Chapter I

General Provisions

Article 1 This Law is formulated in order to strengthen the administration of the urban real estate, maintain the order of real estate market, protect the legitimate rights and interests of real estate obligees and promote the sound development of real estate business.

Article 2 Obtaining the land-use right for development of real estate, engaging in development of real estate and transaction of real estate, and exercising administration of real estate in the State-owned land within a planned urban district in the People’s Republic of China (hereinafter referred to as the State-owned land) shall comply with this Law.

“Houses” as used in this Law means buildings and structures such as houses on the land.

“Development of real estate” as used in this Law means acts of building infrastructure and houses on the State-owned land, the land-use right for which has been obtained in accordance with this Law.

“Transaction of real estate” as used in this Law includes transfer of real estate, mortgage of real estate and lease of houses.

Article 3 The State shall practise a compensatory and terminable system for the use of State-owned land in accordance with the law, however, allocation of the land-use right by the State under this Law shall be excepted.

Article 4 The State shall, based on the social and economic development, support the development of construction of residential houses so as to gradually improve the housing conditions of residents.

Article 5 Obligees of real estate shall abide by the laws, administrative rules and regulations and pay taxes according to law. The legitimate rights and interests of the obligees of real estate shall be protected by law and shall not be infringed by any units or individuals.

Article 6 For public interests, houses of units or individuals on the State-owned land may be expropriated by the State, compensations for their resettlement shall be paid according to law, and their lawful rights and interests shall be protected; and where the housings of individuals are expropriated, their living conditions shall be guaranteed. The specific measures in this regard shall be formulated by the State Council.

Article 7 The department of construction administration and the department of land administration under the State Council shall, in accordance with the division of functions and powers prescribed by the State Council, attend to their own duties, act in close coordination and manage the work concerning real estate of the whole country.

Institutional structures, and functions and powers of the departments of housing administration and land administration under the people’s governments at or above the county level shall be determined by the people’s governments of provinces, autonomous regions, or municipalities directly under the Central Government.

Chapter II

Land Used for Development of Real Estate

Section 1

Granting of the Land-use Right

Article 8 Granting of the land-use right refers to acts that the State grants land users the right to use the State-owned land (hereinafter referred to as the land-use right) for a certain number of years and the users shall pay the State a granting fee for the land-use right.

Article 9 The land-use right for the collective-owned land within a planned urban district may be granted with payment only after it is requisitioned in accordance with the law and turned into State-owned land.

Article 10 Granting of the land-use right must conform to the overall planning for land utilization, urban planning and the annual plan for land to be used for construction.

Article 11 Where the local people’s governments at or above the county level grant land-use right for development of real estate, they must, based on the quota set by the people’s governments at or above the provincial level, draw up plans for the total area for annual granting of the land-use right, which shall, according to the regulations of the State Council, be reported to the State Council or the provincial people’s government for approval.

Article 12 Granting of the land-use right shall be carried out by the people’s governments of the cities or counties in a planned and step-by-step way. With regard to each lot granted, plans for its purposes, term of use, and other conditions shall be worked out by the departments of land administration under the people’s governments of the cities and counties in conjunction with the competent departments of urban planning, construction and housing administration. Such plans shall, according to the regulations of the State Council, be implemented by the departments of land administration under the people’s governments of the cities or counties after their submission to and approval by the people’s governments with due authority for approval.

Limits of authority as provided in the preceding paragraph for the people’s governments and their departments concerned of the counties under the municipalities directly under the Central Government shall be prescribed by the people’s governments of the municipalities directly under the Central Government.

Article 13 The land-use right may be granted by means of auction, bidding or agreement between the two parties.

For Land used for commercial, tourism, recreation and luxury housing purposes, where conditions permit, the means of auction or bidding shall be adopted; where conditions do not permit and it is impossible to adopt the means of auction or bidding, the means of agreement between the two parties may be adopted.

Fees for granting the land-use right by means of agreement between the two parties shall not be lower than the lowest price determined in accordance with the regulations of the State.

Article 14 The maximum term for the granting of the land-use right shall be prescribed by the State Council.

Article 15 Granting of the land-use right shall be conducted through concluding a written granting contract.

The contract for granting the land-use right shall be concluded between the departments of land administration under the people’s governments of the cities or counties and the land users.

Article 16 A land user must pay the fees for the granting of the land-use right as agreed upon in the granting contract. In default of such payments, the department of land administration shall have the power to rescind the contract and may demand compensation for the breach of contract.

Article 17 Where a land user has paid the fees for the granting of the land-use right as agreed upon in the granting contract, the department of land administration under the people’s government of the city or county must provide the land granted as agreed upon in the granting contract; In default of such provision, the land user shall have the right to cancel the contract, the fees for granting the land-use right shall be returned by the department of land administration, and the land user may demand compensation for the breach of contract.

Article 18 Where a land user who needs to modify the land-use purpose agreed upon in the contract for granting the land-use right, he must obtain the consent of the granting party and the administrative department for urban planning under the people’s government of the city or county, conclude an agreement on the modification of the granting contract or conclude a new contract for granting the land-use right and the fees for granting the land-use right shall be accordingly readjusted.

Article 19 All the fees for granting the land-use right shall be turned over to the State Treasury and incorporated into the budget so as to be used for the construction of urban infrastructure and for land development. Specific measures for the turning over and use of the fees for granting the land-use right shall be formulated by the State Council.

Article 20 Before the term for the use of land specified in the contract for granting the land-use right expires, the State is not to recover the land-use right obtained by the land user in accordance with the law. Under special circumstances as required by public interests, the State may, in accordance with legal procedures, recover the land-use right before the expiration of the term and shall make appropriate compensation based on the number of years of utilization and the actual development of the land by the land user.

Article 21 The land-use right shall be terminated with loss of the land.

Article 22 Where the term for the use of land specified in the contract for granting the land-use right expires, and the land user needs to continue the use of the land, the land user shall apply for an extension of the term no later than one year ahead of the expiration. Such an application shall be approved except for the land to be reclaimed as required by public interests. Upon approval of the extension, the land user shall enter into a new contract for the granting of the land-use right and pay fees for the granting in accordance with the relevant regulations.

Where the term for the use of land specified in the contract for granting the land-use right expires, and the land user has not applied for an extension of the term or his application therefore is not approved in accordance with the provisions in the preceding paragraph, the land-use right shall be reclaimed by the State without compensation.