It is necessary to write a clause that fully defines the rights of land users, which separates into different rights and groups of rights

Specifically, in Clause 8, Article 24 of the Draft Land Law (amended) stipulates as follows:

"8. Receive transfer, donation, inheritance, capital contribution, lease of land use rights; purchase, sale, receipt of transfer of shares, contributed capital is the value of land use rights as prescribed by law."

The draft mentioned so leads to indistinguishable between land users in general, citizens in particular what rights do they have. The two terms above alone, combined (in the detailed division of rights), have shown that the individual has at least 14 rights and it is still not enough. The example above has 2 rights, "assignment" and "acceptance of assignment", but only the right to "mortgage" but not the right to "receive mortgage".

Of the 6 rights, all of which are "receiving" in nature, one word is inserted backwards without the same meaning as "transfer", which is "sale" of shares, etc.

The addition of a new right "to buy, sell, receive transfer of shares, contributed capital is the value of land use rights as prescribed by law" is unreasonable, because in principle, the "land use right" is not reasonable or "value of land use rights" contributed as capital and recognized as "shares" (or "capital shares") are the same as any other class of shares and are no longer related to the assets contributed as capital. "Land" or "land use right" or "value of land use right", when it is the property transferred, assigned or leased by the company, not the company's shareholders (shares) or members company (LLC) has no rights or obligations related to "land" or "land use right" or "land use right value".

Therefore, first, it is necessary to write a clause that fully regulates the rights of land users, which separates them into different rights and groups of rights, and then other provisions refer to each right or group of rights or the whole set of rights.

Second, it is necessary to write provisions on the rights of citizens or land users, so that the reader can see immediately that it is the whole right or a part of the right, if it is only a part of the right, there are also provisions. 

Third, it is necessary to remove the regulation on "buying, selling, receiving transfer of shares, the contributed capital is the value of land use rights in accordance with the law".

Transactions should not be banned without paying the land fee

Clause 1, Article 29 of the Draft Law provides:

"1. Land users may exercise the rights to transfer, lease, sublease, donate, mortgage or contribute land use rights as capital upon obtaining the Certificate. In the case of agricultural land use rights, land users may exercise their rights after a decision on land allocation or land lease is issued; in case of inheritance of land use rights, land users may exercise their rights upon obtaining a Certificate or meeting all conditions to issue certificates of land use rights and ownership of houses and other land-attached assets.

Where a land user is allowed to delay the performance of a financial obligation or is entitled to a debit of the financial obligation, the financial obligation must be fulfilled before exercising the rights.

In many cases, especially when having to sell assets to pay off debts, it is very difficult for land users, unable to sell, having to borrow hot loans to pay the full amount of land before transferring land use rights.

Therefore, the transaction should not be banned without paying the land fee. It is necessary to change the regulations in the direction of having to pay enough money before completing the registration and name transfer procedures.

It is necessary to clearly define the recognition of land use rights and assets attached to land

Point m, Clause 1, Article 30 of the Draft Law provides as follows:

"m) Domestic organizations, individuals, overseas Vietnamese, and foreign-invested economic organizations may receive land use rights according to the results of successful conciliation on land disputes approved by the Commission, recognized by competent people; agreements in mortgage contracts for debt settlement; decisions of competent state agencies on settlement of land disputes, complaints and denunciations about land, decisions or the judgment of the People's Court, the judgment enforcement decision of the judgment enforcement agency that has been executed; the document recognizing the auction results of the land use right in accordance with the law; the document on the separation of rights use land in accordance with the law for groups of people with common land use rights".

The above regulation only mentions the receipt of land use rights in cases where the competent authorities recognize the land use rights, but does not stipulate the cases of recognition of assets on the land. How to use land in general and leased land in particular (similar to many other regulations referring to the right to transfer and mortgage the land on which the property is located and the right to transfer and mortgage assets attached to the land use rights).

Recommendation: It is necessary to clearly define the recognition of land use rights and land-attached assets, especially in the case of enforcement of a commercial arbitration award recognizing assets on land associated with the said land use right in general and leased land in particular.

Clarifying a number of regulations on land lease and land rental payment

Regarding the rights and obligations of domestic organizations that are allocated land by the State with land use levy, or leased land with one-off rental payment for the entire lease period: Points a and d, Clause 2, Article 35 of the Draft Law Economic organizations that are leased land by the State with one-off rental payment have a number of rights, including the following two rights:

"a) Transfer of land use rights and assets under their ownership attached to land";

"d) Mortgage with their land use rights and properties attached to the land at credit institutions licensed to operate in Vietnam, at other economic organizations or individuals as prescribed by law".

Article title and content mention the phrase "land lease with one-time rental payment for the whole lease period" and appear in the Draft at least 12 times (similar issue in many other laws). At that time, the land user has a number of rights different from the case of land lease with annual payment or collection of payment in installments (if any). However, in practice, it is not clearly defined, making it difficult to exercise the right (usually the remaining lease term is at least 5 years before the mortgage can be mortgaged, according to the provisions of 111.1.d, Land Law of the year 2003).

The Draft Law contains many provisions that only mention "land use rights" in addition to at least 24 mentions of "land use rights and assets under their ownership attached to land" as Point b above, with repetitive, lengthy, complicated, and difficult-to-follow content (the same problem in many other laws). This provision distinguishes the difference in rights between the land lease with annual payment and the land lease with the remaining term of only 1 year.

The provisions in Point d, that the land use right can only be mortgaged at "at credit institutions authorized to operate in Vietnam" (and regulations in many other articles) may lead to the understanding that mortgage is not allowed at foreign bank branches established and operating in Vietnam (according to Vietnamese law). The reason is, Clauses 1 and 2, Article 2 on the subjects to be applied, the Law on Credit Institutions 2010 (amended and supplemented in 2017) clearly distinguishes two different entities: "Credit Institutions" and "Credit Institutions" Foreign bank branches".

Therefore, for this provision, it is necessary to specify specifically for better understanding, the right does not depend on the remaining term of land rental payment.

It is necessary to set out a general rule, "property owned by individuals and organizations" on land is entitled to perform transactions in general and transactions associated with land use rights in particular in accordance with the law, except where otherwise specified. Thus, the Draft Law does not have to repeat many times about properties attached to land, except in cases where it is necessary to make adjustments other than the general regulations.

At the same time, add the phrase "foreign bank branch" after the phrase "credit institution".

Regarding the rights and obligations of economic organizations and public non-business units using land with annual rental payment: Points b and c, Clause 1, Article 36 of the Draft Law stipulating economic organizations authorized by the State leasing land with annual rental payment, has a number of rights, including the following two rights:

"b) Mortgage of their property attached to the land and the lease right in the land lease contract at credit institutions licensed to operate in Vietnam;

c) Sell or lease assets under their ownership attached to the land and the right to lease in the land lease contract when fully meeting the conditions specified in Article 49 of this Law; the buyer of property on land and the lease right in the land lease contract may continue to use the land according to the defined purpose".

Firstly, "Lease right in the land lease contract" (mentioned at least 4 times in the Draft) is a new regulation compared to the current Land Law 2013. However, it is not clear as written in Point b above is a land user with the right to mortgage assets and to sell or lease assets attached to the "right to lease land in a land lease contract" or to have a separate mortgage of "the right to lease land in a land lease contract".

If you read Point c, it can be understood that only the property can be sold, but not "the right to lease land in the land lease contract".

However, if you read Clause 4, Article 178 on "Production Forest land" of the Draft Law below, you will understand that, "the lease right in the land lease contract with annual rental payment" is a separate type of property (may or may not be allowed to trade):

4. Individuals who are allocated land by the State without collection of land use levy or leased out land with annual payment for production forests being natural forests are not allowed to exercise the rights to transfer, lease, sublease, replace mortgage, contribute capital with the land use right and the right to rent in the land lease contract with annual rental payment".

Secondly, if it is only the provision that allows mortgage of "property attached to land" or mortgage of property "attached to the lease right in the land lease contract", just write "property attached to land" " has fully covered which is not necessary write the mortgage of the property "attached to the right of lease in the lease of land".

Thirdly, the Draft uses the word "annual" incorrectly. Throughout the Bill, the word "annual" is used exactly once only and the word "annual" is misused 88 times.

From the above analysis, it is proposed that if it is recognized that "the right to rent in a land lease contract with annual rental payment" is a separate right, it will be regulated, but if not, it should not be complicated matters and has no legal significance.

It is necessary to specify the above content more clearly to avoid confusion. The simplest and most reasonable way is that the ownership rights to the property are not necessarily attached to the land (whether purchased land, allocated land, leased land, borrowed land, etc.) land lease contract (one-time payment or annual payment) as mentioned in Section 5 above.

Redefining and clarifying the rights and obligations of economic organizations, individuals and communities.

In Clause 2, Article 37 of the Draft Law stipulates:

"2. Economic organizations that receive the transfer of land use rights originating from the State allocated land with collection of land use levy or leased land by the State with one-off payment in advance for the entire lease period, but the land use levy, if the paid land rent does not originate from the state budget, it has the rights and obligations specified in Clause 2, Article 35 of this Law.

The Draft Law contains the phrase "paid land rent not originating from the state budget", related to the right to transfer and mortgage (in addition, this phrase is mentioned in at least 4 other articles).

The phrase "sourced from the state budget" has been defined in the Land Law since 2003 and the current Land Law in 2013, but is still not well explained.

Therefore, it is necessary to explain specifically "originating from the state budget" right in the law or instructions according to the provisions of law on management and use of state property; the law on management and use of state assets invested in enterprises or any other law.

Regarding the rights and obligations of individuals who change the land use purpose from land without land use levy to land with collection of land use levy or land rent": Point b, Clause 2, Article 41 of the Draft Law on individuals. A land user who is permitted by a competent state agency to change the land use purpose from land without land use levy to lease land with annual payment has the rights specified in "Clause 2, Article 40 of this Law." 

While Clause 2, Article 40 on the rights and obligations of households and individuals using land of the Draft Law is specified at Point g, one of the rights of land users is:

"g) Mortgage of land use rights at credit institutions licensed to operate in Vietnam, at other economic organizations or individuals as prescribed by law.

The above regulation is understood that the user of land leased from the State with annual payment is entitled to "mortgage the land use right". Is that the right intention of the Draft Law and is it inconsistent with other regulations?

Therefore, it is necessary to redefine and clarify regulations, more specifically, more simply, to avoid the difficulty of monitoring and incorrect understanding of regulations.

As for the rights and obligations of the residential community using land: Clause 2, Article 42 of the Draft Law provides:

"2. Residential communities using land may not convert, transfer, lease or donate land use rights; may not mortgage or contribute land use rights as capital."

Clause 3, Article 5 on land users of the Draft stipulates as follows:

"3. Population community includes the Vietnamese community living in the same village, hamlet, commune, and similar residential areas with the same customs, practices or the same lineage surname".

Firstly, the regulation that the residential community using land cannot exercise the above rights may only be true for some cases such as using land leased by the State with annual payment or allocated land by the State, for rent land. As for the case where the community buys land at auction, receives the transfer of land use rights or is allocated land with payment (such as buying land), the prohibition of the transaction is unreasonable (except, of course, against the will of the community). will of the residential community).

Secondly, the provisions of Clause 3, Article 5 above, it is not clear that the community "lives in the same village, hamlet, commune, and similar residential areas " at the same time must "have the same family" or just need the community to "have the same family". If understood in the second way, it is inconsistent with the fact that many families now have a common church in the whole country such as the completed Truong family church in Ninh Binh or the Nguyen family church being built in Bac Ninh. This is also not a "religious establishment including pagodas, churches, holy houses, cathedrals, monasteries, religious training schools, headquarters of religious organizations and other religious establishments". specified in Clause 5, Article 5 above.

Therefore, it is recommended that the residential community should only be banned from trading in general, transferring and mortgaging land use rights in particular, in some necessary cases.

Lawyer Truong Thanh Duc

Director of ANVI Law Firm, VIAC Arbitrator