Pledging Land: Is It Legal?

Land Law 2013 stipulates the general rights of land users as follows,

Article 105: General Rights of Land Users

- Land users have the following general rights:- To be issued a certificate of land use rights;- To enjoy the results of labor and investments on the land;- To enjoy benefits from the State's projects on the protection and improvement of agricultural land;- To be guided and assisted by the State in the improvement and fertilization of agricultural land;- To be protected by the State when others infringe upon their lawful land use rights;- To lodge complaints, denunciations, or file lawsuits against acts infringing upon their lawful land use rights and other acts violating land law.

Article 106: Regulations on the rights to exchange, transfer, lease, sublease, inherit, donate land use rights; mortgage, guarantee, contribute capital with land use rights; and be compensated when the State recovers land (the exercise of these rights must comply with the provisions of the Land Law and other relevant laws).

In comparison to the Land Law 2013 (amended and supplemented) effective from July 01, 2014, the two groups of rights prescribed for land users have also changed. Specifically, the group of general rights is specified in Article 166, according to which land users have 7 rights; the group of specific rights is specified in Article 167, whereby land users have 8 rights, specifically regulated as follows:

Article 166: General Rights of Land Users

- To be issued a Certificate of land use rights, ownership of houses, and other assets attached to the land.- To enjoy the results of labor and investments on the land.- To enjoy benefits from State projects serving the protection and improvement of agricultural land.- To be guided and assisted by the State in the improvement and fertilization of agricultural land.- To be protected by the State when others infringe their lawful land rights and interests.- To be compensated when the State recovers land in accordance with this Law.- To lodge complaints, denunciations, or file lawsuits against acts infringing upon their lawful land use rights and other acts violating land law.

Compared to the Land Law 2003, the Land Law 2013 provides one additional general right for land users, which is the right "To be compensated when the State recovers land in accordance with this Law."

Article 167: Regulations on the rights to exchange, transfer, lease, sublease, inherit, donate, mortgage, and contribute capital with land use rights (the exercise of these rights must comply with the provisions of the Land Law and other relevant laws).

Compared to the Land Law 2003, the Land Law 2013 prescribes fewer specific rights for land users by 2 rights. Specifically, one right has been rearranged from the "To be compensated when the State recovers land" from the group of specific rights to the group of general rights. Additionally, the right of “Guarantee” has been removed from the specific rights in the 2013 Land Law compared to the 2003 Land Law, meaning that the guarantee right stipulated in the 2003 Land Law is not included in the 2013 Land Law.

It can be seen, both the Land Law 2003 and the Land Law 2013 do not have any provisions allowing land users the right to "pledge land use rights". Land, in legal documents, is always a special subject that requires particular adjustments because, unlike ordinary assets, the Constitution 2013 and Land Law 2013 stipulate the principle that "Land is the property of the entire people, represented by the State for unified management."

Thus, most documents, contracts, and transactions related to land must seek "permission" or be notarized. Generally, the principle of "permitted to do what the law does not prohibit" is difficult to apply to assets as land use rights. Therefore, civil transactions related to pledging land or land use right certificates, when brought to administrative agencies, will not be recognized and can be declared void for violating legal prohibitions when there is a dispute.

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