Transferring Land-Use Rights In Industrial Parks

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Transferring Land-Use Rights In Industrial Parks

Along with the investment increase into industrial parks, the transfer of land use rights in industrial parks and relevant legal issues are more and more interested. However, unlike other real estates, when transferring land-use rights in industrial parks, enterprises need to pay attention to the following issues:

1. Are your land use rights in industrial parks allowed to be transferred?

The statutory provisions on real estate permit enterprises who lease land in industrial parks to conduct the transaction of transferring land-use rights in the industrial park in the following case:

  • Point a, Clause 3, Article 149 and Point a, Clause 2, Article 174 of the 2013 Land Law (“the Land Law”) regulated that in case of subleasing land in industrial parks from the company investing and trading infrastructures of industrial parks in the form of subleasing land with one-off rental payment for the entire lease period, enterprises shall have the right to transfer land use rights and land-attached assets under their ownership.
  • Point a Clause 2, Article 185 of the Land Law also stipulates that foreign-invested enterprises subleasing land with one-off rental payment for the entire lease period shall have the rights and obligations stated in Article 174 of the Land Law, including the right to transfer land use rights and land-attached assets under their ownership.

Therefore, among the forms of land lease in industrial parks under Clause 3 Article 149 of the Land Law (including subleasing land with one-off rental payment for the entire lease period and subleasing land with annual rental payment), only organizations/individuals who sublease land with one-off rental payment for the entire lease period have the right to transfer the leased land use right.

2. Does the transferee have the right to lease land in the industrial park?

According to the provisions of Clause 3 Article 149 of the Land Law, subjects who are entitled to sublease land from the company investing and trading infrastructures of industrial parks include:

  • Economic organizations (being defined to include enterprises, cooperatives and other economic organizations as prescribed by civil law, excepting foreign-invested enterprises);
  • Households, individuals, Vietnamese residing abroad;
  • Foreign-invested enterprises.

The regulation on land users in Article 5 of the Land Law details the subjects allowed to allocate land, lease land by the State, recognize the land use rights, and receive the transfer of land use rights nut not refer to foreign individuals and organizations. In other words, Vietnam’s land law does not allow foreign individuals and organizations to lease land in industrial parks directly. So, when transferring land-use rights in industrial parks, enterprises also need to pay attention that the transferee must be eligible to sublease land in the industrial park as mentioned above.

3. Conditions for the transfer of land use rights under the land sublease contract with the unit that invests in the construction and commercial operation of infrastructure

As mentioned above, in the case of leasing land with one-off rental payment for the entire lease period, enterprises will have the right to transfer land use rights; this is a legal right and cannot be inhibited. However, in some cases, the land sublease contract between the enterprise and the company investing and trading infrastructures of industrial parks stipulate some procedures require enterprises must perform before carrying out the transfer, such as informing the transfer in writing before performing, liquidating of the old land lease contract, etc. Therefore, enterprises should pay attention to double-check the land sublease contract for restrictions or procedures that need to be executed before officially performing the transfer.

In addition, the law related to the transfer of land use rights does not have separate regulations on the procedures to transfer ownership, benefits and utilities associated with the land in the industrial park from the old enterprise to the new one. Depending on each case, the company investing and trading infrastructures of industrial parks will provide a different procedure guideline for transferring rights. Therefore, enterprises should pay attention and work with the infrastructure development unit for guidance on appropriate transfer procedures to avoid cases that after the legal transfer, the infrastructure development unit does not agree to transfer the lease contract or the facilities in industrial parks to the transferee.

The above issues are just general notes; depending on the specific transfer case, the transferors and transferees will have to check problems related to real estate more carefully and thoroughly. Making a list of to-do works and issues to pay attention to before conducting a real estate transfer or any transaction will help enterprises restrict most mistakes and risks before implementing.