Conditions and Procedures for the transfer of assets attached to annually leased land

The transfer of assets attached to annually leased land is a common transaction for businesses that own factories or structures on State-leased land. This type of deal carries more binding conditions than transferring assets on land leased with a lump-sum payment. Unlike a lump-sum lessee, a party leasing land with annual rental payment does not hold full land-use rights, only rights over the assets on the land and the lease itself under the contract. Any sale must therefore meet conditions on both the asset and the seller, and follow the registration procedure under the current Law On Land. Long Phan Consulting sets out below the conditions, dossier, procedure, and legal risks involved in this transaction.

What Is the Transfer of Assets Attached to Annually Leased Land?

This transaction involves two distinct legal features: the nature of the underlying land-use right and the method chosen for transferring the asset. Both must be correctly identified before the parties proceed.

Legal Features of Land Leased with Annual Rental Payment

A party leasing land with annual rental payment does not hold the same full land-use right as a lessee who pays a lump sum for the entire lease term. It holds only ownership of the assets created on the land and the lease right under the still-effective contract. The obligation to pay annual land rent to the State continues to bind the transferee after the transaction, since the buyer keeps using the land under the signed lease contract. This is governed by Article 46 of the 2024 Land Law, which sets the conditions for selling assets attached to land and the lease right under a State land lease with annual rental payment.

Two Forms of Transferring Assets on Leased Land

Under Article 46 of the 2024 Land Law, a party leasing land with annual rental payment may transfer assets on the land in one of two ways:

• Selling the assets attached to the leased land without transferring the lease right under the land lease contract, subject to the conditions in Clause 1, Article 46 of the 2024 Land Law.
• Selling the assets together with the lease right under the land lease contract, which must satisfy both Clause 1 and the additional conditions in Clause 2, Article 46 of the 2024 Land Law.

Identifying the correct form from the outset helps the parties prepare the right dossier and avoid rejection when registering the change.

Conditions for Transferring Assets Attached to Annually Leased Land

A business or individual seeking to sell assets on leased land must satisfy, at the same time, the conditions on the transferred assets and on the transferring party under Article 46 of the 2024 Land Law. Missing either condition risks rejection by the land registration authority, or may be treated as violating a statutory prohibition. This exposes the transaction to the risk of being declared invalid by a court under Article 123 of the 2015 Civil Code.

Conditions for the Transferred Assets

Assets attached to the leased land must be lawfully created and registered as required by law. Construction must also be completed in line with the approved detailed construction planning and the approved or accepted investment project. An exception applies where the transfer follows an effective court judgment or decision, an enforcement decision of a civil judgment enforcement agency, or a conclusion by a competent State inspection or examination authority. Legal basis: Point a and Point b, Clause 1, Article 46 of the 2024 Land Law.

Where the sale includes the transfer of the lease right under the land lease contract, the transferring party must also have advanced compensation, support, or resettlement funds. These funds must not yet have been fully offset against the payable land rent, under Point b, Clause 2, Article 46 of the 2024 Land Law.

Conditions for the Transferring Party

Clause 1, Article 46 of the 2024 Land Law applies to economic organizations, individuals, overseas Vietnamese, and foreign-invested economic organizations currently leasing land with annual rental payment. Economic organizations and religious organizations, or their affiliates, that are leased land by the State with annual rental payment may sell assets they own that are attached to the land once they meet the corresponding conditions under Article 46, per Point c, Clause 1, Article 34 of the 2024 Land Law.

Special Case: Land Leased for Industrial Park or Cluster Infrastructure Business

Where land is leased with annual rental payment for a project to build and operate infrastructure, the seller must also satisfy the conditions under Clause 1, Article 45 of the 2024 Land Law. The seller must also comply with the applicable requirements of the 2023 Law on Real Estate Business. Legal basis: Clause 5, Article 46 of the 2024 Land Law.

Cases Where Transfer Is Not Permitted

A public non-business unit leased land by the State with annual rental payment has no right to sell, mortgage, or contribute as capital the assets attached to the land or the lease right, unless it uses the land to build and operate industrial park or cluster infrastructure. Legal basis: Clause 2, Article 34 of the 2024 Land Law. This is an important point when dealing with a public non-business unit as seller, since the transaction may not be eligible to proceed at all.

Dossier and Procedure for Transferring Assets Attached to Annually Leased Land

Once the parties confirm the transfer conditions are met, they must prepare the required dossier and register the change with the competent authority. This ensures the asset and the lease right are lawfully recorded for the transferee.

Required Dossier

• The land lease contract signed with the State and related documents on the lease right.
• The Certificate of land-use right and ownership of assets attached to the land, if already issued, or legal documents proving the assets were lawfully created.
• The contract for transferring the assets attached to the land, and the lease right if applicable, notarized or authenticated as required.
• The application for registration of changes to land and assets attached to land, using Form No. 11/DK issued with Decree 101/2024/ND-CP (the form content and guiding documents may since have been amended, and should be verified for validity at the time of filing).
• Documents proving that both the transferring and receiving parties meet the eligibility conditions.

Legal basis for the registration dossier: Clause 1, Article 133 of the 2024 Land Law, and Article 29 of Decree 101/2024/ND-CP. Businesses should note that guiding documents implementing the 2024 Land Law have been amended since Decree 101/2024/ND-CP was issued. The specific dossier requirements should be verified against the documents in effect at the time of filing in each locality.

Procedural Steps

1. Independently value the assets to be transferred, as a basis for price negotiation.
2. Negotiate and sign the contract for transferring the assets attached to the land, and the lease right if applicable, then complete notarization or authentication as required.
3. File the registration dossier for changes at the Land Registration Office or the competent receiving authority, to confirm the transferee assumes the financial obligation to the State.
4. Receive the updated Certificate of land-use right and ownership of assets attached to the land, in the transferee’s name.

Legal basis: Clause 3, Article 46 of the 2024 Land Law governs the right to continue using the land and the transferee’s registration obligation. The registration procedure follows Article 37 of Decree 101/2024/ND-CP (the updated content should be verified against each locality’s current rules at the time of application). For example, in Ho Chi Minh City this is carried out under Sub-section VI, Section C, Part III of Appendix II issued together with Decision No. 44/2026/QD-UBND.

Splitting the Land Parcel Where the Asset Is a Construction Work

When only part of an asset attached to the land, being a construction work, is sold and that part meets the conditions for parcel splitting, the parties may carry out the parcel-splitting procedure. This allows the competent authority to issue a separate Certificate for the transferred portion. Legal basis: Clause 4, Article 46 of the 2024 Land Law.

Common Legal Risks in Transferring Assets on Annually Leased Land

Carrying out this transaction without carefully reviewing the conditions can expose both the seller and the buyer to significant legal consequences.

Risk of an Invalid Transaction for Failing to Meet the Conditions

A transaction risks being declared invalid where assets are sold before construction is completed in line with the approved planning and investment project, or where the transferring party is not eligible to sell, for example a public non-business unit outside the exempted cases. This would violate the mandatory conditions under Clause 1 and Clause 2, Article 46, and Clause 2, Article 34 of the 2024 Land Law. Whether a specific transaction violates a statutory prohibition, and is therefore invalid under civil law, must be assessed case by case.

Disputes Over Outstanding Financial Obligations and Land Rent

The transferee remains responsible for paying annual land rent to the State under the signed lease contract. In practice, if the transferring party still owes financial obligations to the State that are not clearly addressed in the transfer contract, disputes between the parties can easily arise. This can also create complications when the land authority confirms the change. A business receiving the transfer should require the seller to confirm its financial obligation status before signing the contract.

Practical Difficulties Applying the Conditions to Assets Handled Through Judgment Enforcement

In practice, the auction of assets attached to annually leased land for civil judgment enforcement purposes must still be assessed against the conditions in Clause 1, Article 46 of the 2024 Land Law. This applies even though such a sale is exempted from the requirement to complete construction in line with the approved planning. The interpretation and application among enforcement agencies and auction organizations is not always fully consistent in certain cases, so auction participants should carefully verify the asset’s legal status before taking part.

Consulting and Authorized Representation Services for the Transfer of Assets Attached to Annually Leased Land

Long Phan Consulting assists clients with legal matters involving the transfer of assets attached to annually leased land, including the following services:

• Initial case assessment: Receiving case information, reviewing the factual background, identifying relevant legal issues, and recommending an appropriate course of action.
• Legal dossier review: Examining contracts, land documents, asset ownership records, and other relevant materials to assess their completeness and legal validity.
• Identification of required documents: Determining which documents, evidence, confirmations, or approvals need to be supplemented before proceeding with the transaction.
• Legal analysis of transfer conditions: Reviewing applicable regulations to determine whether the assets are eligible for transfer and identifying the rights and obligations of each party.
• Advising on transaction structure: Recommending an appropriate transfer method based on the land lease arrangement, asset status, and the specific circumstances of the transaction.
• Drafting legal documents: Preparing applications, petitions, explanatory documents, complaints, transfer agreements, and other necessary legal papers.
• Supporting evidence collection: Guiding clients in collecting and completing supporting documents and assisting with requests for information from competent authorities where necessary.
• Authorized representation before competent authorities: Acting within the scope of authorization to submit dossiers, provide explanations, supplement documents, and work with competent State authorities, organizations, or relevant parties.
• Negotiation and mediation support: Representing or accompanying clients in negotiations and mediation to resolve disagreements, reduce dispute risks, and seek a commercially appropriate solution.
• Monitoring the handling process: Following up on dossier processing, responding to requests for additional information, and advising clients on subsequent steps until the matter is resolved.

Enterprises, clients, or investors seeking a preliminary assessment may send their documents via email at info@longphanpmt.com or Zalo/WhatsApp at +84 906 735 386.

Frequently asked questions the transfer of assets attached to annually leased land

Frequently Asked Questions on the transfer of assets attached to annually leased land address key issues businesses and investors should clarify before entering into a transaction. These include eligibility to sell assets, whether lease rights must also be transferred, the buyer’s continuing obligation to pay annual land rent, filing requirements, and restrictions on unfinished construction.

Conclusion

The transfer of assets attached to annually leased land is subject to strict conditions on both the asset and the transferring party under current land law. It also requires strict compliance with the registration procedure for the asset to be lawfully recorded in the transferee’s name. Given the significant risk of contract invalidity and disputes over financial obligations if any condition is overlooked, businesses and individuals should carefully review the legal dossier before entering into the transaction. Long Phan Consulting stands ready to assess and carry out the procedure for each specific case; please contact hotline 1900636389 for consultation.