Directions to handle delays in project land use for businesses

Directions to handle delays in project land use helps businesses proactively respond to risks, avoid land repossession or administrative penalties. Understanding the appropriate process and solutions not only protects the legal rights of investors but also creates favorable conditions for continued project implementation. The article below will analyze cases of delayed progress, legal consequences and effective solutions for businesses.

Cases where investment projects are behind schedule

Vietnamese law clearly stipulates cases where investment projects are considered behind schedule and uses land for projects that are behind schedule, while protecting the interests of investors in cases of force majeure.

According to the provisions of Clause 9, Article 81 of the Land Law 2024 and Clause 1, Article 31 of Decree No. 102/2025/ND-CP, force majeure cases are regulated including:

• Natural disasters, environmental disasters;
• Fires, epidemics;
• War, national defense and security emergency;
• Other cases as prescribed by law on state of emergency;
• In cases where a competent state agency applies temporary emergency measures, distraint, or freezes land use rights and assets attached to land according to the provisions of law, after which the land user is allowed to continue using the land;
• Administrative decisions and administrative actions of competent state agencies are objective obstacles, not due to the land user’s fault, and directly impact land use;
• Other cases are decided by the Prime Minister according to the proposal of the Provincial People’s Committee or the Minister of specialized management.

If an enterprise’s investment project is implemented behind schedule but the objective reasons affecting the progress are force majeure events, it will not fall into the cases of land recovery specified in Article 81, Land Law 2024.

Consequences when the land use progress of an investment project is delayed

Delays in land use for investment projects cause many serious consequences for businesses. Understanding these consequences helps businesses be fully aware of legal responsibilities and handling measures.

Below are problems that may arise when the land use progress of an investment project is delayed:

• The first, land recovered without compensation. According to Clause 8, Article 81 of the Land Law 2024, if at the end of the extended period the investor still has not put the land into use, the State will recover the land without compensation for the land, assets attached to the land and remaining investment costs in the land. This is a huge financial loss, which can cause the business to lose all of the capital invested in the project.
• Second, enterprises will be subject to administrative sanctions such as fines for violating regulations on land management and use. The fine can be up to hundreds of millions of dong depending on the scale of the project and the level of violation. The investor is also responsible for compensating damages (if any) to related parties caused by delay.
• Third, facing consequences on business reputation and ability to participate in future projects. According to legal regulations, investors with a history of violations of land use progress may have their rights to participate in bidding and auctioning new projects restricted. This seriously affects the long-term development strategy of enterprises in the real estate market.

Directions to handle delays in project land use for businesses

To minimize legal risks arising from the delay in land use of the project, businesses need to take measures to overcome the consequences as well as bring the investment project in accordance with legal regulations.

Fulfill financial obligations for land use

Completing financial obligations is a mandatory requirement for businesses to be able to handle the problem of slow land use progress. Land financial obligations include many items according to current legal regulations. Fulfilling financial obligations is a prerequisite when an enterprise applies to extend the land use schedule.

Enterprises need to fully pay land use fees or land rent according to regulations and pay it once for the entire lease period depending on the approved form of land lease. Paying these amounts on time and in full is the basis to prove the goodwill and financial capacity of the enterprise when applying for an extension.

In case the progress is extended, the enterprise must pay an additional amount corresponding to land use fees and land rent for the extended period. According to the provisions of Article 15, Decree 102/2024/ND-CP clearly stipulates the method of calculating this amount based on the land unit price at the time of extension and the extended time.

The corresponding cost calculation formula is specified as follows:

• Additional amount = Land area to be extended land use x Land price in the Land Price List at the time the competent state agency issues the decision to extend land use x 2% x (Extension period (months) / 12)

In particular, in case the extension period is not a full month, then 15 days or more will be counted as 1 month. If the extension is less than 15 days, the additional amount for these days will not be counted.

Implement extension of land use term

Extending land use terms is an important solution to help businesses avoid land recovery when progress is behind schedule. Enterprises must submit an application for extension before the deadline for putting the land into use expires or before the 24-month delay.

The application for extension must have all the documents prescribed in Clause 2, Article 55, Decree 31/2021/ND-CP, including:

• Written request for extension of the investment project’s operating term;
• Decision approving the investment policy;
• Investment registration certificate;
• Investor approval decision or documents of equivalent legal value;
• Certificate of land use rights or documents of equivalent legal value;
• Documents proving the investor’s financial capacity include one of the following documents: the investor’s most recent 2-year financial statements; commitment to financial support from the parent company; commitment to financial support from financial institutions; guarantee of the investor’s financial capacity; Other documents proving the investor’s financial capacity.

To increase the likelihood of being approved for an extension, businesses need to demonstrate objective reasons for slow progress and commit to a clear implementation roadmap. Enterprises should prepare a report assessing the project implementation to date, clearly stating the causes of slow progress (such as capital difficulties, administrative procedures, site clearance), along with a solution plan and progress of adjustments for the next stage.

Directions for failure to renew

In case the land use schedule cannot be extended, businesses need to have an appropriate handling plan to minimize damage. Failure to renew may occur when the enterprise has used up the maximum extension period of 24 months or does not meet the conditions for extension according to the law.

Enterprises can consider transferring the project according to the provisions of Clause 1, Article 46, Law on Investment 2020 when they are unable to implement the project. Investors have the right to transfer all or part of the investment project to another investor when the following conditions are met:

• The investment project or portion of the transferred investment project is not subject to termination of operation according to the provisions of Clauses 1 and 2, Article 48, of the Law on Investment 2020;
• Foreign investors receiving transfer of investment projects, part of investment projects must meet the conditions specified in Clause 2, Article 24, of the Law on Investment 2020;
• Conditions according to the provisions of land law in case of transfer of investment projects associated with transfer of land use rights and assets attached to land;
• Conditions according to the provisions of housing law and real estate business law in case of transferring housing construction investment projects or real estate projects;
• Conditions specified in the investment policy approval document, Investment registration certificate or other relevant laws (if any);
• When transferring investment projects, in addition to complying with the provisions of this Article, state-owned enterprises are responsible for complying with the provisions of law on management and use of state capital invested in production and business at the enterprise before making adjustments to the investment project.

Note: If the transfer is not feasible, businesses need to prepare a plan to resolve financial and legal issues related to the project. This includes liquidating assets on land (if any), resolving obligations with partners, contractors and related parties. In case of disagreement with the land recovery decision, the enterprise has the right to complain according to the provisions of the Law on Complaints or initiate a lawsuit according to the provisions of the Law on Administrative Procedures.

>>> See more: Procedures for transferring annual land lease investment projects.

Consulting services on how to handle project land use delays at Long Phan Consulting Company

Long Phan Consulting Company provides in-depth consulting services on handling slow land use progress for businesses. Our team of experts has experience in the field of land and investment law. Consulting services are designed to meet the specific needs of each business, from prevention to overcoming consequences when progress is delayed.

Long Phan Consulting Company provides comprehensive consulting services for investment projects including:

• Carry out an assessment of the legal status of the project, including land records, investment licenses, decisions on land allocation, land lease and implementation progress;
• Support in drafting dossiers for land lease extension for investment projects;
• Support in calculating corresponding costs when renewing land in accordance with current regulations;
• Representing customers to work with competent authorities on extension;
• Answer customers’ questions about extending investment projects;
• Monitor the progress of resolving extension requests and promptly hand over the results to customers.

With a team of highly qualified and experienced experts in consulting and supporting businesses in extending land use terms for investment projects. Long Phan Consulting Company believes in providing customers with safe, effective support services at the most optimal cost.

Frequently asked questions

Below are frequently asked questions about implementation plans when businesses are behind schedule in implementing investment projects.

What typical administrative obstacles can cause project delays?

Typical administrative obstacles can include lengthy permit approvals, complex legal processes, and inconsistencies in administrative decisions.

Can an enterprise request to extend the land use period multiple times?

The ability to renew multiple times is often limited, often with a cumulative maximum period, as prescribed by land law.

What specific financial documents are often required to demonstrate financial capacity for a time extension request?

Financial records often need to include the most recent financial report, commitment to financial support from the parent company, commitment to financial guarantee from a financial institution and other evidence proving the investor’s financial capacity.

How detailed should the adjusted project schedule be when applying for an extension?

The adjusted project schedule needs to be detailed, clearly stating specific important milestones, timetable for each phase and actual completion date.

What key factors do authorities consider when deciding to request an extension of land use?

Authorities often evaluate the reason for the delay, the investor’s efforts to minimize the delay, the feasibility of the project and the potential socio-economic impact.

In the event that an extension request is denied, what are the immediate steps a business should take?

When denied, businesses should promptly seek legal advice to understand the reasons for the refusal and explore options such as appealing the decision or initiating project transfer.

What are the potential tax implications of transferring a project that is behind schedule?

Project transfers may incur different taxes, including corporate income tax and value added tax, depending on the transfer structure and current tax regulations.

What kind of compensation can a business expect if the delay is clearly due to government action?

If government action directly causes delays, businesses may be compensated for damages incurred, subject to legal regulations and negotiations with authorities.

Are there specific penalties for partially developed land during the grace period?

Penalties for partially developed land during the grace period can vary, potentially including fines or a requirement to return the undeveloped portion of the land.

How can businesses proactively minimize the risk of land use delays right from the beginning of the project?

Proactive measures include meticulous project planning, thorough due diligence, maintaining open communication with authorities, and establishing contingency plans for potential disruptions.

Conclude

Delays in project land use can lead to serious consequences for businesses, especially the risk of land being recovered without compensation. Customers need to understand the legal regulations and proactively apply for extension when necessary. Long Phan Consulting Company has a team of experts ready to assist customers in resolving all issues related to slow land use progress. Contact the hotline: 0906735386 immediately for detailed and most effective advice.