Residential land use right donation in accordance with current Vietnamese laws

Secondly, determining assets to be donated as LUR in case that

housing and other assets are on the land.

The provisions are not consistent and somewhat not practical which

are causes of inconsistent application in fact of the law on residential LUR

donation. In detail:

First, “surface right” is a new right in the civil laws of Vietnam,

however there are lack of specific provisions in the current laws, which

cause handling residential LUR donation in some cases confused.

Second, studies of the relation between residential LUR and landattached assets such as housing and construction works show that clear and

specific regulations are needed to address the relations of residential LUR

donation in practice.

Thirdly, splitting registration of LUR and land-attached assets with

two different demands according to the current land law has been being

barrier to donation in disputes

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some aspects of subjects, objects, forms of contract, etc. and causes of that situation are also identified. Third, some studies provide numerous solutions, both theoretically, legally and practically, to speed up improvement of the law on land use right donation. Therefore, during studying the topic, achievements and scientific values of the above mentioned studies are inherited by the author, which are foundation for continuous studies both in theory and practice. 1.2. Open issues to be settled thoroughly While studying transactions on land use right on the background of people’s land ownership regime in which the State acts as the representative 7 owner in Vietnam, acquisition of theoretical and legal foundations on land use right donation in countries around the world - where private land ownership are prevailed, will only present the most general problem of donation but fail to identify specific problems on land use right donation. Previous studies about land use right donation in Vietnam also show that most of these studies are about the period before the Civil Law 2015 and the Land Law 2013 were promulgated. After this period, these studies’ materials are mainly presented in the form of articles published on domestic journals, reflecting the individual aspects of land use right donation such as: asset donation contracts, land use right and housing donation contracts. It is more notable that there is not any separate, intensive and comprehensive research on residential LUR donation. It is affirmed objectively that a comprehensive, focused and intensive study on residential LUR donation with theoretical foundation of theories, suppositions, placed in the relationship of impact, governed by the context of political, economic, social, historical and international integration, a review and assessment of the legal system governing land use right donation, in associated with alternative relations with different specialized laws ... is in fact not available. For that reason, in this dissertation, the author has studied some following intensive issues: First, theoretically, it is necessary to clarify nature of residential land and method for identifying residential land, including residential land and construction works on such land, which is determined as integral to the residential land and as basis for determining object to whom the land use right is donated. It is also to clarify basis for identifying how residential land use right of a household is differed from other lands of organizations or enterprises. Time of legal residential land use right and land-attached assets arisen for purpose of residence is basis for classifying the land use right to be donated. Especially they are significant for determining whether the assets to be donated as object in the donation contract is invalid or not. Second, it is theoretical and practical foundation of legal governing toward residential LUR donation. With which elements are the law on residential LUR donation governed? What is criteria for evaluating a legal system governing effectively residential LUR donation in the socio- economic life? 8 Third, under the aspect of laws and their actual enforcement: Studies about the law on residential LUR donation must be integrated into the legal system that gives direct and alternative impacts and governing them, such as the Law on Real Estate Business, the Land Law, the Housing Law, the Construction Law, the Civil Code, the Notary Law, the Law on Civil Status, The Law on Marriage and Family ... clarify the degree of governing and adjustment of each specific law toward each issue directly related to the right to donate residential land use rights, such as: subject, object, condition, scope of donation; rights and obligations of parties in the donation relationship, processes, procedures and responsibilities of the public agency system in appraising, permitting, inspecting and supervising the donation process and handling any violation. Fourth, legal and practical issues of residential LUR donation contracts, once performed, are coping with difficulties and obstacles, detailing: - It is to determine whether the asset as residential land use right and object in the LUR is only residential LUR or included land-attached asset; When they are assets integral in the donation relation; When the residential LUR is object of donation but not for land-attached asset; Whether or not the issue of partial or whole invalidation in the donation contract has been proposed when there is a conflict. - Subject in the residential LUR relation is household including various members who share the residential LUR, but on the certificate of LUR, only householder’s name is specified, but not all members sharing the LUR; Are oversea-Vietnamese, foreigners living and working in Vietnam, persons without nationality living in Vietnam, enterprises, foreign organizations investing and working in Vietnam, beneficiaries of conditional donation right? - For object of donation: Whether or not object of donation is extended in the context of the newly born Land Law together with many changes on method of determining LUR to eliminate the compulsion of "assigning" fixed "addresses" to be donated. - Which consequences have been caused from the fact that LUR registration is compulsory and land-attached asset registration is not compulsory? In which case is a LUR donation contract invalidated? When is 9 a LUR legal but not permitted for donation? Whether or not is a LUR beneficiary bound in such donation relation? - Residential LUR donation is from aspect of an obligatory relation between a donor and donee arisen in a residential LUR donation contract. This approach aims at determining rights and obligations of subjects and legislations on parties’ rights and obligations in a residential LUR donation contract. - Is the time of establishing the transfer of residential LUR from donor to donee as prescribed by current law appropriate with practice? Under laws, it is required to determine time of transferring residential LUR between participatory parties, and avoiding default (disputes) due to changed land prices, or due to change in goodwill of participatory parties. Is time of “unifying goodwill” between participatory parties in the donation relation considered as time of transferring residential LUR to donee? - Care must be taken to prevent illegal transactions in order to disperse assets and avoid performing obligations to other entities through donation transactions. Fifth, with actual issues arisen in the contrary and negative direction, demonstrated with subjects’ violations when fulfilling the transaction of residential LUR donation, resulting in their consequences towards the economy and society, objective indispensability of continuous improvement of the law on residential LUR donation in particular and the law on LUR donation in general is focused among other specialized laws and other relevant laws. To make the law highly predictable and feasible, requirements and criteria are especially proposed and set up in the dissertation for a legal system of residential LUR donation that is effective and appropriate with economic and social conditions of the country, with market economy institutions and adapting to integration trends. 10 CHAPTER 2 THEORY ON RESIDENTIAL LAND USE RIGHT DONATION AND THE LAW ON RESIDENTIAL LAND USE RIGHT DONATION 2.1. Theory on residential LUR donation 2.1.1. Concept of asset donation 2.1.1.1. Concept of asset The asset is land use right, a type of asset expressed in the form of "Right" protected by Vietnamese law, valuated in cash and fully entitled to be transferred in civil or commercial exchange; it has right to dispose of this asset according to goodwill and purpose of person with asset ownership. 2.1.1.2. Concept of asset donation (1) Donation is an expression of asset ownership holder’s goodwill regarding transferring his/her asset ownership to another person; (2) Asset must be in the possession of the donor; (3) The donor must be still alive at the time of donation exercise; (4) The donation must be made through a written contract; (5) The donation must be subject to the consent (approval) of the donee; and (6) The donor does not require the donee to compensate him/her for any material benefits. In this regard, some views of scientists also show agreement. 2.1.2. Theory on residential LUR donation 2.1.2.1. Concept and features of land use right Land use right is a right toward an asset belonging to ownerships of organizations, households and individuals arisen with decision of land allocation, land lease, LUR recognition by competent state agencies or from LUR transfer transactions. The possession, use and disposition of land use rights must comply with the conditions and procedures prescribed by law. 2.1.2.2. Concept and features of residential land use right Residential land is planned and recognized as land for residence, used for major purpose of housing and other construction works in service of life by competent state agencies. There are 33,123,078 hectares of land throughout the country, of which 31,010,279 hectares have been used for various purposes (including 11 land for residence in both urban and rural areas), accounting for 93.62% of the total natural land area. 1 A residential land use right is a special asset, valuated in cash on the basis of the market price and in accordance with the law, the goodwill of the owner as the State, it is allowed to involve in civil transactions. 2.1.2.2. Concept and features of residential LUR donation “LUR donation is a right of land user (donor) who accordingly has right to discuss and assign the his/her LUR to another subject (donee) without any demand of compensation, though a written civil contract with consent of donee according to provisions of the Civil Law and the Land Law” Firstly, there are LUR donation transactions legally established and complied with provisions of the land law, the civil law and other relevant ones, but they are of two different types of donation: ordinary residential LUR donation and conditional residential LUR donation. Secondly, object of donation is not only land use right but also land- attached assets. Thirdly, subject of donation is not only one possessing the residential LUR but it belongs to use right of various subjects. 2.1.2.3. Roles of residential LUR donation Together with recognizing other rights of transferring land use right in current land law, it shows that LUR donation in general and residential LUR donation in particular are essentially significant in socio-economic life. 2.3. Theory on the law on residential LUR donation 2.3.1. Concept and features of the law on residential LUR donation From the process of synthesis, studies ad experience review from practice of legislative application, the law on residential LUR donation can be defined as follow: The law on residential LUR donation is a total of legal provision promulgated by the State, which specifies the subjects, objects, rights and obligations of parties, form and validity of donation transactions, processes and procedures that competent state agencies must carry out and the guarantee by state institutions to ensure that the residential LUR 12 donation is carried out in practice. Studies about the law on residential LUR donation in relation with other laws on asset donation and the law on asset donation in general show that they are featured as follows: - The law on residential LUR donation is a part of the system of legal provisions on LUR donation, asset donation - The law on residential LUR donation is specified on various documents. - The law on residential LUR donation assures and respects freedom, mutual agreement between relevant parties during establishment and implementation of donation transaction but limited to the law. 2.3.2. Legal structure for regulating residential LUR donation The legal system regulating residential LUR donation relation is structured as follows: First, legal norms for objects and conditions of the donation transaction Second, legal norms for regulating subjects of the residential LUR donation Third, legal norms regulating rights and obligations of parties in residential LUR donation Fourth, legal norms regulating forms and validity of residential LUR donation Fifth, legal norms regulating order and procedure for implementing residential LUR donation 2.3.3. Elements affecting the law on residential LUR donation The law is developed basing on the State’s will but also governed by elements of a civil society. In Vietnam, the land law in general and the law on transferring land use right in particular (of which is residential LUR donation) are governed and affected by such elements as guidelines, policies of the Communist Party of Vietnam; land ownership; social and cultural elements; international integration in economy. 13 CHAPTER 3 REALITY OF THE LAW ON RESIDENTIAL LUR DONATION IN VIETNAM 3.1. Reality of the law on objects, conditions of residential LUR donation and obstacles in practice 3.1.1. Content of the law regulating the residential land use right – Objects and conditions of residential LUR donation In the current land law, specific conditions for residential LUR when involving in land use right donation is not specified, but general conditions for all transactions of LUR transfer. Accordingly, a type of LUR – residential LUR when becoming an object of donation transaction, one of LUR transfer transaction, must satisfy and comply with such general conditions. In detail, residential LUR to be donated must satisfy the following conditions: Firstly, it is granted with LUR certificate; Secondly, it is not in dispute; Thirdly, the LUR certificate is not distrained to ensure judgment execution; Fourth, it is within the land use term. 3.1.2. Obstacles and inadequacy arisen in practice when studying about assets as LURs in the LUR donation and causes Firstly, general conditions for residential land use as asset to be donated Studying 04 general conditions as specified in Article 188 Paragraph 1 of the Land Law 2013 indicates that there are still many unclear, not really appropriate points and they have become a barrier in practice. They can be noticed with some of the following manifestations: First, the prerequisite that only assets granted with certificates of land use right and ownership of housing and land-attached assets are permitted for donation is somewhat rigid and forced. Second, the condition of “land without dispute” as prescribed at Clause 1 Article 188 of the Land Law 2013 is quite general and without any specific regulations to determine or define what is a disputed LUR that is not permitted for donation. Third, the condition of “LUR is not distrained to ensure judgment execution” is also not rational. 14 Secondly, determining assets to be donated as LUR in case that housing and other assets are on the land. The provisions are not consistent and somewhat not practical which are causes of inconsistent application in fact of the law on residential LUR donation. In detail: First, “surface right” is a new right in the civil laws of Vietnam, however there are lack of specific provisions in the current laws, which cause handling residential LUR donation in some cases confused. Second, studies of the relation between residential LUR and land- attached assets such as housing and construction works show that clear and specific regulations are needed to address the relations of residential LUR donation in practice. Thirdly, splitting registration of LUR and land-attached assets with two different demands according to the current land law has been being barrier to donation in disputes. 3.2. Reality of the law on subjects donating residential land use right and obstacles in practice 3.2.1. The content of the law on subjects donating residential land use right Since the relation of residential LUR donation is within a civil law, participatory subject must satisfy general conditions for a subject involving in a civil transaction. In details: 3.1.2.1. Subject as donor The forgoing regulations show that if subject is a donor in a residential LUR donation it is compulsory to consider whether its origin and establishment must be residential LUR, regardless they are enterprise, organization, household or individual. On other hand, such residential LUR donation must subject to proper object as prescribed by the State, then donor can become subject of such donation. 3.1.2.2. Subject as donee of residential LUR donation It can be seen that current regulations fail to ensure the effective and appropriate management and supervision of the transfer of land use rights and land-attached assets, especially regarding LUR donation, a transfer with multiple characteristics. This inadequacy and lack of specificity and clarity are being major barrier for actual transactions of donation. 15 3.2.2. Obstacles and inadequacy arisen in fact during studying about subject in the relation of residential LUR donation and its cause At present, current legislations are just for listing cases subjects are not permitted to receive LUR donation or to donate LUR, but not regulations on specific conditions for subjects in implementing the right of asset donation. Owners of land-attached assets that are allocated by the State to households, individuals with land use levy collection or leased with rent paid once for the whole period of lease have no right to donate land-attached assets under their ownership. This is a major omission of the land law, while recognizing the right to donate assets owned by households and individuals who use land rented and paid annually, and foreigners and over-sea Vietnamese people residing in foreign countries are eligible for purchasing, this right among households and individuals that are allocated land with land use levy collection and leased land with rent paid once is not recognized. 3.3. Reality of the law on rights and obligations of participatory parties in the relation of residential LUR donation 3.3.1. Content of the law on rights and obligations of participatory parties in the relation of residential LUR donation 3.3.1.1. Rights and obligation of donor Pursuant to general regulations on asset donation contracts, rights and obligations of LUR donor and donee are prescribed as follows: * Rights of donor (in case of conditional donation) - Request donee to implement one or more obligations before or after the donation. - Revoke the donated LUR and claim for damage if donee fails to implement his/her post-donation obligations. * Obligations of donor - Deliver the LUR as agreed properly in term of area, class of land, type of land, location, code and land status; - Complete formalities for the ownership transfer to donee so that a certificate of land use right and land-attached asset ownership is granted to donee - Never request donee to compensate to receive the LUR. - Notify donee of any defect of the LUR or land-attached assets. If 16 donor is aware of any asset’s defect but fails to notify it, donor is responsible for compensating any damage incurred by donee; otherwise he/she is not responsible for such compensation of damage. There is not any specific provision of conditional LUR donation in the current land law, however LUR donation is a type of special asset donation, so conditional LUR donation in general and residential LUR donation in particular must comply with the civil law on conditional donation. 3.3.3.2. Rights and obligations of donee * Rights of donee: - Have the right to agree to accept or not accept the LUR donated. - Request donor to hand over the LUR properly as agreed in terms of area, class of land, type of land, location, code and land status; - Continue to use the land for the proper purpose and for the remaining land use term; - Be granted with a certificate of land use right and land-attached asset ownership; - Receive donor’s notice about the defects of LUR or land-attached assets; If donor is aware of any asset’s defect of but fails to notify it, donee is compensated for any damage incurred. - In case an obligation must be fulfilled prior to donation, if donee has fulfilled the obligation and donor has not delivered the asset, donee reserves right to request donor to refund the liability paid by donee; * Obligations of donee - Participate in completing formalities of registration for land use right reception at a competent state agency in accordance with the land law. - Perform one or more obligations before or after donation as agreed with donor. - Fulfill the financial obligations of the land user after receiving the land use right. Notwithstanding the above provisions on rights and obligations, enforcement in fact shows many restrictions, obstacles and ambiguity. In details: Firstly, it is about regulations on the right to refuse to receive LUR donation. At present, in current legislations there is not any specific 17 provision on method, time of losing the right to refuse to receive donation in some specific cases. Secondly, rights and obligations of LUR donor and donee have not satisfied parties’ demand in the transaction and have not brought into play the State role in assuring benefits of land owners. 3.3.2. Obstacles and inadequacy arisen in practice when studying about parties’ rights and obligations in the relation of land use right donation and causes Firstly, regulations on conditional LUR donation contract remain sketchy, so their practical application faces many difficulties for donor, donee and state agencies. Secondly, agreement about personal assets of a spouse has been being consequences of different application to notarization of residential LUR donation contracts at localities. 3.4. Reality of the law on form and validity of residential LUR donation transaction 3.4.1. The law on form and validity of residential LUR donation transaction Form of residential LUR donation transaction According to the provisions of the land law, a LUR donation contract must be made in a written contract in a form consistent with the provisions of the Civil Code, the land law and relevant legal provisions. In details: - A residential LUR donation contract must be made in writing. - A residential LUR donation contract must be notarized or authenticated in accordance with legislation. Validity of residential LUR donation transaction According to legal provisions, LUR-related transactions only become valid since the LUR transfer is registered as prescribed by the land law (Article 503 of the Civil Code 2015). The legal provision that a LUR donation transaction is valid from the time of registration is not consistent with the reality of civil transactions, and rights of parties in the transaction are not assured. Many countries around the world specify that a LUR donation becomes effective right from the time of representing such donation or in case donee agrees to receive 18 asset or the time when the LUR donation contract has been established and notarized. 3.4.2. Obstacles and inadequacy arisen in practice when studying the form and validity of residential LUR donation transactions and causes Firstly, the two processes of notarization-authentication and LUR donation contract registration as prescribed by laws have been making them overlapped and identical; making the process of establishing donation transactions prolonged. Secondly, scope of notarizing real estate mortgage under the Notary Law has also been being "transformed" in a very flexible manner in practice. 3.5. Reality of the law on orders and procedures for implementing LUR donation transactions 3.5.1. Content of the law on orders and procedures for implementing LUR donation transactions Orders and procedures for implementing LUR donation transaction are subject to Article 79 of the Decree No.43/2014/ND-CP dated 15/5/2014. In general, legislations on orders and procedures for LUR donation are similar to other forms of land use right transfer for land users. 3.5.2. Obstacles and inadequacy arisen in practice of for implementing residential LUR d

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