Vietnam: Should the agreement on a real estate transfer that is the common property of two spouses be invalid if lacking the signature of either spouse?

The purchase and transfer of real estate which falls into common ownership rights, using the rights of two spouses, is a popular civil transaction. However, this is also a type of civil transaction that frequently raises disputes in practice because parties do not clearly understand statutory conditions towards a valid real estate transfer agreement in which the subject of this transaction is the common property of two spouses. In connection with this issue, the Supreme People’s Court (the “SPC”) issued Case law No.04/2016/AL (“Case Law 04”) and Official letter No. 196/TANDTC-PC (the “Official Letter 196”) to guide the settlement of lawsuits related to the dispute of real estate transactions that are the common property of two spouses during the marriage period.

In this article, BLawyers Vietnam presents several points that parties should be aware of about the implementation of the civil transactions in real estate stated as the common property of two spouses.

1. Content and the SPC’s standpoint on dispute resolution in Case Law 04

a. Overview of the content of the lawsuit

Case Law 04 presents a dispute relating to the real estate transaction that is the common property of two spouses between the plaintiff as the transferee and the defendant as the transferor. Accordingly, the defendant only had the confirmation signature of the husband in the real estate transfer agreement (the “Agreement”). Afterward, both parties fulfilled their obligations as agreed in the Agreement. After entering into the Agreement, the plaintiff owned, used, and managed these properties in public.

When the parties’ dispute on the real estate transfer agreement arose, the defendant appealed, requiring the Court to declare the Agreement completely invalid because, at the time of signing the Agreement, the wife did not know the transaction and had signed the Agreement; therefore, the Agreement did not fulfill the statutory conditions for formal validity of a real estate transaction that is the common property of two spouses under the law.

However, at the cassation stage, the Court kept the entire appellate judgment, not accepting the aforesaid request of the defendant, for the following reasons:

1. The defendant received the full amount from the plaintiff under the agreement of both parties on the transaction value;
2. The wife did use the above amount to contribute to her children; and
3. The wife knew or had to know about the reception of the real estate transfer of the plaintiff and had no objections during the period the plaintiff used and managed these properties in public.

b. Viewpoint of dispute resolution of the SPC

In Case Law 04, the SPC stated that a dispute resolution is made in the spirit of protection of the legitimate rights and interests of bona fide third parties in civil transactions, ensuring equity in the agreement between the parties in the event of entering a real estate transfer agreement that is the common property of the two spouses.

Prevailing Vietnamese laws have regulations on civil transactions related to the common property of two spouses as follows:

1. The disposition of common property, which is real estate, shall be agreed upon by notarized written agreement by the husband and wife; and
2. Transactions towards common property that is real estate shall be affirmed by two spouses; if both parties cannot confirm together, one party shall authorize to the other party in writing to represent such party to establish the transaction.

However, not all individuals are able to clearly understand the legal principles mentioned above to ensure that the real estate transfer agreement between the parties is legitimate and valid. Hence, in Official Letter 196, the SPC continues to guide on resolving disputes related to the common property of the husband and the wife from Case Law 04, in which the real estate transfer agreements lack confirmation signatures of either spouse but are not invalid provided they fulfill the 03 following conditions:

1. The transferor has received the full amount as agreed;
2. The person who does not sign the agreement knows and uses the above amount; and
3. The transferee of the real estate has received, managed, and used such property in public; the person who did not sign the contract did know and did not object.

Therefore, similar lawsuits can apply the above conditions to prove that the real estate transfer agreements are not invalid and that the transferred property still belongs to the legitimate ownership and use rights of the transferee.

2. Notes for implementing real estate transactions that are the common property of two spouses to mitigate potential disputes

When entering into a real estate transfer agreement that is the common property of husband and wife, the parties should pay attention to the following significant issues to limit the arising of disputes as mentioned above:

1. Require the transferors who are husband and wife to have a notarized written agreement on common property for real estate; and
2. At the time of signing the real estate transfer agreement, both husband and wife are required to be present to sign the agreement. If the husband and wife are unable to present together, there shall be a notarized authorization document from one party to the other party.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. BLawyers Vietnam would love to hear from you.

Date: 2 November 2023

Writer: Uyen Tran