(Practice Note – Legal Framework Update 2026)
Category: Practical Legal Note – Specialized Legal Services Practice Area: Banking & Finance Disputes, Secured Transactions Service Positioning: Lawyers Protecting Borrowers and Security Providers Prepared by: HT Legal VN Law Firm – Ho Chi Minh City, Vietnam
Purpose of this Checklist
This legal checklist is prepared to assist borrowers and security providers in:
- Assessing whether a bank is legally entitled to take possession of secured assets;
- Distinguishing lawful enforcement from enforcement actions that may present legal risks;
- Preparing appropriate legal responses in order to mitigate risks and protect asset value.
This checklist is developed in accordance with Article 198a of the Law on Credit Institutions as amended in 2025, the Civil Code of Vietnam and prevailing dispute resolution practice.
CHECKLIST 1 – HAS THE RIGHT TO ENFORCE THE SECURED ASSETS ARISEN?
☐ Has the secured obligation fallen due and remained unpaid, or been improperly performed?
☐ Is there an agreement or statutory basis allowing early enforcement under Article 299 of the Civil Code of Vietnam?
➡ If none of the circumstances set out in Article 299 have occurred, the bank does not yet have the right to enforce, and therefore has no legal basis to take possession of the secured assets.
CHECKLIST 2 – DOES THE SECURITY AGREEMENT EXPRESSLY ALLOW POSSESSION?
☐ Does the mortgage/pledge agreement contain a clear and explicit clause allowing the bank to take possession of the secured assets?
☐ Was such clause agreed voluntarily and transparently, rather than embedded in obscure appendices or inaccessible standard forms?
➡ In the absence of a clear agreement, or where the agreement lacks clarity, the bank does not satisfy the statutory conditions for possession under Article 198a.
CHECKLIST 3 – HAS THE SECURITY INTEREST TAKEN EFFECT AGAINST THIRD PARTIES?
☐ Has the security interest been properly registered in accordance with applicable law?
☐ Was such registration completed prior to the occurrence of disputes or enforcement actions?
➡ If the security interest has not taken effect against third parties, the bank’s right to possession is not legally protected.
CHECKLIST 4 – IS THE SECURED ASSET SUBJECT TO DISPUTES OR PROHIBITIVE MEASURES?
☐ Is the secured asset subject to a pending court case?
☐ Is the asset subject to interim injunctive or provisional measures ordered by a court?
☐ Has the asset been seized, frozen or secured for judgment enforcement?
☐ Is enforcement suspended under insolvency or bankruptcy proceedings?
➡ If any of the above circumstances exist, the bank is not legally permitted to take possession of the secured asset.
CHECKLIST 5 – HAVE STATUTORY DISCLOSURE OBLIGATIONS BEEN COMPLIED WITH?
For secured assets being immovable property
☐ Has notice of possession been issued at least 15 days in advance?
☐ Does the notice specify time, location, secured asset and reasons for possession?
☐ Have all statutory disclosure methods been implemented concurrently, including:
- ☐ Publication on the bank’s official website;
- ☐ Written notice to the local People’s Committee and local police authority;
- ☐ Public posting at the relevant People’s Committee offices;
- ☐ Notification to the security provider or asset holder in accordance with the agreed method?
For secured assets being movable property
☐ Has required public disclosure been made prior to possession in accordance with law?
➡ Any omission or procedural defect may render the possession legally vulnerable.
CHECKLIST 6 – IS THE INVOLVEMENT OF LOCAL AUTHORITIES WITHIN LAWFUL LIMITS?
☐ Are local authorities involved solely for maintaining public order and safety?
☐ Is a written record made where the security provider is absent or uncooperative?
☐ Is there no administrative or coercive intervention exceeding a civil law relationship?
➡ The presence of local authorities does not create possession rights, nor does it legitimize enforcement conducted in breach of legal procedures.
CHECKLIST 7 – ARE LEGAL LIMITATIONS DURING POSSESSION RESPECTED?
☐ Are there no acts of intimidation, coercion or violation of dignity?
☐ Is there no unlawful intrusion into residence or private life?
☐ Has the bank issued an internal procedure on possession in accordance with Article 198a?
➡ Any act violating statutory prohibitions or social ethics is not protected by law. Affected parties may exercise their rights to complaint or denunciation where legally justified.
PRACTICAL OBSERVATIONS FROM HT LEGAL VN
In practice, many enforcement cases do not involve comprehensive violations, but rather breaches of one or several critical statutory conditions, which may nonetheless lead to prolonged disputes and significant losses for borrowers and security providers.
The lawful exercise of borrowers’ and security providers’ rights is not intended to delay obligations or encourage non-cooperation, but rather to ensure balance, transparency and legality in civil and credit relationships.
Early legal review using this checklist, together with timely legal representation, helps to:
- Accurately assess the legal situation;
- Avoid emotional or unnecessary confrontation;
- Maximize protection of asset value and lawful interests.
CONCLUSION
Banks are only entitled to take possession of secured assets when all statutory conditions are fully satisfied, procedures are properly followed and legal limits are respected.
The taking of possession is a special civil law measure that must be exercised with caution, transparency and strict adherence to legal boundaries in order to avoid unnecessary disputes and to uphold the rule of law.
Borrowers and security providers are fully entitled to review, supervise and request legal protection where there are indications of unlawful possession.
