MAKING OF A WILL FOR REAL ESTATE PROPERTY CURRENTLY MORTGAGED TO CREDIT INSTITUTION

Matter in Brief:

Mr Nguyen Van N (a Vietnamese citizen) and Mrs Nguyen C (a U.S. citizen) were married in 1985 and have three children: Nguyen Van T, Nguyen Kieu A and Nguyen Kieu Q.

In 2000, Mr. N and Mrs. C purchased Apartment C17 located in VP Urban Area, P City, BT Province (hereinafter referred to as “Apartment C17”) and were issued a Certificate of land use rights and ownership of houses and other land-attached assets. In 2023, Mr. N and Mrs. C mortgaged the aforementioned property to Commercial Joint Stock Bank S to secure a loan pursuant to a Credit Agreement entered into with Bank S (with a loan term of 5 years).

Now, due to their advanced age and a desire to distribute their assets equally among all their children in the event of their death, Mr. N and Mrs. C intend to gift Apartment C17 to their daughter, Ms. Q. However, Bank S does not consent to this. Mr. N and Mrs. C have already gifted other assets to their other children.

Client Request:

Clients Mr. N and Ms. C, represented by TAPHALAW, seek legal advice on the following matters:

(i) Whether the refusal of Bank S is legally justified.

(ii) Due to the complex process of fulfilling the obligations to the mortgagee, are Mr. N and Mrs. C able to choose alternative options for disposing of Apartment C17, other than selling or gifting it to Ms. Q?

Attorney’s Work Performed:

Upon receiving the case, TAPHALAW Attorneys reviewed the case file, compared it with current legal regulations, drafted and issued a Consulting Letter to Mr. N and Mrs. C, accompanied by related forms. In the Consulting Letter, the Attorneys analyzed the relevant legal grounds, assessed the documents and evidence contained in the case file.

With respect to the legal opinion, the attorney has rendered the following findings:

Regarding the rights of the mortgagor (Mr. N and Mrs. C) to the mortgaged property at the credit institution, the Attorneys relied on the provisions of the Civil Code 2015, the Law on Credit Institutions 2010, and related documents; the agreement between the parties in the credit contract, the mortgage contract, and provided a detailed analysis to the client regarding the rights of the mortgagor (Mr. N and Mrs. C) to the mortgaged property, specifically:

(i) Apartment C17 is not a circulating commodity in the production and business process. Therefore, Mr. N and Mrs. C may only sell, exchange or gift Apartment C17 if the mortgagee agrees or as otherwise permitted by law. Considering that there are no other legal provisions and Bank S does not agree, Mr. N and Mrs. C cannot gift this property to Ms. Q.

(ii) Based on the above opinion, the Attorneys proposed a different legal solution for Mr. N and Mrs. C, which is to make a will leaving Apartment C17 to Ms. Q.

The attorney advised the client on the conditions that must be met for the will to be effective. Some key points include: (i) The state of health of the testator at the time of making the will must be of sound mind; (ii) The form of the will must comply with legal provisions; (iii) The legal capacity of the testator; (iv) Information and legal capacity of the beneficiary; (v) Information about the bequeathed property and the location of the property (legal status of Apartment C17).

Since Apartment C17 is mortgaged to Bank S, and at the request of Mr. N and Mrs. C, the Attorney have advised on issues related to the responsibility to perform the property obligations in respect of the legacy that is mortgaged property at the time of commencement of an inheritance; the effectiveness of the will if the mortgaged property no longer exists at the time of commencement of an inheritance, or if the legacy to the beneficiary is only partial.

Consultation Outcome: Following legal consultation from the attorney, Mr. N and Mrs. C have elected to proceed with the execution of a will bequeathing Apartment C17 to Ms. Q. Mr. N and Mrs. C have requested that TAPHALAW provide additional legal services, including: (i) drafting a will; (ii) assisting Mr. N and Mrs. C in contacting the appropriate notary public to complete the will execution formalities; and (iii) preparing a notification to Bank S regarding this matter.