Auction of property required by law to be sold through auction in Vietnam

by hà ngọc

Vietnam law has regulations on auction of property required by law to be sold through auction. Let’s find out this issue with Lawyer X through the following situation: “Dear Lawyer! I want to ask what are orders and procedures for auction of property in Vietnam? What are regulations on Selection of property auction organizations? Thanks for answering my questions!”

  • 2016 Vietnam Law on Property Auction

Order and procedures for auction of property required by law to be sold through auction

The auction of property specified in Clause 1, Article 4 of 2016 Vietnam Law on Property Auction must comply with the order and procedures prescribed in Chapter III of 2016 Vietnam Law on Property Auction and this Chapter.

Selection of property auction organizations

– After a competent person issues a decision on property auction, a property seller shall disclose information on the selection of a property auction organization on its/his/her website and the specialized auction website.

– A public notice on the selection of a property auction organization must have the following principal contents:

+ Name and address of the property seller;

+ Name, quantity and quality of the auctioned property;

+ Reserve price of the auctioned property;

+ Criteria for selection of a property auction organization as prescribed in Clause 4 of this Article;

+ Time and place for submission of dossiers for registering to become a property auction organization.

– The property seller shall, based on dossiers for registering to become property auction organizations and criteria specified in Clause 4 of this Article, select a property auction organization and take responsibility for such selection.

– Criteria for a property auction organization to be selected include:

+ Having physical foundations and equipment necessary for property auction;

+ Having a feasible and effective auction plan;

+ Having capacity, experience and prestige;

+ Asking for appropriate auction remuneration and auction expenses;

+ Being on the Ministry of Justice-publicized list of property auction organizations;

+ Other criteria suitable to the auctioned property as decided by the property seller.

– In case the selection of a property auction organization is subject to bidding as required by law, 2016 Vietnam Law on Property Auction and bidding law shall apply.

Disclosure of information on property auction

– In addition to the provisions on public display of information on property auction in Clauses 1,2 and 3, Article 35 of 2016 Vietnam Law on Property Auction, for movable property with a reserve price of at least fifty million Vietnam dong and immovable property, a property auction organization shall disclose information on the auction at least twice on a central- or provincial-level printed newspaper or television of the locality where the auctioned property is located and on the specialized auction website; the interval between times of publicization must be at least 2 working days.

– In case of auction according to summary procedures under Point b, Clause 1, Article 53 of 2016 Vietnam Law on Property Auction, the property auction organization shall disclose information on the auction once on a central- or provincial-level printed newspaper or television of the locality where the auctioned property is located.

– The second disclosure shall be made for at least 7 working days, for movable property, or 15 days, for immovable property, before the date an auction opens. The disclosure mentioned in Clause 2 of this Article shall be made simultaneously with the public display of information on property auction prescribed in Clause 2, Article 53 of 2016 Vietnam Law on Property Auction.

– To-be-disclosed information on property auction includes:

+ Names and addresses of the property auction organization and property seller;

+ Time and place of auction;

+ Name of property and place where the auctioned property is located;

+ Reserve price of the auctioned property in case such price is publicized, and advance payment;

+ Time, place, conditions and method of registration for participation in auction.

– The property auction organization shall keep documents and images on disclosure prescribed in Clauses 1 and 2 of this Article in auction dossiers.

Publicization of reserve prices, method of auction

– A property seller shall publicize the reserve price of the property.

– The auction of property shall be conducted only in the form of ascending-price auction.

Auction of property required by law to be sold through auction in Vietnam
Auction of property required by law to be sold through auction in Vietnam

Auction of property in case only one person registers for participation in auction, one person participates in auction or one person offers bids

The auction of property in case only one person registers for participation in auction, one person participates in auction or one person offers bids as prescribed in Article 49 of 2016 Vietnam Law on Property Auction shall not apply to the following property items:

– State property as defined in the law on management and use of state property;

– Land use rights upon land allocation with land use levy or land lease by the State in accordance the land law;

– Other property items not eligible for auction as prescribed by law in case only one person registers for participation in auction, one person participates in auction or one person offers bids.

Formation of a property auction council

– The owner of a property item required by law to be sold through auction shall decide to form a property auction council for auctioning property in the following cases:

+ It is prescribed by law that the auction shall be conducted by the property auction council;

+ It is impossible to select a property auction organization under Article 56 of 2016 Vietnam Law on Property Auction.

– The competent person who has decided to form the property auction council shall take responsibility for all activities of the council.

– The property auction council must be composed of at least 3 members; the council’s chairperson is the property seller or his/her/its authorized person; and the council’s members include representatives of the same-level finance and justice agencies and related agencies and organizations as prescribed by law. The council may sign a contract with a property auction organization to appoint the auctioneer to conduct the auction.

Operation principles of the property auction council

– An auction conducted by the property auction council must be attended by at least two-thirds of the council’s members.

– The property auction council shall work on the principles of centralism, collective discussion, and decision by majority votes through showing hands or casting secret ballots. If the numbers of hands shown for and against or numbers of ballots for and against are equal, the council’s chairperson may make a final decision.

– The property auction council automatically disbands when the auction ends and the auction dossier is transferred under Article 45 of 2016 Vietnam Law on Property Auction.

Rights and obligations of the property auction council

– The property auction council has the following rights:

+ To deprive of the right to participate in an auction of, and make a record for handling, a bidder who commits an act of causing disorder at the auction, colludes or is in cahoots with others for price suppression or commits other acts affecting the objectivity and truthfulness of the auction;

+ To stop the auction and report to the competent person who has decided to form the council for handling violations of the regulations on auction order and procedures or when detecting that the auctioneer colludes or is in cahoots with others for price suppression or commits other acts affecting the objectivity and truthfulness of the auction;

+ To request valuation and appraisal of the auctioned property;

+ To select a form of auction specified in Clause 1, Article 40 of 2016 Vietnam Law on Property Auction for property auction;

+ Other rights as provided by law.

– The property auction council has the following obligations:

+ The obligations prescribed at Points b and d. Clause 2, Article 24 of 2016 Vietnam Law on Property Auction;

+ To issue the operation regulation of the council;

+ To organize and conduct an auction according to the operation regulation of the council, rules of the auction and relevant laws;

+ To take responsibility for the auction results before law and the competent person who has decided to form the council;

+ To settle complaints and denunciations during the auction; to receive and settle according to its competence or propose the competent person who has decided to form the council to settle complaints filed after the auction; to pay damages in accordance with law;

+ To report on the property auction results to the competent person who has decided to form the council;

+ Other obligations as prescribed by law.

Tasks and powers of the chairperson and members of the property auction council

– The chairperson of the property auction council has the following tasks and powers:

+ To organize the exercise of the rights and performance of the obligations of the council under Article 62 of 2016 Vietnam Law on Property Auction;

+ To preside over meetings of the council; to assign tasks to each member of the council;

+ To conduct an auction or assign a member of the council or an auctioneer to conduct the auction under the operation regulation of the council;

+ Other tasks and powers as stated in the operation regulation of the council and relevant laws.

– Members of the property auction council shall perform the tasks assigned by the council’s chairperson and take responsibility before the council’s chairperson.

Auction of non-performing loans and collateral of non-performing loans

– The wholly state-owned organization established by the Government for handling non- performing loans of credit institutions may only auction non-performing loans and collateral of non-performing loans specified at Point o, Clause 1, Article 4 of 2016 Vietnam Law on Property Auction.

– For non-performing loans and collateral of non-performing loans put for auction in accordance with law, the wholly state-owned organization established by the Government for handling non-performing loans of credit institutions shall sign a property auction service contract with a property auction organization or shall auction property by itself. The property auction must comply with the order and procedures prescribed in 2016 Vietnam Law on Property Auction.

Rights and obligations of the wholly state-owned organization established by the Government for handling non-performing loans of credit institutions in property auction activities

– The wholly state-owned organization established by the Government for handling non-performing loans of credit institutions has the following rights:

+ To sign labor contracts with auctioneers practicing at the organization;

+ To assign an auctioneer to conduct an auction;

+ To hold an auction at its head office, the place where the auctioned property is located or another place as appropriate for the auction;

+ Other rights as provided by the law on property auction.

– The wholly state-owned organization established by the Government for handling non-performing loans of credit institutions has the following obligations:

+ To conduct an auction according to the principles, order and procedures prescribed in 2016 Vietnam Law on Property Auction and take responsibility for the property auction results;

+ To issue the rules of an auction under Article 34 of 2016 Vietnam Law on Property Auction and other relevant laws;

+ To hand the auctioned property and relevant documents of title to the property buyer;

+ To obtain the written consent of the property seller in accordance with law, in case of auction of property specified in Article 49 of 2016 Vietnam Law on Property Auction;

+ To take responsibility for the value and quality of the auctioned property, in case it conducts the auction by itself;

+ To pay compensation for damage it has caused during auction in accordance with law;

+ To keep a book for monitoring the auctioned property and an auction register; + To request the provincial-level Justice Department of the locality where it is headquartered to grant auctioneer cards to auctioneers practicing at the organization;

+ To pay occupational liability insurance premiums for its auctioneers under Article 20 of 2016 Vietnam Law on Property Auction;

+ To report to the Ministry of Justice on the list of its practicing auctioneers on an annual basis or upon request;

+ To report to the Ministry of Justice and the State Bank of Vietnam on property auction activities on a biannual or an annual basis or upon request;

+ To fulfill competent state agencies’ requests on examination and inspection of property auction activities;

+ Other obligations as prescribed by law.

– The wholly state-owned organization established by the Government for handling non-performing loans of credit institutions is prohibited to commit the following acts:

+ Colluding or being in cahoots with bidders, price assessment organizations, organizations appraising the auctioned property or other organizations or individuals to falsify information on auctioned property, auction dossiers or property auction results;

+ Impeding or causing difficulties to bidders in buying auction dossiers, registering for participation in auction, participating in auction or delivering and receiving the auctioned property;

+ Receiving any money amount, property or profit from bidders in addition to auction expenses and other service charges relating to the auctioned property as prescribed by law;

+ Other prohibited acts under relevant laws.

– The Government shall detail:

+ The assessment of reserve prices of non-performing loans and collateral of non- performing loans;

+ The establishment of a council for auction of high-value non-performing loans and collateral of non-performing loans.

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Frequently asked questions

Shall a property seller disclose information on the selection of a property auction organization

After a competent person issues a decision on property auction, a property seller shall disclose information on the selection of a property auction organization on its/his/her website and the specialized auction website.

What principal contents must a public notice on the selection of a property auction organization have?

A public notice on the selection of a property auction organization must have the following principal contents:
+ Name and address of the property seller;
+ Name, quantity and quality of the auctioned property;
+ Reserve price of the auctioned property;
+ Criteria for selection of a property auction organization as prescribed in Clause 4 of this Article;
+ Time and place for submission of dossiers for registering to become a property auction organization.

For non-performing loans and collateral of non-performing loans put for auction in accordance with law, shall the wholly state-owned organization established by the Government for handling non-performing loans of credit institutions sign a property auction service contract with a property auction organization?

For non-performing loans and collateral of non-performing loans put for auction in accordance with law, the wholly state-owned organization established by the Government for handling non-performing loans of credit institutions shall sign a property auction service contract with a property auction organization or shall auction property by itself. The property auction must comply with the order and procedures prescribed in 2016 Vietnam Law on Property Auction.

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