Foreigners are better off if they do NOT marry Vietnamese nationals – what you must know:
By: Dr. Oliver Massmann and Pham Ngoc Ha
In Vietnam, there is no private ownership of land. Land is owned by the people and administered exclusively by the State. The State grants land use rights to land users being domestic organizations, domestic family households/individuals, communities of Vietnamese citizens, religious establishments, foreign organizations with diplomatic functions, Vietnamese residing overseas, foreign invested enterprises. Land users are entitled to obtain the title certificate for land use rights, so called Certificate of Land Use Rights and Ownership of Houses and Other Assets Attached to Land (LURC) or Sổ Đỏ in Vietnamese. Foreign individuals are not allowed to have land use rights, i.e., no LURC.
Whether a foreign individual married to a Vietnamese citizen can own land use rights
Given such strict prohibition in the Land Law, foreign individuals who want to have their own land plots in Vietnam, especially in Da Nang or Nha Trang with beautiful beaches, would think that marriage to Vietnamese could solve the problems.
It is a common understanding that every married couple, regardless of any nationalities, would like to make their investments, particularly in real estates, in such a manner that both spouses can be legally recognized as co-owners of the property. Vietnam Family Law has the same approach. It is provided in the law that: Common property of husband and wife includes property created by a spouse, incomes generated from labor, production and business activities, yields and profits arising from separate property and other lawful incomes in the marriage period. The land use rights obtained by a spouse after marriage shall be common property of husband and wife, unless they are separately inherited by, or given to a spouse or are obtained through transactions made with separate property. For a common property which is required by law to be registered for ownership or use, both spouses shall be named in the title certificate, unless otherwise agreed by the couple (Articles 33 and 34 of the Family Law).
One could figure that if he/she marries a Vietnamese, they could together purchase land and hence, jointly own the land. This is well backed-up by the above Family Law provision. However, there’s no such ideal scenario in Vietnam.
Family Law vs. Land Law
When the married couple finally found a perfect land plot, they would likely need to enter into a land use right transfer agreement/sale and purchase agreement and such agreement would need to be notarized to be complied with the law and ultimately for the issuance of an LURC. Here comes the issue: the Land Law will prevail the Family Law.
Even though it is provided that the land use rights obtained after marriage will be common property, it is not right in the case of marriage between a foreigner and a Vietnamese. No matter how much you contribute to buy the land, even you agree not to be a party to the transfer agreement, not to be named in the LURC, you risk losing all your money invested to buy the land.
How so?
The Land Registration Office would explain that Land Law applies in this case. Since foreign individuals are not allowed to have land use rights in Vietnam, the land purchased by the married couple could only be recognized as property of the Vietnamese spouse. In order to name only the Vietnamese spouse on the LURC, it must be the separate property.
“Separate property” in Vietnam is, among other things, property formed by the husband or wife’s separate funds. The Land Registration Office will then require a so called “Acknowledgement of Separate Property” (i.e., a Waiver of Rights) from the non-Vietnamese spouse, which generally says that the non-Vietnamese spouse acknowledges that this is his/her Vietnamese spouse’s own property which was obtained by his/her Vietnamese spouse separate funds and that the non-Vietnamese spouse will waive all rights whatsoever to such property. If you don’t agree to this Waiver, you and your Vietnamese spouse cannot get the LURC. It’s the worst case if you have paid all or most of the purchase price to the land transferor already! Take it or leave it. If you don’t agree, you will lose all; if you agree, you will lose your money but at least your Vietnamese spouse still can get the LURC. In any case, your money invested in the land is totally lost because you don’t get any consideration, legally!
Lessons Learnt
Foreign individuals should not marry Vietnamese with the main purpose to have land use rights. Do NOT marry to secure real estate – It works the other way: it’s better if you are NOT married to protect your money and rights to real estate in Vietnam. Or go the simple way: buy a condominium because foreigners can own condominiums in Vietnam on their name if they have a tourist visa. That is the golden simple way!
Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC
THANK YOU!