May an enterprise that was allocated land for business and production with annual payment in Vietnam lease it out to build a warehouse?
According to the provisions at Point e Clause 1 Article 175 of the Land Law 2013, the rights and obligations of economic organizations and public non-business organizations using leased land with annual rental payment in Vietnam are regulated as follows:
To sublease land use rights with annual rental payment for the land with completely constructed infrastructure in case they are permitted to invest in the construction and commercial operation of infrastructure in industrial parks, industrial clusters, export processing zones, hi-tech zones or economic zones.
Under Clause 3 Article 12 of the Land Law 2013, the following acts are strictly prohibited:
Failing to use land, or using land for improper purposes.
The Company's intention to lease the land to build a warehouse does not conform with the initial purpose of the land when allocated to the enterprise. Therefore, the use of this homestead land is not in line with its intended purpose.
Clause 1 Article 19 Decree 91/2019/ND-CP stipulates:
Transfer, lease, sublet and mortgage of land prohibited from being transferred, leased and mortgaged according to Land Law
1. Transfer and mortgage of land allocated or recognized for land use rights by government in form of land allocation without collection of land levy (except for agricultural land of households and individuals), land leased by government for annual rent, land leased or recognized for land use rights by government in form of land allocation with land levy or land leased with lump-sum payment without completing financial obligations or making payment originating from state budget shall be sanctioned as follows:
a) A fine ranging from VND 1,000,000 to VND 2,000,000 shall be imposed if area of land of violation is less than 0.05 hectare;
b) A fine ranging from VND 2,000,000 to VND 5,000,000 shall be imposed if area of land of violation is from 0.05 hectare to less than 0.1 hectare;
c) A fine ranging from VND 5,000,000 to VND 10,000,000 shall be imposed if area of land of violation is from 0.1 hectare to less than 0.5 hectare;
d) A fine ranging from VND 10,000,000 to VND 20,000,000 shall be imposed if area of land of violation is from 0.5 hectare to less than 01 hectare;
dd) A fine ranging from VND 20,000,000 to VND 50,000,000 shall be imposed if area of land of violation is 01 hectare or more.
Remedial measures:
- Enforce parties receiving the transfer of land use rights or leasing land specified in Clauses 1, 2, 3, 4 and 5 of this Article to return land to land owners prior to the land transfer or lease. In case of trading or gifting land use rights, the government shall revoke the land as specified in Point d Clause 1 Article 64 of Land Law;
- Enforced termination of contracts for mortgage in form of land use rights with respect to cases specified in Clause 1 of this Article.
Under Article 64 of the Land Law 2013, the land expropriation due to violations of land law in Vietnam is specified as follows:
1. Cases of land expropriation due to violations of the land law include:
a/ Land is not used for the purposes for which land has been allocated, leased, or land use rights have been recognized by the State and the land users, after having been sanctioned administratively for using land for improper purposes, still continue committing the violation;
...
Thus, for the act of illegal land lease:
- First case: If this violation is the first instance, you will only be subject to administrative penalties and will not have the land recovered for improper land use.
- Second case: If you have previously been penalized by the competent authorities for this act, the State authorities have the right to decide on the recovery of the land area you have improperly used according to regulations.
Sincerely!
