Writers: Phuong Nguyen & Thao Bui
Giving properties, especially real estate, becomes more and more popular. To protect their own interests, givers often add certain conditions on the recipient in the property giving contract. A question of that if the involving parties agreed conditions for property giving but not recorded clearly in the giving contract, will the law protect the right of giver? Judicial Precedent No. 14/2017/AL approved by the Judges’ Council of the Supreme People’s Court on 14 December 2017 (“Judicial Precedent 14”) solve this question. Such precedent has also set out a flexible, reasonable and specific direction for dispute settlement and judgment in practice.
1. Regulations on contract of conditionally giving property (“Giving Contract”)
Definition of Giving Contract
That is a form of contract recording the parties’ agreement. Accordingly, the giver shall give a property and transfer its ownership to the recipient without any compensation/ payment. However, the Giving Contract includes some certain conditions applied to the recipient and he agrees to receive property and perform obligations.
Conditions of Giving Contract
The giver can set any conditions if they do not contravene laws or social morals. The recipient shall perform obligations at the giver’s request. Those obligations are transferring objects, transferring rights, doing or not doing a certain work, etc. The receiver can perform obligations before or after giving property. If requiring to perform before giving property and the recipient completed it but the giver fails to deliver the property, he/she must pay for obligation parts that the recipient already performed. If the recipient fails to perform an obligation after the giving property, the giver may reclaim the property and request for damage compensation.
Conditions for the validity of Giving Contract
- The involving parties must fully have civil legal capacity, civil acting capacity and be entirely voluntary.
- Regarding formality, prevailing laws do not require a general form towards the Giving Contract. In case of giving real estate, that contract must be made in writing with notarization, authentication or ownership registration. In case of giving land use right, the contract must comply with laws on land.
- The effective time of the Giving Contract depends on type of property to be given. It can be: (i) the time of both parties’ agreement; (ii) the time of receiving property; or (iii) the time of registering ownership of movable property. If given property is real estate, the Giving Contract shall take effect from the time of transferring property or the registering property ownership.
As the above, the Giving Contract protects the giver’s interests better than the receiver’s ones. For unconditional giving, after transferring ownership, the giver will no longer have any rights or obligations related to the property. So, he/she cannot reclaim the property. Meanwhile, if the Giving Contract recognized giving condition terms, the giver has the right to reclaim the given property and request for compensation if the recipient violates his/her obligations. However, to have the basis for reclaiming the property, the giver must prove the existence of the giving condition. In other words, the giving condition must be recognized, and the recipient breaches this condition in reality.
Nevertheless, not all Giving Contracts have/ mention conditions of giving property. Hence, consideration of the existence of giving condition is a common problem in disputes of Giving Contract, but the law now keeps silent on this matter.
2. Solution of Judicial Precedent 14
Judicial Precedent 14 recorded a land use right dispute when a father gave his property to his son through Giving Contract with the following specific contents:
Mr. Quang Van P1 (father) entered the Giving Contract on transferring land use right of the 72m2 plot of land in residential group 8, T Ward, P City, Dien Bien Province to Mr. Quang Van P2 (son) with the conditions that Mr. Quang Van P2 must build house for Mr. Quang Van P1 to live and take care of his parents. However, the Giving Contract dated 06 October 2006 between them did not state conditions, but then they mentioned conditions in the Authorization Letter dated 25 March 2006.
Mr. Quang Van P1 by this letter authorized Mr. Quang Van P2 to apply for a construction permit and state additionally that Mr. Quang Van P2 must build a house on the land plot No. 379B for Mr. Quang Van P1 to live and taking care of him and his wife. Then, Mr. Quang Van P2 made the Commitment dated 12 October 2006 recording that he committed to build a house for Mr. Quang Van P1 and not sell to anyone.
When Mr. Quang Van P1 register the ownership change under the giving contract, Mr. Quang Van P2 did not carry out the construction of the house as promised. Mr. Quang Van P1 so requested to cancel the contract of land giving because Mr. Quang Van. P2 did not fulfill the committed conditions.
The Court of First Instance did not recognize the giving conditions and not consider the contract as a conditional giving contract, so the Court rejected Mr. Quang Van P1’s request to cancel the giving contract. The Appeal Court accepted Mr. Quang Van P’s appeal, declared the cancellation of the conditional giving contract as mentioned above. The appeal verdict then was under the reconsideration procedure and the Chief Justice of the Supreme People’s Court appealed to this appellate judgment. In the final conclusion, the Reconsideration Decision No. 02/2011/DS-GDT dated 17 January 2011 of the Supreme People’s Court recognized that Mr. Quang Van P1 legally made the giving conditions, and recognized the effectiveness of Giving Contract with the following argument:
“Although Mr. Quang Van P2 did not admit that Mr. Quang Van P1 conditionally giving property, but the authorization letter dated 25 March 2006 stated Mr. Quang Van P1 authorized Mr. Quang Van P2 to apply for construction permit… and must build a house on the land plot No. 379B for Mr. Quang Van P1 to live and taking care of Mr. and Mrs. K (Mr. P1’s parents). In the commitment dated 12 October 2006, Mr. Quang Van P2 wrote “… My father gave me a land lot… I made this commitment to the local authorities to build house for my father and not transfer to anyone”.
Though the conditional giving contract did not record the giving conditions, the aforesaid documents stated Mr. Quang Van P2 had to build a house for Mr. Quang Van P1 to live, took care of him and his mother”.
From above case, the contracting parties clearly set and agreed with each other on the giving conditions. Those are: the recipient must build a house for the giver and to perform the taking-care-of obligation. Not the Giving Contract but other documents such as authorization letter, commitment and memorandum can state those conditions. Civil Code does not regulate that the giving conditions is compulsory in Giving Contract. Therefore, the Court’s recognition as mentioned above is totally reasonable.
In conclusion, Judicial Precedent 14 helped interpret the current regulation of law and enhanced its applicability in practice. When conditionally giving property, the giving conditions whether clearly stated in the Giving Contract or another document, authorities of Vietnam can consider as an integral part of such the contract.