenses in preserving and preserving the property. The payment of these expenses is carried out at the same time as the payment of the debt in the main obligation and the return of the mortgaged property.
7. Handling of mortgaged assets and termination of mortgage
When the time is due to perform the obligation and the pledgor fails to perform or performs the obligation incorrectly, the pledgor has the right to dispose of the pledged property to compensate for the benefits owed to the other party. not performed, performed incorrectly or incompletely.
If, when agreeing on a mortgage, the parties have agreed on a method of disposing of the mortgaged property, the mortgagee may dispose of the property according to that method. Depending on the determination when the two parties agree, the mortgagee can personally carry out actions directly affecting the property to satisfy his or her rights or the parties can carry out actions together.
the disposal of assets without the intervention of competent state agencies. This is the most convenient measure so it is often applied by both parties in practice.
In case the parties have not agreed on the method of handling the mortgaged property, the mortgaged property will be auctioned according to the provisions of law. The mortgagee is paid from the proceeds from the auction after deducting property preservation costs and auction costs. Through auction, the rights of the mortgagee are guaranteed while also ensuring the interests of the pledgor. Because the auction must comply with the provisions of law (see also the property purchase contract) and avoid the situation where the mortgagee intentionally sells the property, as long as the amount is fully recovered. debt without taking into account the loss of the other party.
When the mortgaged property is processed, the mortgage will end. In addition, a mortgage of property is also considered to terminate when the obligation secured by the mortgage ends; The mortgage of assets is canceled or replaced by another security measure or as agreed by the parties.
