Tiếng Việt
Table of Contents
1. What is a property loan contract?
2. The borrower’s obligation to repay the debt according to the law
3. Who is obliged to repay the debt when the borrower dies?
1. What is a property loan contract?
According to Article 463 of the 2015 Civil Code:
“Article 463. Contracts for loan of property
Contract for the loan of property means an agreement between parties whereby a lender delivers property to a borrower. When the loan falls due, the borrower must repay the lender property of the same type in accordance with the correct quantity and quality, and must pay interest if so agreed or so provided by law.”
Based on the above provisions, when the payment is due, the borrower must fulfill his/her payment obligation and the agreed interest amount in accordance with the provisions of law.
2. The borrower’s obligation to repay the debt according to the provisions of law
According to Article 466 of the 2015 Civil Code, the borrower’s obligation to repay the debt is stipulated as follows:
“Article 466. Obligations of borrowers to repay loans
1. Where the property lent is a sum of money, the borrower must repay [the lender] the loan in full when due. If the property is an object, the borrower must deliver [to the lender] an object of the same type, quantity and quality, unless otherwise agreed.
2. A borrower who is unable to deliver an object may, with the consent of the lender, repay the value of the borrowed object in cash as at the time and place of delivery.
3. The place for repayment of a loan shall be the place of residence or head office of the lender, unless otherwise agreed.
4. If a borrower fails to repay [all or any instalment of] an interest-free loan, in whole or in part when payment falls due, the lender shall have the right to request [the borrower] pay interest at the interest rate provided in article 468.2 of this Code on the overdue amount, unless otherwise agreed or provided by law.
5. If a borrower fails to repay, in whole or in part a loan with interest, the borrower must pay interest in accordance with the following provisions:
(a) [The borrower must pay] interest on the principal which is due and unpaid at the interest rate agreed in the contract for the term of loan; in the case of late payment, [the borrower] must also pay interest at the interest rate provided in article 468.2 of this Code;
(b) [The borrower must pay] interest on the principal which is due and unpaid [at the interest rate] equal to one hundred and fifty (150) per cent of loan interest stated in the contract for the period of the delay, unless otherwise agreed.”
3. Who is obligated to repay the debt when the borrower passes away?
According to Article 615 of the 2015 Civil Code, the heir must perform the obligations left by the deceased as follows:
“Article 615. Performance of property obligations left by deceased
1. A person entitled to an inheritance has the responsibility to perform the property obligations within the scope of the estate left by the deceased.
2. Where an estate has not yet been divided, the property obligations left by the deceased shall be performed by the administrator of the estate as agreed by the heirs within the scope of the estate left by the deceased.
3. Where an estate has already been divided, each heir shall perform those property obligations left by the deceased corresponding to, but not exceeding, that part of the estate that the heir has inherited, unless otherwise agreed.
4. Where an heir not being an individual inherits an estate under a will, it must perform the property obligations left by the deceased in like manner as an individual heir.”
In the event that the borrower unfortunately passes away, the heirs of the borrower are responsible for fulfilling the debt repayment obligation to the deceased within the scope of the inheritance left by the deceased and received by themselves, unless otherwise agreed.
However, in the case stipulated in Clause 3, Article 422 of the 2015 Civil Code, the contract terminates when the loan contract agrees that only the borrower is the one to repay the debt.
“Article 422. Termination of contracts
The contract terminates in the following cases:
3. Where a contract is only able to be performed by the particular individual or legal entity which entered into the contract, and that particular individual dies, or that legal entity ceases to exist.”
Thus, when the borrower dies, the heirs are obliged to pay within the scope of the inheritance left by the deceased, unless the loan contract agrees that the payment obligation must be paid by the borrower himself or there is another agreement.
To sum up, when the borrower dies, the lender has the right to request the borrower’s heirs to pay money. In case of evasion or intentional non-payment, the lender has the right to file a lawsuit at the People’s Court where the defendant resides. In case the deceased is cleared of debt while the loan contract is completed, there is an agreement that the borrower must perform it.