The Land Law 2024, in effect from January 1, 2025, has introduced many regulations regarding the use and ownership of real estate in Vietnam, of which the most notable are the rights that a foreign individual or organization is allowed to exercise over real estate in Vietnam. We notice that foreign investment activities in Vietnam in recent years have been quite exciting, foreign enterprises, after conducting business in Vietnam, also realize that having the right to legally use real estate in Vietnam will greatly support their business activities. Therefore, we want to summarize all the legal issues related to the real estate use rights of foreign organizations in Vietnam through this article, with the hope that foreign enterprises will have the most comprehensive assessment of the rights that enterprises may be allowed to exercise over real estate in Vietnam.

1. When does a foreign-invested economic organization receive land use rights?

Economic organizations with foreign investment capital are enterprises that carry out investment procedures for foreign investors in accordance with the provisions of the Law on Investment. According to the provisions of the Land Law 2024, foreign-invested enterprises will be granted land use rights in Vietnam in the following cases:

• Receive the transfer of land use rights in industrial parks, industrial clusters, and high-tech parks;
• Receive the transfer of investment capital whose value is land use rights in accordance with Government regulations;
• Receive a capital contribution that is land use rights;
• The State allocates land to carry out investment projects aimed at building housing for sale or both sale and rent;
• Foreign-invested enterprises are entitled to receive land use rights according to the results of successful conciliation of land disputes recognized by the competent People’s Committee; agreement in the mortgage contract to reclaim debt; decisions of competent state authorities on land dispute resolution, complaints and denunciations about land, court judgments, and judgment enforcement decisions from the judgment enforcement agencies that have been executed; the award of Vietnam Commercial Arbitration; Documents recognizing the results of the land use rights auction in accordance with the law; Documents on division and separation of land use rights in accordance with the law for groups of land users who share the same land use rights.

2. Rights of foreign-invested enterprises when using land to implement investment projects in Vietnam

Depending on the form of land use of the enterprise, the rights of each enterprise will have certain differences, specifically:

If a foreign-invested enterprise is using land in the form of a land lease with an annual land rent, that enterprise will be allowed to:

• Mortgage its Land-Attached Assets at licensed credit institutions that operate in Vietnam;
• Contribute capital with its  Land-Attached assets during the land lease term;
• Lease its assets attached to land and lease rights in the land lease contract;
• Subleasing the land use rights in the form of annual land rental payments. applied to land that has completed infrastructure construction in cases where the investment in construction and business of infrastructure is allowed for industrial park land, industrial clusters, and high-tech parks. The sublessee of land use rights must use the land for the right purpose and fulfill their financial obligations according to regulations.

Foreign-invested enterprises that are using land in the form of a land lease with a one-time land rental payment for the entire lease period or land allocation with a land use levy are allowed to carry out the following activities:

• Transfer its land use rights and land-attached assets during the term of land use;
• Lease or sublease the land use rights and Land-Attached Assets within the term of land use;
• Mortgage its land use rights and assets attached to land at licensed credit institutions operating in Vietnam;
• Contribute capital with its land use rights and land-attached Assets.

3. Rights of foreign-invested enterprises to use land in industrial parks, industrial clusters, and high-tech parks

Currently, most enterprises involved in manufacturing activities are required to operate in industrial parks to ensure environmental protection requirements. Depending on each industrial park, foreign-invested enterprises will rent land, sublease land, or rent infrastructure in the industrial park to perform business activities.

In case an enterprise with foreign investment capital makes a one-time land rental payment or a one-time land sublease payment for the entire sublease period, it has the following rights:

• Transfer its land use rights and land-attached assets;
• Lease its land use rights and assets attached to land in cases where land is allocated by the State with the collection of land use fees; sublease its land use rights and assets attached to land in cases where the State leases land and collects a one-time rental fee for the entire lease term;
• Donating land use rights to the State; donating land use rights to residential communities to build buildings that serve the public interests, or expand roads according to planning; donating land use rights to build gratitude houses, charity houses, and great solidarity houses attached to land according to the provisions of the law;
• Mortgage its land use rights and land-attached assets at licensed credit institutions operating in Vietnam, at other economic organizations, or individuals as prescribed by law;
• Contribute capital with its land use rights and land-attached assets to domestic organizations, individuals, people of Vietnamese origin residing abroad, and economic organizations with foreign investment capital according to the provisions of the law.

In case an enterprise pays land rent or sublease land annually, it has the following rights:

• Mortgage its assets attached to land at credit institutions licensed to operate in Vietnam, at other economic organizations or individuals as prescribed by law;
• Sell its land-attached assets, sell its  land-attached assets, and lease rights in land lease contracts when meeting the conditions in each specific case;
• Contribute capital with its land-attached assets during the land lease term;
• Lease its land-attached assets and lease rights in the land lease contract;
• Subleasing land use rights in the form of annual land rental payments for land that has completed infrastructure construction in cases where investment in the construction and business of infrastructure is allowed for industrial park land, industrial clusters, and high-tech parks.

Foreign investors at the stage of searching and surveying operating locations or changing locations, must first request the lessor to provide all legal documents related to the location. Based on the provided legal documents, investors and enterprises determine the form of land use corresponding to the enterprise after establishing a lease or sublease contract, and corresponding to each form of land use, the enterprise’s rights to the leased property will have certain differences.

Time of writing: 11/03/2024

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer  at  info@cdlaf.vn

You can refer for more information:

• Effectively managing probationary relationships in enterprises
• Notes when drafting delivery terms in sales contracts (Part 1)
• Notes when drafting delivery terms in sales contracts (Part 2)
• Foreign Investors Need to Pay Attention to Which Taxes When Investing in Vietnam