DECREE No.86-CP OF DECEMBER 19, 1996 OF THE GOVERNMENT PROMULGATING THE REGULATION ON PROPERTY AUCTION

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;

DECREES:

Article 1.- To promulgate together with this Decree the Regulation on the Auction of Property.

Article 2.- This Decree takes effect from the date of its signing. The earlier stipulations which are contrary to the Regulation attached to this Decree are now annulled.

Article 3.- The Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Government, the Presidents of the People�s Committees of the provinces and cities directly under the Central Government shall have to organize the implementation of this Decree.

On behalf of the Government

For the Prime Minister

Deputy Prime Minister

REGULATION ON PROPERTY AUCTION
(Issued together with Decree No.86-CP of December 19, 1996)

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

1. This Regulation shall apply to the auction of property through the State auction service organizations and business organizations specialized in auction service.

2. The auction procedures stipulated in this Regulation shall also apply to the auction of property through the competent State auction agencies as prescribed by law, except otherwise provided for by laws and ordinances.

Article 2.- Interpretation of terms

Terms in this Regulation shall be construed as follows:

1. Auction is the public sale of property in which many bidders participate according to the procedures stipulated in this Regulation; the person who offers the highest bid which is at least equivalent to the reserve price shall be entitled to purchase the auctioned property;

2. The auctioneer is the Auction Service Center directly managed by the provincial/municipal Justice Service or business organizations specialized in auction service professionally managed by the provincial/municipal Justice Service.

3. The seller of property is the owner of property or the person mandated to sell the property by its owner or the person entitled to sell the property of other person(s) in accordance with the provisions of law;

4. Auction participants can be individuals or organizations;

5. The auction administrator is a person appointed by the auctioneer to handle the auction;

6. The auctioned property may be movable or immovable allowed to be sold and purchased.

Article 3.- Auction principles

The auction of property shall be conducted in accordance with the principles of publicity, honesty and protection of the legitimate rights and interests of the auction participants.

Chapter II

AUCTIONEER

Article 4.- Auctioneer

1. The auctioneer is the Auction Service Center set up by decision of the President of the People�s Committee of the province or city directly under the Central Government and directly managed by the provincial/municipal Justice Service.

The Auction Service Center attached to the provincial/municipal Justice Service is a non-business administrative unit that has its revenues, legal person status, bank account and its own seal.

2. The auctioneer may also be a State enterprise established under the Law on State Enterprises, a limited liability company or stock company established under the Corporate Law which is specialized in auction activities and not involved in any other business and professionally managed by the provincial/municipal Justice Service.

Article 5.- Obligations of the auctioneer

The auctioneer shall have the following obligations:

1. To organize the auction in accordance with the principles and procedures provided for in this Regulation;

2. To announce the auction and put up full and accurate necessary information relating to the auctioned property;

3. To preserve the auctioned property when it is entrusted to him/her as if it is his/her own property;

4. To exhibit, show and consult the dossier of the auctioned property as prescribed by this Regulation;

5. To record all details on the auction in the Property Auction Registration Book and make a document on the auction of property;

6. To deliver the auctioned property to the buyer in accordance with the provisions of Articles 25 and 26 of this Regulation;

7. To fill procedures for the transfer of the ownership right over the auctioned property of which the ownership needs to be registered as prescribed by law;

8. To pay the money gained from the sale of the property to its seller or return the unsold property to its seller according to agreement; if there is no agreement, he/she shall have to pay the money to the seller of the property no later than three days after receiving money from the buyer of the property or return the property within three days at the latest after the auction;

9. To compensate for damage caused by the breach of obligations;

10. To pay taxes in accordance with the provisions of law.

Article 6.- Rights of the auctioneer

The auctioneer shall have the following rights:

1. To request the seller of the property to provide fully and accurately the necessary information relating to the auctioned property and be liable for that information;

2. To determine together with the seller the reserve price of the auctioned property or determine by him/herself in case of a mandate from the seller;

3. To conduct the auction of property on behalf of the seller;

4. To request the buyer to pay in accordance with the provisions of Articles 22 to 24 of this Regulation;

5. To collect the fee paid by the seller in accordance with the provisions of Article 27 of this Regulation.

Chapter III

AUCTION PROCEDURES

Article 7.- Mandate contract on auction of property

1. The auctioneer shall conduct the auction of property only after signing a contract on mandate for the auction with the seller of the property. The mandate contract must be made in writing and include the following contents:

a/ The name and address of the seller;

b/ The name and address of the auctioneer;

c/ The date and place of auction;

d/ The list and description of the auctioned property;

e/ The reserve price of the property;

f/ The time limit and mode of delivering the property;

g/ Fee;

h/ The time limit, place and mode of payment;

i/ Rights and obligations of the parties;

j/ Responsibilities arising from the breach of the contract;

k/ Other agreements.

2. In case of a property auction for the execution of a judgment or other handling decisions of the competent State agencies, the property auction mandate contract shall be signed between these agencies and the auctioneer.

3. In cases where pledged or mortgaged property are auctioned for the fulfillment of civil obligations, the mandate contract on auction of property shall be signed between the auctioneer, the pledgee or mortgagee and the pledgor and mortgagor. If the auction is agreed upon in the pledge or mortgage contract but the pledgor or mortgagor is absent without plausible reasons or refuse to sign the auction contract, a mandate contract on auction shall be signed between the pledgee or the mortgagee and the auctioneer.

4. In the auction of the land use right, a mandate contract on auction shall be signed if the auction is allowed by the competent State agency.

Article 8.- Determination of the reserve price

1. The seller of the property shall determine the reserve price together with the auctioneer.

2. The auctioneer shall determine the reserve price if he/she is so mandated by the property seller and shall have to inform the latter of the auction before making a public announcement thereon.

3. In cases where the auctioned property is pledged or mortgaged property, the pledgee or the mortgagee and the pledgor or the mortgagor shall determine the reserve price with the participation of the auctioneer.

If the pledgee or the mortgagee is the seller of property as stipulated in Item 3, Article 7 of this Regulation, the reserve price shall be determined by the auctioneer with the participation of the property seller.

Article 9.- Assessment of property

The auctioned property may be assessed. The assessment cost shall be borne by the person requesting such assessment unless otherwise agreed upon by parties.

Article 10.- Unilateral termination of the mandate contract on property auction

The property seller and the auctioneer shall unilaterally terminate the performance of the mandate contract on the auction only in cases provided for in Clause 1, Article 593 of the Civil Code before making a public announcement on the auction. The party at fault in terminating the contract shall have to compensate for damage caused to the other party.

Article 11.- Posting the auction notice

1. Seven days before the auction of a movable property and thirty days before the auction of an immovable property, the auctioneer shall have to post the auction notice at the place of auction, place of displaying the property, place of his/her head office and place where the auctioned immovable property is located.

2. The auction notice shall contain the following:

a/ The time and place of auction;

b/ The name and address of the auctioneer;

c/ The name and address of the seller of the property;

d/ The list of properties, their quantity and quality;

e/ The reserve price;

f/ The necessary information relating to the property, including information requested to be announced publicly by the seller;

g/ The place and time of displaying the property;

h/ The place and time of consulting the property dossier.

3. In cases where there are persons registering to purchase the auctioned property as stipulated in Article 14 of this Regulation, the list of the applicants shall have to be posted at the place of auction two days before the auction.

Article 12.- Public announcement

1. In addition to the posting of the auction notice, the auctioneer shall have to announce on the mass media the auction twice for cases prescribed in Item 2 of this Article, at an interval of three days between two announcements. The time limit and contents of the announcement shall comply with the stipulations of Article 11 of this Regulation.

2. The auction of movable and immovable properties with a reserve price of 10 million VND upward must be announced publicly. In cases where the auction property is a movable with a reserve price of less that 10 million VND, and the seller requests a public announcement on the auction, such a public announcement must be made.

Article 13.- Persons not allowed to participate in auction

The following persons are not allowed to participate in an auction of property:

1. A person who is not entitled to buy the auctioned property as prescribed by law;

2. A person who has no civil act capacity or has lost his/her civil act capacity or is restricted in his/her civil act capacity as stipulated in Article 23 to Article 25 of the Civil Code or a person who at the time of the auction, is not conscious of or cannot control his/her act;

3. Persons working in auction organizations; their parents, spouses and children;

4. A person who has directly made the assessment of the auctioned property; his/her parents, spouse and children.

Article 14.- Registering for the purchase of auctioned property

1. A person wishing to participate in an auction of immovable or movable property with a reserve price of 10 million VND upward shall have to register for the purchase at least two days before the opening of the auction and make a deposit equivalent to 1% of the reserve price.

2. In cases where the auctioned property is purchased, the deposit shall be deducted from the buying price; if the property is not purchased, the deposit shall be returned to the depositor right after the auction.

If a person wishing to participate in the auction has already made a deposit but later failed to participate in the auction, the deposit shall be remitted to the State budget.

Article 15.- Displaying, observation of the auctioned property

1. A movable property or its sample with a reserve price of 10 million VND upward must be displayed from the time the notice of auction is put up till two days before the auction at the announced place. The lot of goods and list of properties which the auctioned property belongs to as well as the name of the seller of property must be written clearly on the property or its sample.

2. For an auctioned immovable property, the duration for its display to the auction participants shall commence from the time the notice is put up till two days before the auction at the place where that immovable property is located.

3. For a movable property with a reserve price of less than 10 million VND, within at least two days before the auction, the auctioneer shall have to create conditions for the public to see the auctioned property.

Article 16.- Conducting auction

At the auction, the auction administrator shall perform the following:

1. To introduce him/herself and his/her assistants, if any.

2. To make a rollcall of the bidders who have already registered to participate in the auction.

3. To present each of the auctioned properties, repeat the reserve prices, answer questions of the bidders and ask them to offer bids.

4. To clearly and accurately repeat in speaking every thirty (30) seconds the latest bid which is higher than the one offered by the previous bidder.

5. The auction administrator shall announce the name of the winning bidder only if after repeating thrice the price offered by that person no one offers a higher bid. In cases where many persons offer the same price, the auction administrator shall organize a lot drawing and announce the name of the person who has drawn the right lot, as the winning bidder.

6. The auction administrator shall have to clearly write down the auction results in the Property Auction Registration Book and record them in a property auction document affixed with the signatures of the auction administrator, the buyer and two witnesses among the auction participants. The auction document must be made right at the auction. With regard to the auction of a immovable, the auction document must be notarized by the State Public Notary at the place where the immovable is located.

In cases where the highest bid is lower than the reserve price, the auction shall be considered unsuccessful; the auctioneer and the property seller may reach an agreement on the second or subsequent auctions. The subsequent auction must be conducted in compliance with the procedures stipulated in this Regulation as in the first auction.

Article 17.- Auction document

1. An auction document shall include the following:

a/ The name and address of the auctioneer.

b/ The name and address of the auction administrator.

c/ The name and address of the property seller.

d/ The name and address of the property buyer.

e/ The time and place of auction.

f/ The auctioned property.

g/ The selling price.

h/ The time limit, mode and place of payment of the money for the purchase of the property.

i/ The time limit and place of delivery of the auctioned property to the buyer.

j/ The names and addresses of two witnesses.

2. The auction document shall be made in four copies, each of them shall be kept respectively by the auctioneer, the buyer, the seller and the agency competent to register the ownership right over the property; in cases where the registration of the ownership right over the auctioned property is not required, the auction document shall be made in three copies.

Article 18.- Withdrawing the offered bid

At the auction, if the highest bid offerer withdraws his/her bid, the auction shall be immediately held anew, starting from the previous offered bid. The person who has withdrawn the offered bid shall not be allowed to participate in the auction.

In cases where the auctioned property is sold at a price lower than the withdrawn bid the withdrawer shall have to pay the price difference to the auctioneer; if the property is sold at a higher price, the bid withdrawer shall not be entitled to the price difference.

If the auction fails, the bid withdrawer shall have to bear all costs of the auction and not be eligible for the refund of his/her deposit.

Article 19.- Refusing to purchase

1. After the auction document has been made, if the eligible buyer refuses to buy the property, his/her refusal must be accepted by the seller of the property, but he/she shall have to bear all costs related to the auction, unless otherwise agreed upon.

2. In cases where the eligible buyer has deposited an amount of money but refuses to buy the property, he/she shall not be entitled to the refund of that deposit. Such deposit shall belong to the property seller.

Article 20.- Registering the ownership right

1. The auction document is a document certifying the sale and purchase and serves as basis for the transfer of the ownership right over the auctioned property, which has to be registered in accordance with the provisions of law.

2. Basing itself on the auction document and other invalid papers, the competent State agency shall register the property ownership right for the buyer in accordance with the provisions of law.

The auctioneer shall have to fill procedures for the transfer of the property ownership right to the buyer. All costs of such transfer shall be deducted from the money gained from the sale of the property.

Article 21.- Time limit for the completion of procedures for the transfer of the property ownership right

With regard to the property over which the ownership right has been registered, the time limit for the completion of the procedures for the transfer of the property ownership right shall be fifteen days for a movable and thirty days for an immovable, counting from the date when the auction document is made, unless otherwise agreed upon.

Article 22.- Time limit for the payment of money to purchase the property

The time limit for the payment of the money to purchase the property shall be agreed upon by the auctioneer and the buyer; in case of no agreement, the buyer shall have to pay in full the money to the auctioneer right after receiving the property.

Article 23.- Mode of payment

The auctioneer and the buyer of the property shall have to agree on the payment of the money to purchase the property, which may be made in a package or in installments; in case of no agreement, the buyer shall have to pay the money in full to the auctioneer.

Article 24.- Place of payment of the money to purchase the property

The place of payment of the money to purchase the property shall be agreed upon by the auctioneer and the buyer of the property; in case of no agreement, the place of payment shall be the head office of the auctioneer.

Article 25.- Time limit for delivery of the auctioned property

With regard to a property over which the ownership right must not be registered, the auctioneer shall have to deliver the property to the buyer after the auction document is made and the buyer has already paid for the purchase of that property, unless otherwise agreed upon.

With regard to a property over which the ownership right has been registered, the auctioneer shall have to deliver the property to the buyer after the buyer has already paid for the purchase of that property, unless otherwise agreed upon.

Article 26.- Place of delivery of the auctioned property

The place of delivery of the auctioned property shall be determined as follows:

1. The place where the immovable property is auctioned.

2. The place of the auction of the immovable property, unless otherwise agreed upon by the auctioneer and the property buyer.

Article 27.- Fee

1. The seller of the property shall have to pay the fee for the auction.

2. In cases where the auctioned property is sold, the fee shall be calculated as follows:

a/ If the sold property is valued one million Dong (1,000,000) or less, the fee shall be fifty thousand (50,000) Dong.

b/ If it is from over one million (over 1,000,000) Dong up to one hundred million (100,000,000) Dong, the fee shall be 5% of the value of the sold property.

c/ If it is from over one hundred million (over 100,000,000) Dong up to one billion (1,000,000,000) Dong, the fee shall be 2% of the value of the sold property.

d/ If it is over one billion (over 1,000,000,000) Dong, the fee shall be two million (20,000,000) Dong plus 0.2% of the value of the part of the sold property that exceeds one billion Dong.

3. In cases where the auctioned property cannot be sold, the fee shall represent 50% of the rate provided for in Item 2 of this Article but shall not exceed thirty million (30,000,000) Dong.

Article 28.- Costs

The payment of auction costs shall be agreed upon by the parties; if there is no agreement, the property seller shall bear the cost of transportation of the property to the place already agreed upon, the cost of public announcement if the auctioned property is a movable with a reserve price of ten million Dong or less and the cost of property preservation if such property is not delivered to the auctioneer; and the auctioneer shall bear the cost of preservation of the delivered property, the cost of public announcement of the auction of the property which is an immovable or movable with a reserve price of more than ten million Dong and the cost of organizing the auction and other related costs .

Article 29.- Risk bearing

The seller of property shall bear all risks occurring to the auctioned property over which the ownership right must not be registered till such property is delivered to the buyer and the buyer shall bear all risks occurring to the property from the time of receiving such property.

With regard to a property over which the ownership right must be registered as prescribed by law, the seller shall bear all risks till the completion of the registration procedures for the buyer, and the buyer shall bear all risks from the time the registration procedures are completed, even if he/she has not received the property yet.

Article 30.- Responsibilities for the value and quality of the auctioned property

1. The seller of property and the auctioneer shall not take responsibility for the value and quality of the auctioned property, except in cases where they fail to provide all necessary information related to the auctioned property for participants in the auction.

2. Within three days from the date of the purchase of the property, the buyer shall be entitled to return the property to the auctioneer and request compensation for any damage if the quality of the auctioned property is not true to that already announced.

Article 31.- Settlement of complaints and disputes

All complaints and disputes related to the auction of property shall be settled in accordance with the provisions of law.

On behalf of the Government

For the Prime Minister

Deputy Prime Minister