In the case where the savings deposit constitutes joint marital property, if the husband or wife whose name is on the savings book pledges it to secure a bank loan without the other spouse’s knowledge, the question arises as to whether such a pledge contract is legally valid.
In today’s economy, credit transactions through banks are increasingly common, and using a savings book as collateral for loans is a popular and secure practice. However, when the savings book is jointly owned by a married couple, one spouse pledging the book for a loan without the consent of the other raises important legal issues. The question is: Does a pledge of a savings book under these circumstances have legal effect? This article analyzes the relevant legal basis, including the right of disposition of the savings book holder under the Law on Credit Institutions, the right to dispose of joint marital property under the Law on Marriage and Family, and regulations on transactions with third parties, in order to draw clear legal conclusions.
1. Rights of the Savings Book Holder under Banking Law
According to Section 3, Article 6 of Decision No. 1160/2004/QĐ-NHNN dated July 14, 2004, of the State Bank of Vietnam regarding the issuance and management of savings books: “The owner of a savings deposit is the person whose name appears on the savings book.”
This means that the person whose name appears on the savings book is the legal owner of the deposited funds. This person has the right to:
- Withdraw money from the savings book;
- Transfer or authorize others to manage the funds;
- Use the savings book as collateral for bank loans.
Thus, in principle, the right of disposition of the savings book holder is absolute, except in cases where the law imposes limitations, such as when the asset constitutes joint marital property or involves a third party who is not acting in good faith.
2. Right of Disposition of Joint Marital Property
Where the savings deposit constitutes joint marital property, the 2014 Law on Marriage and Family clearly stipulates the rights of spouses in transactions with third parties. Specifically, Clause 1, Article 32 of the 2014 Law on Marriage and Family provides:
“In transactions with bona fide third parties, the spouse whose name appears on the bank account or securities account shall be considered to have the right to establish and execute transactions related to that asset.”
Accordingly:
- The spouse whose name is on the savings book has the right to represent and establish transactions related to the savings book with bona fide third parties;
- A third party (bank or credit institution) is considered to be acting in good faith if they do not know and have no reason to know of any agreement restricting the other spouse’s right of disposition;
- Therefore, if a spouse whose name is on the savings book pledges it, the pledge contract will be legally valid, except in cases where the recipient of the pledge is not a bona fide third party.
3. Non-Bona Fide Third Parties – Limitations on the Right of Disposition
The right of disposition is not absolute in cases where the third party is not bona fide. Article 8 of Decree No. 126/2014/NĐ-CP dated December 31, 2014, providing detailed guidance on certain provisions and enforcement of the Law on Marriage and Family, states:
“A third party who establishes or executes a transaction with a spouse relating to a bank account, securities account, or other movable property, which under law does not require registration of ownership, shall be considered not bona fide in the following cases:
- The third party was provided with information by the spouse under Article 16 of this Decree but still establishes or executes a transaction contrary to that information;
- The spouses have publicly agreed under the law on the possession, use, and disposition of property, and the third party knows or should know of such an agreement but still establishes or executes a transaction contrary to the spouses’ agreement.”
Thus, if the bank knows or should know that there is an agreement limiting the disposition of joint marital property but still accepts the pledge, the pledge contract will not be considered a bona fide transaction and may be invalid under the law.
4. Practical Analysis
In practice:
- If a spouse whose name is on the savings book pledges the book, the bank must verify whether the transaction is bona fide.
- If the bank acts in good faith, the pledge contract is legal and valid.
- If the bank knows or has indications that the savings book is joint property and there is an agreement restricting the right of disposition, the contract risks being declared invalid.
This approach protects both the rights of the savings book holder and the other spouse, while ensuring transparency in credit transactions.
5. Conclusion
Based on the above legal provisions, the following conclusions can be drawn:
- The person whose name appears on the savings book is the legal owner and has the right to dispose of the funds, including the right to pledge them at a bank.
- In marital relations, a spouse acting with bona fide third parties is recognized by law, and the contract is valid.
- In cases where the third party is not bona fide—for example, knowing about an agreement limiting the disposition of joint marital property but still entering into the transaction—the pledge contract is not valid and may be void.
Therefore, Vietnamese law protects both the right of the savings book holder and the rights of the other spouse, while ensuring the safety of transactions with third parties. Understanding these provisions is essential for banks, credit institutions, and married couples engaging in financial transactions.
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Khuong Ngoc Lan