Decree 21/2021/ND-CP guiding the implementation of the Civil Code on securing the performance of obligations

On March 19th, 2021, the government promulgated Decree no. 21/2021/ND-CP guiding the implementation of the Civil Code on securing the performance of obligations. This Decree has been effective from the date of 15th May 2021, replacing Decree no. 163/2006/ND-CP on security transactions, and Decree no. 11/2012/ND-CP amending the Decree no. 163/2006/ND-CP.

Civil Code of 2015 was issued and took effect from January 01st, 2017. Accordingly, it stipulated some new provisions of the security transactions which had not been guided by a Circular; however, at the same time, Decree no. 163/2006/ND-CP and Decree no. 11/2012/ND-CP have been still applied. So it caused many difficulties and disadvantages for relevant parties. Therefore, Decree no. 21/2021/ND-CP was promulgated in order to resolve these difficulties and create a sufficient and favorable legal corridor of security transactions.

Some of the main new points of the Decree 11/2012/ND-CP as follows:

The Decree has provided clear explanations for some notions compared to the previous decree, such as: “assets attached to land”, “guarantee contract”, “certificate”, “reasonable term”, etc.

Regarding the scope of regulation and subjects of application and agreement on securing the performance of obligations, since Decree 21 has guided the implementation of the Civil Code on security transactions, this Decree has been only applied for civil relations. Accordingly, Decree 21 gives priority to the application of specific relevant regulations (if any) provided under other laws, such as the laws on land, residential housing, investment, enterprises, securities, insurance, banking, natural resources, fisheries, forestry, aviation, maritime affairs, intellectual property, science and technology, and bankruptcy. If an agreement contains a provision on security for the performance of an obligation but the parties have not specified or have incorrectly identified the name of the security measure and such provision is consistent with the security measures prescribed in the Civil Code, the provisions on security measures applicable to the equivalent provision in the agreement will apply.

Decree 21 devotes an entire chapter to regulations on security assets (collateral) which includes descriptions of security assets, land use rights, assets attached to the land, assets created from surface rights, usufruct rights, property rights arising from contracts, etc. which were previously scattered in Circulars. Some new collaterals are stipulated in Decree no. 21/2021/ND-CP, for example, assets created from surface rights, usufruct rights, an investment project, assets belonging to an investment project. Moreover, the investor may use the entire investment project, which is not prohibited by law from being transferred, a property right in terms of exploitation, management of investment project to ensure the performance of obligations; or in the case of investing in a mortgaged property that causes the value of these properties to increase, the additional investment value belongs to these mortgaged properties.

Regarding the regulation of establishing and performing security contract, security measures by common property of husband and wife (Article 27). The new point of Decree  21 is that in the case of husband and wife reach an agreement on using a common property by him/her to contribute capital to an economic organization, that he/she may establish and perform a security contract or security measures related to the common property by himself or herself. Although there is no agreement between the husband and wife on the use of the common property to contribute capital, either party establishes and performs a security contract security measures related to common property that shall be construed as having reached an agreement between them if the other party knows without objection.

Since there is the abovementioned agreement, when an event of divorce occurs, the person establishing the security contract or security measure is allowed to continue to perform such security contract or security measure, unless otherwise decided by the jurisdiction.

In terms of the institution of collateral handling, unlike the previous Decree, Decree no. 21/2021/ND-CP uses the phrase “to handle collateral” instead of “to realize mortgaged, pledged assets” showing that the provisions of this institution shall be applied for all securities, not only for pledge and mortgage as the previous Decree.

Another point is that in Decree 21, in place of providing separate regulation on the cases are required to register secured transactions, this Decree only prescribes an article about antagonistic effect against third parties, and the registration of secured transactions shall be prescribed by the Civil Code and other related laws or registration by reaching an agreement or by requesting of the secured party.

This table below gives the detailed list of new contents of Decree no. 21/2021/ND-CP

Contents Decree no. 21/2021/ND-CP Decree no. 163/2006/ND-CP amended and supplemented by Decree no. 11/2012/ND-CP
  To supplement provisions on the application of law and agreement on the security for performance of obligations – Article 4  
  To supplement provisions on the security for performance of the obligation by many securities, many assets – Article 5  
  To supplement provisions on The right of reclaiming the collateral – Article 7  




Assets used to secure the performance of obligations

1. Existing assets or assets to be formed in the future…

2. Property sold in a sale and purchase contract of property with title retention;

3. The property subject to the obligations in the bilateral contract is breached with respect to the lien on property;

4. Property under the whole ownership, if so provided for by relevant laws.

Collateral is an existing asset or an asset formed in the future…

Assets formed in the future include…



Assets used to fulfill obligations

To supplement specific provisions on:

Article 10: Land use right and assets attached to land

Article 11: Property is created from surface rights, usufruct rights

Article 12: Objects with auxiliary objects, integrated objects, distinctive objects …

No prescribed
  To supplement regulations on investment in collateral, variable collateral – Article 20, Article 21  


Effect of the security contract: to supplement provisions for the case where the collateral  is withdrawn as agreed – Article 22

To supplement provisions on antagonistic effect against third parties


Article 10: Validity of secured transactions


Secured by assets formed in the future



Handling collateral as assets to be formed in the future

“…from the time when this part or all of this collateral is formed”, Clause 1, Article 24

Antagonistic effect against third parties – Clause 2, Article 24


No prescribed



“…the secured party may transfer the contract for the sale of assets, other contracts on establishing the rights to the property to be formed in the future, and receive the collateral itself as a substitute for the performance of the secured obligation or sell assets formed in the future in accordance with the law” – Article 55  

“…the secured party still has the right to handle the property when it is due.”

  To supplement provisions on Security for the performance of obligations in the future – Article 25  
  To supplement provisions on Security by land-use rights, properties attached to the land, properties created from surface rights, usufruct rights – Article 26  
  To supplement regulations on establishment and performance of security contracts, security measures with the common property of husband and wife – Article 27  
The relationship between the secured transaction and the contract with the secured obligation -The security contract void or canceled, unilaterally terminated does not terminate the contract with the secured obligation. The invalidation of the secured transaction shall not terminate the contract with the secured obligation unless otherwise agreed.
  – “The contract with secured obligations is void or canceled, unilaterally terminated…”


b) “…The secured party has the right to realize the collateral to pay the obligor’s repayment obligation towards him.”

-“The contract with guaranteed obligations is void…”

“…unless otherwise agreed by parties …”

  To supplement provisions on Realizing partially invalid secured contracts – Article 30  

In case the pledged property is an object in danger of losing its value or depreciating in value

“…the pledgor hands over the pledged property to the pledgee or a third person to keep” “…the pledgee directly holds the property or authorizes a third person to keep the property”
“…must give notice… within a reasonable time” “…notice… within a certain period of time

Sale, replacement, exchange, or donation of pledged property – Article 32

Sale, exchange, donation, lease, lending, or pledge of property to secure the performance of other obligations – Article 18






Mortgage property

Not specifying the case where the mortgagor sells, exchanges, or donates the mortgaged property; Collateral is being held  


A mortgage with the right to claim debt, receivables, other rights to request payment – Article 33 Mortgage of the right to claim debt – Article 22
Mortgage of the property being leased or lent (Article 34):

“…the collateral being leased or lent shall be realized according to the case specified in Article 299 of the Civil Code, which fails to terminate the lease or borrowing contract; the lessee and the borrower may continue to lease or borrow until the contract term expires.”

Mortgage of the property being leased (Article 24):

“…if such property is realized to perform any obligation, the lessee may continue to lease it until the lease term expires in accordance with the lease contract unless otherwise agreed by the parties.”

  To supplement regulations on mortgage-related to properties being leased or lent  
  To supplement regulations on accepting mortgages of individuals or economic organizations other than credit institutions for land use rights and land-attached assets of households and individuals using land  
  To supplement provisions on the settlement of the case where the property is the subject of an invalid civil transaction used as collateral  
Obligations of depositors and party putting up collateral – Regulations on additional rights and obligations

– Explaining: “reasonable cost”

Escrow deposit “The amount of money used as escrow deposit … at a credit institution as agreed” -“Escrow assets as prescribed in Clause 1, Article 360 of the Civil Code… at commercial banks”





Escrow depositor’s rights

–    Rights of the credit institution where the escrow deposit is made


-“ Request the credit institution where the escrow deposit is made to return the deposit as prescribed at Point d, Clause 1 of this Article; interest is paid in case there is an agreement with the credit institution where the deposit is made”


-To supplement regulations on the rights and obligations of the parties holding rights in escrow

– Rights of the bank where the escrow deposit is made


-“The escrow depositor has the right to request the bank where the escrow deposit is made to return the escrow property after deducting the cost of banking services and the amount paid at the request of the parties holding rights…”

  To supplement provisions on Reserving of Ownership  



-“…The guarantor has the right to refuse to perform the obligation in case the grounds notified by the guarantor are not within the scope of the guarantee commitment.”

– To supplement regulations on notification obligation of the guarantor when the guarantor has fulfilled the guarantee obligation – Clause 4, Article 44

Fidelity guarantees


Obligations of the Borrower

Guarantee in form of fidelity:“…organization in communes, wards, townships…unless otherwise provided for in the charter of this organization.”

-“Use loan capital for production, business, living needs or consumption in accordance with the loan purpose”

– “To use the loan for the right purpose as committed”
  Separate provisions on a lien on the property  
Realizing collateral

Notice of realizing collateral




Rights and obligations of the secured party while the security property has not been realized





Get back the collateral

– General rules

– To settle cases where the guarantor or the secured obligor being an individual dies or is declared dead by a court decision.

Regulations on the content of notices, notification methods, and notice duration – Article 51





No clearly prescribed


Detailed regulations on delivery of security assets, realizing of pledged and mortgaged properties; realizing security assets which are synchronous objects, assets with attached assets, debt collection rights, receivables…  




-“The secured party is responsible for preserving the security property in case the security property is kept for realizing.” – Clause 1, Article 53  

No prescribed

To supplement regulations on Realizing collateral assets that are formed in the future; Invested collateral  


Regulations on cases in which security assets can be returned No prescribed
To supplement regulations on Buying, receiving the transfer, receiving other transfer of ownership of security assets; Receive the collateral itself to replace the performance of the secured obligation