Court Rejects Land Division Claim and Invalidates Handwritten Property Transfer Contract

Two daughters are contesting the seizure of a 1,228.5-square-meter property in Dong Thap province, seeking to carve out individual ownership shares while five creditors move to block the division.

The dispute stems from a 2018 enforcement action when authorities seized the land held under the name of Mr. U. to settle outstanding debts. According to the Volksgericht of Dong Thap province, the land was acquired during the marriage of Mr. U. and his wife. The couple later agreed to divide the property among their children, a move that creditors argued was a strategic attempt to shield assets from legal judgments.

The daughters, including Ms. N., claimed that the household land should be partitioned, with each requesting 307 square meters. Creditors countered that the land was transferred to Mr. U. in 2009, when the children were minors and lacked the financial capacity to contribute to the acquisition.

The appellate court found no evidence that the children provided labor or capital for the property, ultimately rejecting the claim that the land belonged to all four family members.

Without clear documentation of contributions, family-based claims often fail against the claims of secured creditors.

A secondary dispute involves a hands-on agreement with a party identified as Mr. C., who paid 1.15 billion VND in 2017 for 747.5 square meters of the same land.

Both Mr. C. and the owners entered into a handwritten contract, despite knowing the property was already mortgaged to a bank. The court ruled this agreement invalid because it lacked the consent of the mortgage holder and failed to meet statutory requirements for property transfer.

The court valued the total loss from the voided transfer at over 1.72 billion VND. Because both the buyer and the seller knowingly proceeded with an illegal transaction, the court ordered that each party bear half of the resulting damages. Mr. U.’s household must now repay the original 1.15 billion VND purchase price plus 859 million VND in compensation, totaling over 2 billion VND in liability.

The ruling in case number 413/2023/DS-PT, issued on August 2, 2023, serves as a warning for investors purchasing distressed land.

When a property is under a forced execution order, the rights of the creditors generally supersede private arrangements between family members or informal buyers.

The court’s decision to invalidate the transfer between Mr. C. and the household confirms that knowledge of a mortgage at the time of purchase is sufficient to assign liability for failed transactions. The obligation for the household to return the land and pay over 2 billion VND remains enforceable under the August 2023 appellate ruling.