Determining the price for compensation for a State’s land retrieval – Perspective from a practical judgment

In recent years, along with the significant development in economies, the need for urban areas improvement, the construction of infrastructure, and new urban areas of provinces to serve the demand for housing and daily activities has also rapidly increased. For those projects to be implemented, the State needs to retrieve land and compensate pursuant to laws. In fact, many socio-economic development projects have been delayed due to disagreements in determining the price for compensation for land retrieval between land use rights and land-retrieving agencies.

So, what should note about the price for compensation for land retrieval in practice? BLawyers Vietnam will present underneath.

land retrieval

1. Summary of the judgment contents

The Judgment No. 281/2019/HC-PT of People’s Supreme Court in Ho Chi Minh City about claiming decision on compensation, support, resettlement recorded some main contents as follows:

  • On 18 June 2003, the People’s Committee of Ho Chi Minh City (“PCC”) issued Decision No. 2720/QD-UB on land retrieval to implement urban improvement projects;
  • On 13 April 2009, the People’s Committee of District B (“PCD”) issued Plan No. 110/PA-UBND on compensation, support, and resettlement when the State retrieve land to implement the project on urban improvement;
  • On 30 September 2010, PCD issued Decision No. 6111/QD-UBND-QTĐT approving the detailed 1:500-scale plans of high-rise complex, offices, commercial services, and apartments;
  • On 06 June 2013, Ms. H received Decision No. 5763/QD-UBND dated 05 June 2013 of PCD on compensation, support, resettlement, and ground clearance for the house that her family is using legally with the compensation price for land retrieval is VND54,000,000/m2;
  • On 01 July 2013, disagreeing with Decision No. 5763/QD-UBND, Ms. H complained that the PCD announced the compensation plan in 2009, but just issued the decision on compensation in 2013 and applied the compensation price according to the 2009 plan;
  • After many times of settling complaints, amending and supplementing the Decision but Ms. H had been not satisfactory, she filed a lawsuit for requesting to revoke Decision No. 5763/2013/QD-UBND;
  • According to first-instance Administrative Judgment No. 421/2018/HC-ST dated 10 April 2018, the People’s Court of Ho Chi Minh City decided not to accept Ms. H’s request;
  • On 19 April 2018, Ms. H made an appeal against the first-instance Judgment;
  • According to  Judgment No. 281/2019/HC-PT, the appeal Court accepted Ms. H’s appeal with the following reasons:
    • The above-mentioned project has commercial purposes, so compensation must be at the agreed price;
    • The PCD announced the compensation plan in 2009, but just issued the decision on compensation in 2013 and applied the compensation price according to the 2009 plan, which was not in accordance with laws. At this time, the land price appraised by a bank is significantly higher than VND54,000,000/m2.

2. “Takeaway” from the judgment

From the above judgment, it can be seen that the application of the value of the compensation for land retrieval depends on not only the provisions of the laws but also the actual implementation of the project to issue a satisfactory compensation price to people. In particular:

  1. The land compensation price must be suitable for the purpose of the project: According to the above judgment, the initial purpose of the project was to implement urban improvement. This was a case where the State retrieved land for socio-economic development in national or public interests and the compensation price was issued by the State based on the provisions of laws. However, the purpose of the project was changed to build a high-rise complex, commercial services, offices, and apartments. This is a project that is not subject to land retrieval by the State, so the investor must negotiate the land price;
  2. The land compensation price is the price of that type of land at the time of land retrieval: By law, the specific land price of the retrieved land type is decided by the provincial People’s Committee at the time of retrieval decision. However, under the judgment, at the time of issuing the Decision on land retrieval to Ms. H, PCD determined that the land price based on the 2009 land price list was incorrect. The reason was the land valuation must be suitable with the popular land price in the market of the land type with the same land use purpose for a transaction.

Should you have any questions about the above contents, please revert to BLawyers Vietnam at consult@blawyersvn.com. We are more than happy to hear from you!

Date: 15 March 2022

Writer: Huy Nguyen

Maybe you want to read:

How to determine overdue payment interest, fine for breaching contract and compensation in commercial relation under Judicial Precedent No. 09/2016/AL?

Real estate transaction in Vietnam: List of 27 frequently asked questions and answers

Risks of signing a house and land transfer contract with a lower value than its actual one?

blawyersvn-cta-image

Request a consultation

To schedule a meeting with BLawyers Vietnam’s attorneys, please call us or complete the intake form below. We will respond within 24 hours.

  • This field is for validation purposes and should be left unchanged.