When the State recovers land before the lease term expires for national defence, security, or socio-economic development, the first question for an FDI enterprise is: is the rent prepaid for the unused years compensated? The answer depends on the rent payment form.
Current legal framework
The 2024 Land Law (31/2024/QH15), effective 1 August 2024, provides in Article 95 the conditions for land compensation: economic organisations leased land by the State with one-off rent payment for the entire lease term are entitled to land compensation upon recovery. Detailed compensation, support and resettlement follow Decree 88/2024/ND-CP (effective 1 August 2024).
One-off payment vs annual payment
One-off rent payment: the enterprise is compensated for the land; prepaid rent for the remaining period counts as remaining investment costs in the land in the compensation plan — it is not lost. Annual rent payment: the enterprise is not compensated for the land (as no rent was paid for the remaining period), but remains entitled to compensation for assets attached to the land and remaining investment costs, plus support amounts under the plan. A practical point: many annual-paying enterprises wrongly assume they get nothing — their asset and investment-cost rights are in fact protected.
What should the enterprise do?
Upon receiving the recovery notice, the enterprise should: (1) gather all land-rent payment vouchers, the land lease contract and the land lease decision; (2) inventory on-land assets and invested costs; (3) participate in preparing the compensation plan and reconcile each line — especially how remaining land investment costs are calculated; (4) if disagreeing with the plan, exercise the right to complain under the complaints legislation. Note: assets created after the land recovery notice are not compensated.
Frequently asked questions
1. Is prepaid rent compensated when annually-paid leased land is recovered early?
There is no compensation “for the land” since the enterprise has not paid for the remaining period. But the enterprise is still compensated for assets attached to the land, remaining investment costs in the land, and support amounts under the compensation plan.
2. We prepaid 50 years of rent and used 10 — what happens to the rest?
The rent corresponding to the remaining 40 years counts as remaining investment costs in the land when the compensation plan is prepared under Decree 88/2024/ND-CP — the enterprise does not lose this amount.
3. Are assets built after the recovery notice compensated?
No. Assets attached to the land created after the competent authority issues the land recovery notice are not eligible for compensation.
4. What if we disagree with the compensation plan?
The enterprise may complain against the compensation, support and resettlement plan under the complaints legislation, and may bring an administrative lawsuit if the land recovery decision is unlawful.
Key takeaways for investors
- The rent payment form decides compensation rights: one-off payment is compensated for the land; annual payment is not.
- Prepaid rent for the remaining period counts as remaining investment costs in the land.
- Annual payers still get asset and investment-cost compensation — not “empty-handed”.
- Prepare payment vouchers and an asset inventory as soon as the recovery notice arrives.
This article has been quality-reviewed by the FLAW AI Legal Council. Content is for legal reference only and does not replace lawyer advice for specific cases.
