Leasing from an industrial park infrastructure developer is considered the safest route for foreign investors. Yet quite a few parks operate while the developer still holds no land-use right certificate for the whole park or its phases. Signing a lease in that situation is like buying a house from someone who holds no title deed.
Why the developer may lack the certificate
Several causes recur. Most commonly, the allocation or lease of land to the developer is unfinished: an investment approval or land allocation decision exists, but surveying and certification are pending. In some cases the land is mortgaged to a bank funding the infrastructure build, with the bank holding the certificate. Expansion phases are another classic: new land not yet legally completed while the developer markets it early to fill occupancy.
The core legal risk
The basic rule: without a certificate, the developer cannot prove subleasing rights. Under Article 34 of the 2024 Land Law, only organizations permitted to invest in and trade infrastructure inside industrial parks may sublease land-use rights, and that right attaches to a lawful state allocation or lease.
If the developer has not completed land acquisition procedures, a sublease signed with a secondary investor risks being declared void. An investor who has already built a factory then faces a dilemma: structures standing on land where the leasehold lacks legal recognition. Without the developer’s certificate, the secondary investor also cannot register the leasehold or mortgage assets for financing.
Early warning signs
The developer dodges producing a copy of the certificate, offering only the land allocation decision or the investment approval. The lease carries vague wording like the lessor will supplement the certificate later, with no deadline. Rent well below the area’s going rate is another flag, since the developer may be desperate for cash to finish legalization.
Mitigation if you still want the site
The golden rule: inspect the infrastructure developer’s land-use right certificate before price talks. If the developer lacks it but you still want the park, sign only a conditional deposit agreement instead of a definitive lease: the deposit is fully refundable if, by the agreed date, the developer cannot produce the certificate or an authority letter approving subleasing.
In parallel, verify independently with the land authority: has the allocation or lease decision for the developer been issued, how far has certification progressed, is the land mortgaged. Never take one side’s word on this.
Contract clauses that protect the investor
Make the developer’s certificate, or a written sublease approval, a condition precedent to the lease’s full effectiveness. Provide a unilateral termination right with a full refund of amounts paid plus interest if the condition is not met on time. Retain a significant portion of rent until the developer completes its land legal obligations.
When to wait and when to walk away
Wait when the developer holds a land allocation decision, certification surveying is underway, and the land authority confirms a clear timeline. Walk away when the developer cannot produce any legal paper on land-use rights, or when the land is disputed or seized. Another park with clean title, even slightly pricier, is always cheaper than a cheap park with murky legality.
Frequently asked questions
1. The developer shows a land allocation decision but no certificate. Enough to sign?
Not safe enough. An allocation decision shows the developer is in the process of receiving land, but only the land-use right certificate fully grounds subleasing rights. Sign a conditional deposit agreement tied to production of the certificate, not a definitive lease.
2. We already signed and built, then learned the developer has no title. What now?
A very difficult situation. Push the developer to complete legalization immediately, while engaging counsel to assess the contract’s validity and options for protecting invested assets. The lesson is to check the certificate before signing, never on promises.
3. Where can we check the developer’s certification progress?
At the provincial land authority where the park sits: ask about the allocation or lease decision for the infrastructure developer, the certification status and any mortgage. Verify independently rather than relying on the developer’s account.
4. When the park developer has no certificate yet, which protective clauses does the sublease need?
Clauses tying the certification timeline under Articles 135 and 136 of the Land Law 2024 to the developer’s obligations: a concrete date by which the certificate must exist, the lessee’s right to suspend payment or terminate with cost reimbursement if that milestone slips, and a covenant that the developer will not mortgage the leased land in ways affecting the leasehold. Paying rent against actual infrastructure and legal-file progress instead of prepaying in full is the basic risk-allocation principle. Every verbal assurance that the title is “coming soon” must become a clause with remedies before it has protective value.
5. How is the developer’s right to sublease park land verified?
Under Article 34(e), an organization leasing land with annual payment may sublease the land use right on the annual-payment mode for land whose infrastructure is completed, where it is permitted to invest in industrial-park infrastructure business. The lessee verifies through a document set: the State’s land-lease decision to the developer, the infrastructure investment approval, the acceptance minutes for the infrastructure of the subleased area, and the certificate once issued. Missing any link, the developer’s sublease right is not fully evidenced and the lessee is carrying risk on the developer’s behalf.