In October 2022, the Supreme Court issued Precedent 55/2022 which recognises the validity of an un-notarised contract for transfer of land use right on the basis that two thirds of the contract have been performed and accordingly the contract becomes valid in accordance with Article 129 of the Civil Code 2015.
In October 2022, the Supreme Court issued Precedent 55/2022 which recognises the validity of an unnotarised contract for transfer of land use right on the basis that two thirds of the contract have been performed and accordingly the contract becomes valid in accordance with Article 129 of the Civil Code 2015. The background of the case is as follows:
· In 2009, the parties signed a contract for transfer of land use right over a piece of land which would be allocated by the Government to the seller in accordance with a land compensation scheme. The contract was not notarised.
· In 2016, the Seller received the land use right certificate for the transferred land. The Buyer also paid around 90% of the sale price. The Buyer also leased the land to a third party.
· However, the Seller later on refused to register the transfer with the authority and claimed that the transfer contract was invalid since it has not been notarised.
In the Precedent 55/2022, the Supreme Court accepts the judgement of the lower court which recognises the validity of the transfer contract on the ground that the parties have performed two-thirds of the contract. Under Article 129.2 of the Civil Code 2015, where the civil transaction established in writing is in breach of compulsory provisions on notarization or certification, and one or more parties have performed at least two-thirds of the obligations in the transaction, the court will, at the request of one or more parties, recognize the validity of such transaction.
In addition to the key point regarding the validity of an unnotarised contract above, the following points could be deduced from Precedent 55/2022:
· Article 129 of the Civil Code 2015 which took effect from 1 January 2017 could apply to contracts entered into and performed before 1 January 2017;
· At the time of entering into the transfer contract, (1) the Seller did not obtain the land use right certificate for the relevant piece of land, and transfer of “future land use right” is not permitted. However, the court still accepts the validity of transfer contract presumably on the basis that at the time of the dispute, the Seller has obtained the land use right certificate.
This post is written by Nguyen Quang Vu with research assistance from Nguyen Lan Phuong.
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