A man identified as C. in HCMC lent B. money several times, totaling nearly VND3 billion. To secure repayment, C. asked the borrower to transfer property, with an agreement that the property could be sold to recover the money if the debt was not repaid.
B., however, used property belonging to his brother, A., rather than property registered in his own name. Before receiving the money, B. wrote a commitment stating that the lender could sell the property if he failed to repay the debt.
A. later transferred the property to C. With the borrower's written commitment and the property registered in his name, C. believed the loan was secured.
The problem arose after A. sued C., saying that his brother B. had deceived him into transferring the property and that A. himself had never borrowed money from C.
C. said A. claimed that the amount connected with the transaction was only VND300 million, the figure written in the transfer contract. B.'s total borrowing from C., meanwhile, had reached nearly VND3 billion.
Fearing that he would not recover the money he had lent, C. sought advice from lawyer Tran Viet Ha of the Dak Lak provincial bar association.
According to Ha, the lender's mistake was failing to obtain a signed commitment from A., the property owner, when C. received the transfer. The document should have confirmed that A. understood the purpose of the transaction.
The lawyer said that if B. borrowed money and promised to use his brother's property as security, C. needed written proof that A. agreed to use the property to secure the loan. The parties also needed to specify how the property would be handled if the debt was not paid.
In the current situation, Ha said, C. is in the position of someone who acted in good faith but may struggle legally. C. says A. and B. are brothers and that part of the borrowed money was used for A.'s benefit. Ha said these points would have to be proven in court.
The transfer of the property to C. does not by itself mean the dispute has been resolved. If the records do not clearly show the nature of the transaction and the owner's consent to using the property as loan security, C. will have difficulty protecting his rights, the lawyer said.
There is also a risk that the money cannot be recovered from the person who borrowed it. Ha said that if the contract is declared invalid, B. would have to repay the money. But B. currently has no property that can be used to settle the debt and cannot satisfy a court judgment.
"Even if the dispute ends with a judgment establishing an obligation to repay, recovering the nearly VND3 billion may still be difficult in practice. The lender risks spending a great deal of time and effort without getting the money back," the lawyer said.
Based on the case, Ha advised people to be cautious when lending money, especially when a third party's property is used to secure the repayment obligation.
When property belongs to someone else, the parties should prepare clear records and written commitments. The owner should sign a confirmation that they understand and agree to the purpose of securing the loan and to the way the property will be handled if the obligation is breached.
Ha said current law allows people to sign a secured loan agreement at a notary office, similar to a bank loan. Instead of using a sham contract, people can go to a notary office.
"People should not use a sham contract to replace an agreement securing a loan. This approach creates legal risks and may make it harder for the lender to recover the money handed over," the lawyer warned.
Sources: Dân Trí
