What should businesses do to avoid having their land reclaimed due to slow project implementation?

What should businesses do to avoid having their land reclaimed due to slow project implementation? It is a key issue to maintain legal land use rights and ensure investment progress as committed. Complying with regulations on implementation progress, proactively extending or adjusting projects when necessary helps businesses avoid the risk of land acquisition, preserve invested resources, and create favorable conditions for the project to be implemented stably and effectively.

Can the land be recovered if the investment project is delayed?

The Land Law 2024 clearly stipulates cases of land recovery due to violations of land laws, including slow implementation of investment projects.

According to Clause 8, Article 81, Land Law 2024, land recovery due to delayed implementation of investment projects is carried out as follows:

• Land allocated, leased, allowed to change use purpose, recognized land use rights, received transfer of land use rights to implement an investment project but has not been used for 12 consecutive months from the date of handover of land on the ground or the land use progress is 24 months behind the progress recorded in the investment project;
• In case the land is not put into use or the land use progress is slow compared to the progress recorded in the investment project, the investor is allowed to extend the use period for no more than 24 months and must pay an additional amount to the State corresponding to the land use fee and land rent for the extended period;
• At the end of the extended period, if 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.

Land recovery due to delayed project implementation is strictly regulated in the Vietnamese legal system. This regulation also aims to strengthen state management of land use investment projects. The purpose of these regulations is to ensure effective land use, avoiding “hanging” projects and wasting land resources.

In case the investor does not comply with the schedule, the State has the right to recover the land without compensation for the land, assets attached to the land and remaining investment costs in the land. This is a huge loss for businesses, not only financially but also affecting business reputation and future investment opportunities.

Principles for land recovery due to slow implementation progress

Pursuant to the provisions of Article 83 of the Land Law 2024, the authority to recover land due to delayed project implementation is as follows:

• The Provincial People’s Committee decides to recover land from investors who are domestic organizations, religious organizations, affiliated religious organizations, people of Vietnamese origin residing abroad, foreign organizations with diplomatic functions, economic organizations with foreign investment capital.
• District-level People’s Committees recover land from households, individuals, and communities.

When an enterprise is behind schedule in project implementation and does not extend the deadline, the competent authority will issue a land recovery decision and enforce land recovery if the enterprise does not comply.

Principles for enforcement of land recovery decisions are specifically stipulated in Point a, Clause 1, Article 89, Land Law 2024. Accordingly, enforcement must be conducted publicly, transparently, democratically, objectively, ensuring order, safety and in accordance with the law. Enforcement can only be carried out during office hours and not on breaks or holidays as prescribed.

The process of land recovery due to land law violations includes specific steps:

Step 1: Prepare land recovery documents;

Step 2: Notice of land recovery to land users;

Step 3: Issue a decision to recover land;

Step 4: Organize the implementation of land recovery decisions.

In case the land user does not comply, the land recovery decision will be forced to comply with the law.

What should businesses do to avoid having their land reclaimed due to slow project implementation?

To avoid financial and legal risks from land acquisition due to delayed project implementation, investors need to carry out the following activities.

Comply and monitor project implementation progress

Enterprises need to develop detailed and feasible project implementation plans right from the investment project planning stage. The project implementation schedule must be set realistically, taking into account potential risk factors and preventive measures. It is necessary to clearly stipulate that the content of the investment project must have a project implementation schedule, including the progress of basic construction and putting the project into operation.

Enterprises need to regularly review and evaluate project implementation progress on a monthly or quarterly basis. This helps to detect problems and delays compared to the proposed plan early so that timely remedial measures can be taken. Pay special attention to the deadline of 12 months from the date of handover of the land on the ground to put the land into use, and must not be more than 24 months behind schedule compared to the schedule stated in the investment project.

Carry out periodic reports on the implementation of investment projects according to the provisions of law. According to Clause 2, Article 72 of the Law on Investment 2020, investors are obliged to periodically report to the investment registration agency and statistical agency on the implementation of investment projects. Timely reporting helps management agencies grasp the project implementation status and provide guidance and support when necessary.

Fulfill financial obligations regarding land

Enterprises must fully and on time pay land use fees, land rent and other financial obligations related to land according to the provisions of law. Late payment of these financial obligations not only leads to late payment fines but can also be a basis for land recovery as prescribed in Clause 6, Article 81 of the Land Law 2024.

In case an enterprise has difficulty fulfilling its financial obligations, it should proactively work with the tax authority to receive instructions on tax payment extension procedures or tax exemption or reduction according to the provisions of law. Enterprises should note that when the land use schedule is extended (no more than 24 months), they must pay an additional amount to the State corresponding to the land use fee and land rent for the extended period. Failure to fulfill this financial obligation may result in non-renewal or land confiscation according to regulations.

Please extend the project implementation time

When realizing that a project is at risk of being behind schedule, businesses need to proactively carry out procedures to extend the land use schedule. According to Clause 8, Article 81, Land Law 2024, the investor is allowed to extend land use for no more than 24 months in case the land is not put into use or the land use schedule is delayed compared to the schedule recorded in the investment project.

The application for extension of project implementation progress needs to be fully prepared with documents as prescribed in Clause 2, Article 55, Decree No. 31/2021/ND-CP.

Profile includes:

• 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.

Enterprises must submit an extension application before the deadline to put the land into use expires or before progress is behind schedule 24 months. Late submission of the application may result in not being considered for extension and having the land revoked. At the same time, when the extension is approved, the enterprise must pay an additional amount corresponding to land use fees and land rent for the extension period.

>>> See more: Procedures for extending the operating period of investment projects.

Consulting services on issues related to land recovery due to slow implementation of investment projects at Long Phan Consulting Company

Long Phan Consulting Company provides in-depth consulting services on land and investment. With a team of experienced experts, Long Phan Consulting Company has supported many businesses in handling legal problems related to the progress of investment projects.

We provide comprehensive consulting and support services including:

• Support in-depth legal review of the project, analyze risks and propose solutions;
• Support businesses in drafting necessary records and documents to apply for extension of project implementation progress;
• Representing businesses to work with competent state agencies to explain and protect the legal rights and interests of businesses in the process of applying for extension of land use progress;
• Answer questions related to investment project extension activities;
• Regularly update your business on the status of your application.

With a practical approach, in-depth understanding of legal regulations and experience in directly handling many similar cases, Long Phan Consulting Company commits to effectively supporting your business in avoiding the risk of land repossession due to slow project progress and continuing to implement the project in accordance with current regulations.

Frequently asked questions

Below are frequently asked questions about land recovery when investment projects are delayed.

What is the maximum time limit for extending the project implementation schedule?

According to the Land Law 2024, the maximum extension period for land use is no more than 24 months.

What happens if the business does not submit enough documents to extend the project schedule?

Failure to submit complete documents may result in not being considered for an extension and the project being at risk of land recovery.

Do businesses need to pay any additional costs when the project schedule is extended?

Yes, when the extension is approved, the enterprise must pay an additional amount corresponding to the land use fee or land rent for the extension period.

What financial risks do businesses face when land is recovered?

Enterprises may lose the entire value of investment in land, assets attached to land and remaining investment costs without compensation.

Which agency has the authority to recover land for projects that are behind schedule?

The People’s Committee of the province or centrally run city where the land is located carries out land recovery.

What can businesses do to prove their financial capacity when applying for a project extension?

Enterprises can provide the most recent 2 years of financial statements, a commitment to financial support from the parent company or financial institution, or a financial guarantee.

Is it important to periodically report on the implementation of investment projects?

Periodic reporting is very important, helping state management agencies grasp the project implementation situation and provide timely support.

What are the legal consequences if the enterprise does not comply with the land handover time?

If within 12 months from the date of land handover, the enterprise does not put the land into use, the land may be revoked.

Conclude

What should businesses do to avoid having their land reclaimed due to slow project implementation? It is an important issue that requires initiative and strict compliance with legal regulations. Customers need to consult experts to receive timely support before facing the risk of land recovery. Please contact us now Long Phan Consulting Company via the hotline: 0906735386 for detailed advice and appropriate solutions for each specific case.