In many localities, FDI enterprises lease land directly from households — and plenty of those plots have no land use right certificate yet. Lessors reassure: “my family has used it stably for decades, the certificate is being processed.” The problem: land law makes the certificate a gateway condition for most transactions — signing a lease before the conditions are met imports the risk onto the tenant.
What the 2024 Land Law requires of the lessor
Article 45(1) of the 2024 Land Law allows land users to exercise rights — including leasing and subleasing land use rights — only when all conditions are met simultaneously: (a) holding a certificate; (b) no dispute, or disputes resolved; (c) the right not seized for judgment enforcement; (d) within the land-use term; (e) no provisional urgent measure applied. So a lessor without a certificate has, in principle, no right to lease. One narrow exception at Article 127(4)(a): households/individuals not yet certificated but eligible for certification may lease for project implementation — but eligibility must be proven, not promised orally.
Concrete risks of leasing uncertificated land
First, the lease may be declared void. A transaction by a person without disposal rights breaches the statutory conditions for exercising land use rights; under the 2015 Civil Code (Articles 117, 122), a void contract means mutual restitution — an enterprise that built on the land may lose its investment, keeping only a damages claim if the lessor’s fault is proven. Second, no registration of changes, no mortgage. Third, “whose land is it” disputes erupt exactly when the enterprise needs to expand — a third party appears, or the lessor reneges and hikes the rent knowing the tenant is entrenched.
Precautions: verify first, bind in the contract
Step 1 — independent verification: require the lessor to produce the full pending certification dossier; separately request plot information from the Land Registration Office (certification status, disputes, planning). If the dossier is stuck — encroachment, boundary overlap, ongoing dispute — “eligible for certification” is an empty promise. Step 2 — milestone-structured contract: make completed certification a condition precedent for major rent payments; a refundable deposit if the certificate is not issued by the committed date; termination rights and damages if the lessor proves ineligible. Step 3 — no major construction before the certificate: every dong invested in uncertificated land is risk capital.
How long does the lessor have to complete certification?
The law sets no hard deadline for “the lessor must obtain the certificate within X days” in private leases — certification timing is an administrative procedure depending on dossier completeness and local processing, varying by locality. So the deadline must be set by the lease itself: a concrete milestone (e.g. 6 months from signing) with sanctions — expiry triggers termination, refund of paid amounts and deposit, plus actual damages. Never sign a lease saying “the lessor commits to complete procedures soon” with no date and no sanction — that clause is decoration.
Frequently asked questions
1. What risks does leasing land without a certificate carry for FDI?
The core risk is a void lease, since the lessor lacks the Article 45 (2024 Land Law) conditions for leasing; plus no change registration, no mortgage, and ownership disputes.
2. Should a lease of uncertificated land be signed?
Only after verifying the lessor is genuinely eligible for certification (the Article 127(4)(a) exception), with payments structured around certification milestones and termination plus damages rights.
3. What precautions reduce the risk?
Independent verification at the Land Registration Office; certification as a payment condition precedent; a refundable deposit; unilateral termination rights; no major construction before the certificate issues.
4. How long does the lessor have to complete the certificate?
No statutory hard deadline in private leases. The contract must fix one — a concrete date with termination, refund and damages sanctions on expiry.
Key takeaways for investors
- 2024 Land Law Article 45: a certificate is the gateway condition for leasing.
- Narrow exception: leasable if eligible for certification though not yet certificated (Art. 127).
- Core risks: void contract, lost investment, ownership disputes.
- Prevention: independent checks + milestone payments + termination clauses.