Land Use Rights For Foreign Investors In China

What the Law SaysIn China, neither domestic companies nor Foreign Rosetta Stone V3 Invested Enterprises may own land outright; instead they own Land Use Rights. There are two kinds of Land Use Rights Allocated and Granted. In comparison with Western common law concepts, Allocated Land Use Rights are in some way similar to leaseholds, and Granted Land Use Rights are in some ways similar to life estates.Allocated Land Use Rights are generally provided by the government for an indefinite period (usually to state-owned entities) and cannot be pledged, mortgaged, leased, or transferred by the user. Furthermore, Allocated land can be reclaimed by the government at any time.Granted Land Use Rights are provided by the government in exchange for a grant fee, and carry the rights to pledge, mortgage, lease, and transfer within the term of the grant. Land is granted for a fixed term generally 70 years for residential use, 50 years for industrial use, and 40 years for commercial and other use. The term is renewable in theory (although no foreign investor has been in China long enough to find out how this works in practice). Unlike the usual case in Rosetta Stone French Western nations, Granted land must be used for the specific purpose for which it was granted.Allocated Land Use Rights may be converted into Granted Land Use Rights upon the payment of a grant fee to the government. Even Granted Land Use Rights are subject to expropriation by the government under unusual circumstances (in exchange for fair compensation similar to the eminent domain power in the US). This state of affairs tends to work in favor of the foreign investor land granted to Foreign Invested Enterprises is seldom expropriated, but agricultural land is often expropriated in order to make room for foreign invested projects.How the Law Applies to Foreign Invested EnterprisesMost foreign invested Joint Ventures obtain Land Use Rights from the Chinese party. A common problem is that the Chinese party holds only Allocated Land Use Rights for the land it occupies (be looking for this if the Chinese party is a state-owned entity). In this case, the authority to transfer the Land Use Rights is vested in the local Land Administration Bureau, and the Rosetta Stone Portuguese Chinese party will not have the right to transfer it to the Joint Venture.