Commentary on Precedent No. 04/2016/AL on Contract Disputes pertaining to the Transfer of Land Use Rights

Precedent No. 04/2016/AL on Contract Disputes pertaining to the transfer of land use rights

In reality, agreements between spouses on joint property are not always in writing. In fact, it’s just the opposite – it is more commonly observed that one party (spouse) liquidates the joint property without explicit consent of the other party (spouse) – However, there are instances in which the other party does have knowledge of the transaction but object or exhibit behavior that could be interpreted as consent toward the transaction of the joint property.

Precedent No. 04/2016/AL is considered a major Precedent in Vietnam, due to the prominence of disputes over joint property between parties to a marriage, and in this particular case, the concerned property is land use rights

The following article belongs to the series on Precedents, provided by Lawyers from CNC to inform readers about Precedent No. 04/2016/AL pertaining to the transfer of land use rights, and the application of this Precedent in practice

See more: Precedent No. 02/2016/AL on property disputes

General information on Precedent No. 04/2016/AL on Contract disputes over the transfer of land use rights

Legal issues of Precedent No. 04/2016/AL

According to Article 15 of the Law on Marriage and Family 1986, the transfer of property of great value must be consented to by both parties to a marriage. Similarly, Clauses 35.2 of the Law on Marriage and Family 2014 also stipulates that the decision regarding joint property that is immovable must be given consent by both parties to a marriage. However, in situations in which an immovable property transaction contract has only the signature of one party, and the other party did not object despite having knowledge of the transaction, presents the concerning question of, is the contract in these particular cases valid? Precedent No. 04/2016/AL was written to address this issue.

Summary of the Precedent.

Regarding the transfer of joint property of parties to a marriage that has only the signature of one party to the marriage, provided that there is sufficient evidence to substantiate that (i) the transferor has received the full amount in accordance with the agreement; (ii) the party who did not sign the contract knows of the transaction as well as jointly uses the money gained from the transaction; and (iii) the transferee has received and managed that property publicly. If no objection is raised by the party who did not sign the contract despite having knowledge of the above, that party is deemed to have consented to the transaction of immovable property.

Case Summary

Law provisions relevant to the Precedent No. 04/2016/AL

Clause 176.2 of the Civil Code 1995 and Article 15 of the Law on Marriage and Family 1986

Solution by Precedent No. 04/2016/AL

According to Precedent No.04/2016/AL, the contract on the transfer of land use rights, which are the joint properties of parties to a marriage, having only the signature of one party, is still valid if the following conditions are met:

The transferor has received the full amount in accordance with the agreement.
The party to the marriage who did notsign the contract has knowledge of the transfer and jointly used the money gained from the transfer; and
The transferee has received and managed, used the property publicly; but the non-signing spouse did not

Practical application of Precedent No. 04/2016/AL on the dispute pertaining to the transfer of land use rights

Commentary on Precedent No.04/2016/AL

The resolution in the case of Precedent No. 04/2016/AL has the following merits:

Merits of Precedent No. 04/2016/AL

Firstly, protect the legal rights of the innocent party of the transaction pertaining to immovable property with parties of a marriage

It is commonly observed that civilians do not entirely grasp or even have the knowledge that the transaction of joint property of parties to a marriage must have the signatures of both parties of the marriage. If one of the two signatures is missing, the contract shall be annulled due to a violation of forbidden provisions of law [1] The damages due to the increase in prices of property at the time of contract annulment in comparison to the time of the conclusion of the contract shall be incurred by the transferee. Moreover, the transferee might also be required to pay the cost of negotiation, conclusion, and execution of the contract.

Precedent No.04/2016/AL has protected the legal rights of the innocent transferee. Regarding the stipulation that the contract on the transfer of joint properties that are immovable properties of parties of a marriage must have the signatures of both parties to the marriage to be valid. The transferor could not refer to such stipulation to request the Court to annul the contract and reclaim the sold property in this particular case.

Secondly, help stabilize civil relations

The purpose of a contract is to ensure the obligations contained therein are fulfilled and the annulment of a contract is usually an undesirable outcome. Therefore, Precedent No. 04/2016/AL has contributed to the stability of civil relations by limiting the possibility of one party requesting the Court to annul a contract with malicious intent.

Practical application of Precedent No. 04/2016/AL

The most recent application of Precedent No. 04/2016/AL involved “Disputes over the termination of a land use rights transfer contract, revocation of land use rights certificate, and division of joint property” addressed by judgment No.98/2021/DS-PT and dated March 15^th, 2021 by the People’s High Court of Ho Chi Minh City.

Mrs. L and Mr. D own the land and aluminum refining factory on said land as joint property; however, on paper, Mr. D is shown to be the sole owner of the aforementioned properties. After a period of separation, Mrs. L discovered that Mr. D had sold the above property to Mr. P and Mrs. Nh. Therefore, Mrs. L filed a lawsuit to request the Court to annul the immovable property transfer contract.

However, in the opinion of the first-instance court, due to the fact that up until the lawsuit was filed, no objection was raised by Mrs. L throughout the management and occupation of the properties by Mr. P and Mrs. Nh. Therefore, based on Precedent No. 04/2016/AL, the immovable property transfer contract between Mr. D and the couple of Mr. P and Mrs. Nh remains valid. The second-instance court maintains the judgment of the first-instance court regarding this content.

What can be learned from Precedent No. 04/2016/AL?

Advice

If a purchase of immovable property (land use rights, residential building, etc.) that is the joint property of parties to a marriage were to be made, the transferee ought to:

Request both parties of the marriage to provide the disposition agreement on the immovable joint property.
Request the transferors, which are boththe husband and wife, to endorse the transaction contract.

Risk-limiting measures:

Whenever the concerned contract has only the signature of one party to the marriage, the transferee should prepare the following evidence:

The transferor has received the full amount per the agreement.

The payment documents for the immovable property must clearly state the purpose of the transfer, which is the payment for the immovable property.

The spouse who did not sign the contract has knowledge of the transaction and jointly used the money gained from the transaction; and
The transferee has managed and used the property publicly and the spouse who did not sign the contract raised no objection.

Conclusion

Through a timely and reasonable approach, Precedent No. 04/2016/AL on disputes pertaining to land use rights transfer contracts has addressed the question of the validity of a joint property transfer contract if said contract is missing one signature from the parties of a marriage.

Contributions, and comments of readers, researchers, and law practitioners would support the growth of similar precedents so that a further comprehensive and more notable precedent could be established, thus an optimal solution and consistent application could be adopted.

Contact

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