There is inconsistency between the Land Law 2013 and the Law on Real Estate 2014 regarding the ability of a local real estate company, who sub-leases land from an industrial zone developer (IZ Developer), to sell building or other construction works built on such land. In particular,
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According to Article 149.3 of the Land Law 2013, a local real estate company, who sub-leases land from an IZ Developer to conduct business in an industrial park is entitled to, among others, transfer building or construction works attached to such land to others; and
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However, under Article 11.1 of the Law on Real Estate Business 2014, the scope of real estate business of a local enterprise does not include the scenario where the real estate company sub-leases land from an IZ Developer. The most relevant scenario is the scenario where a real estate company leases from another organisation for leasing business. But that scenario does not include sale of building and construction works.
The above inconsistency seems to be a drafting mistake under the Law on Real Estate Business 2014. This is because:
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It is unreasonable to restrict a local real estate enterprise sub-leasing land from an IZ Developer from selling building or construction works built on land in an industrial zone while foreign invested enterprises (FIEs) are entitled to do so; and
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By analogy, under Article 149.3 of the Land Law 2013, a local enterprise sub-leasing land from an IZ Developer to conduct real estate business should have the same rights as those leasing land from the State to conduct real estate business. These rights include the right to build constructions for sale, lease or sub-lease in accordance with Article 11.1(d) of the Law on Real Estate 2014.
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Hong Bang Law Firm.
