[Direct answer]In the Beijing area, the legal basis for the compensation standards for the demolition of enterprise factories is divided into four levels. The first level is the higher-level law. The Land Administration Law of the People's Republic of China (amended in 2019 and implemented on January 1, 2020) stipulates that fair compensation should be provided to the persons subject to expropriation, and the Implementing Regulations of the Land Administration Law further clarify the procedures and content requirements for compensation. The second level is the regulations on expropriation compensation and resettlement at the administrative regulation level and local regulations. The third level is the provincial-level implementation measures for expropriation compensation and resettlement, which are responsible for determining the principles and frameworks of compensation items and calculation methods. The fourth level is the municipal and district-level implementation plans for expropriation compensation, which specifically stipulate the compensation standards, resettlement methods, and incentive policies in the local area. Therefore, there is no uniform compensation standard for enterprise factories across the country. In practice, the current effective implementation plans for expropriation compensation in the local area should be used as the direct basis; for matters not specified in the plans, reference should be made to the provincial-level implementation measures and combined with assessments. There are differences in the compensation basis and resettlement methods between factories on collective land and factories on state-owned land, which need to be checked separately.Land expropriation and demolition, and administrative litigationThe column can assist in finding the applicable legal basis.

1. Problem background and typical scenarios

Common appeal scenarios include: the factory building is self-built but lacks construction procedures; the factory building mortgaged to the bank needs to be dealt with together; renting a factory building for operation, but the tenant is not the owner of the property; the factory building is identified as an illegal construction and the subsidy is greatly reduced; the compensation plan is organized and signed by the village committee; the land where the factory building is located is designated for industrial use, but its actual use is different.Business and contract disputes in enterprisesThe analysis of contracts and ownership rights in this column can be used to address basic issues related to factory buildings.

II. Key points of dispute

Focus I: The hierarchy of compensation standards and conflict resolution. Focus II: The differences in applicable legal basis for collective land and state-owned land. Focus III: The identification of factory buildings and area verification. Focus IV: The identification of illegal construction and the handling of compensation. Focus V: The estimation of losses from production and business suspensions. Focus VI: The qualification of signatories to compensation agreements.Real estate transactions and construction projectsThe explanations about building compliance and area verification in the column can be used for reference.

III. Professional analysis by Henglue Lawyers

Take the dispute over the compensation agreement for non-residential houses on collective land represented by lawyer Qi Chao Li of our firm as an example: The applicant company signed a compensation agreement with the villagers' committee of a certain village, agreeing to demolish a house with a construction area of over 4,000 square meters and pay corresponding compensation. After signing the agreement, the village committee failed to fulfill its obligations. The applicant discovered through applying for information disclosure that the factory building was not actually included in the scope of the expropriation. The lawyer's representation strategy was to first address the issue of legal basis: signing the agreement under the guise of expropriation but without actual expropriation, and the village committee lacking the subject qualification to sign the expropriation compensation agreement. On this basis, the lawyer argued that the agreement was fraudulent and applied for its invalidation, which was ultimately supported. This analysis path is of universal significance to enterprises: no matter how high the compensation standards are, if the expropriation itself lacks legal basis or the signing subject is not qualified, the standards cannot be applied. Therefore, the review order should be to first verify the expropriation basis and subject qualifications, and then compare the compensation standards item by item.Special services and other casesFor further reference on the effectiveness of the agreement, please refer to the explanations provided in the column. This case was handled by Beijing Henglu Law Firm.Zhi Chao LiThe attorney (practice license number: 11101202311629788, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

Action recommendations: 1. Clarify the land attributes and ownership of the factory and obtain ownership certificates; 2. Obtain the approval documents for expropriation and the compensation implementation plan through government information disclosure applications; 3. Verify the clauses related to the enterprise's factory in the plan, including compensation standards, resettlement methods, and incentive policies; 4. Commission an appraisal to determine the value of the factory and equipment; 5. Gather evidence of production and business suspension, as well as personnel resettlement; 6. Review all clauses item by item before signing the contract, clarifying payment deadlines and breach of contract liabilities. Legal basis: Article 47 of the Land Administration Law of the People's Republic of China (amended in 2019 and implemented on January 1, 2020); The provisions on expropriation compensation in the Implementing Regulations of the Land Administration Law of the People's Republic of China (implemented on September 1, 2021); The local expropriation compensation implementation plan; The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Reminder

First, the compensation standards are directly based on the current local policies, and experiences from other regions cannot be applied directly. Second, first verify the legality of the expropriation and the contracting parties, and then discuss the compensation amount. Third, the determination of the factory building area is often a focus of controversy, and the surveying and mapping standards need to be confirmed in advance. Fourth, the identification of illegal construction will significantly affect the subsidies, so it is necessary to prepare for it in the early stage. Fifth, the losses from production and business suspension require operational evidence to support them, and the tax payment and cash flow materials should be organized in advance. Sixth, the mortgage and seizure status should be clarified first to avoid affecting the subsequent transfer of ownership.Financial capital and cross-border transactions involving foreign entitiesThe asset verification approach in the column can be used as a reference for further study.

VI. Frequently Asked Questions

Q1: Is there a unified national standard for compensation for the demolition of factories?

There is no nationwide standard amount. The law establishes the principle of fair compensation, and the specific standards are determined by the implementation plans for expropriation and compensation in various regions. Therefore, in the same year and under similar conditions, the compensation levels for factories in different cities may vary significantly. Enterprises should take the current implementation plans for expropriation and compensation in their localities as a direct basis and apply for the plan text through government information disclosure; at the same time, they should understand the framework provisions on compensation items and calculation methods in the provincial implementation methods, so as to refer to them when the municipal-level plans are not clear enough.

Q2: How are the factory buildings on collective land compensated?

The compensation for factory buildings on collective land is usually subject to the local collective land expropriation compensation and resettlement plan, with the main compensation methods being monetary compensation and housing resettlement. It should be noted that the identification of housing ownership on collective land is different from that on state-owned land. Village committees usually do not have the qualification to sign expropriation compensation agreements, and the compensation should be signed with the organs or entities with expropriation qualifications. Therefore, enterprises should verify the qualifications of the parties before signing the agreement and obtain the compensation plan and approval documents through information disclosure to avoid defects in the effectiveness of the agreement.

Q3: Can the factory building be fully compensated even if it doesn't have a property ownership certificate?

Not necessarily. The lack of a property ownership certificate may affect the amount of compensation, but it doesn't necessarily mean there will be no compensation. In practice, a comprehensive assessment is usually required: whether the factory building actually exists, the construction time and actual use, whether the land nature allows construction, whether the approval procedures have been fulfilled, and whether it is an illegal construction. During the assessment process, the enterprise's investment certificates, construction materials, construction personnel, and the testimonies of neighbors can all be used as supporting materials. It is recommended to apply for information disclosure as soon as possible to obtain the assessment results, and to put forward opinions on the assessment conclusions in subsequent procedures to avoid accepting a compensation plan that is obviously too low before the facts are clarified.

Q4: What is the standard for compensating for the losses caused by production and business suspension?

It mainly depends on whether the local compensation plan clearly stipulates the relevant provisions. If the plan is clear, it should be implemented according to the plan; if the plan is not clear, it is usually determined through consultation based on the actual operating conditions of the enterprise in practice, with reference factors including the area of the house, the number of employees, the operating income and profit level, tax payment records, and the duration of the suspension of business. When making claims, it is necessary to prepare the business license, tax declaration forms, bank statements, social insurance payment records, and payrolls to form an evidence chain, and to entrust an appraisal or complete the estimation according to the provisions of the plan to avoid making claims solely based on verbal statements.

Q5: If the factory building is identified as an illegal construction, does that mean there will be no compensation?

There is not entirely no compensation. Illegal buildings usually cannot obtain the same compensation as legal buildings, but in practice, some costs may still be given appropriate subsidies, such as the structure of the house and its residual value, some demolition costs, etc., which depend on the local plan and the conclusion of the identification. The key lies in whether the identification process is legal and whether the identification conclusion has factual basis. Therefore, it is recommended to: first, apply for the identification conclusion and supporting documents; second, check whether the identification process is complete; third, if necessary, apply for administrative reconsideration or initiate administrative litigation to safeguard rights and interests. For related procedural issues, please refer to other sources for further information.Special services and other casesColumn.

The above answer is based on the judicial practice in Beijing. The adjudication guidelines in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situations.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the necessary evidence, to avoid missing the statutory time limit. →Land expropriation and demolition legal services·Attorney Zhai Chao Li·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.