[Direct answer]In the Beijing area, if a leased factory is subject to expropriation, the compensation agreement is generally signed by the owner of the house (the expropriated person), but the lessee may legally claim the relocation expenses, losses due to production and business suspension, and compensation for improvements that belong to them. According to Article 17 of the "Regulations on the Expropriation and Compensation of Houses on State-Owned Land" (promulgated and implemented on January 21, 2011), the compensation includes the value of the expropriated house, relocation and temporary resettlement compensation, and losses due to production and business suspension. Article 23 stipulates that the losses due to production and business suspension shall be determined based on the efficiency of the house before expropriation and the duration of the production and business suspension. The lessee should, in accordance with the provisions on expropriation compensation in the lease contract, negotiate the distribution with the lessor and the expropriation implementation unit. If no agreement can be reached, the lessee may sue according to law. It is recommended to keep the lease contract, the purchase receipts of decorations and equipment, and the tax payment records of the business. For more details, please refer to the relevant provisions.Legal services for land expropriation and demolition, and administrative litigation.

1. Problem background and typical scenarios

When leased factories and shops are subject to expropriation, tenants are most concerned about three things: whether they have their own share of compensation, when they must move out, and how to calculate the losses from production and business suspension. Typical scenarios include: the lease contract does not stipulate the distribution of expropriation compensation; the lessor has already signed an agreement with the expropriator, requiring tenants to move out within a specified time limit; the relocation fees and losses from production and business suspension are claimed by the lessor alone; the tenants' investments in decoration and equipment face uncompensated demolition; the lease procedures for factories on collective land are incomplete and ownership certificates are missing; and the lessor refuses any compensation on the grounds that the contract does not stipulate it. Many tenants believe that there is no compensation if the house is not their own, or they are afraid to assert their rights for fear of offending the lessor, resulting in the loss of their legitimate rights and interests. For cases involving the review of lease contract terms, the following can be combined with the review of the lease contract terms:Real estate sales and construction project servicesReconcile the accounts together.

II. Key points of contention

There are four key points of contention regarding the compensation for the leased factory premises. Firstly, the basis of the claim: the lessee is usually not the statutory subject of the expropriation, but according to the contract or the principle of fairness, the lessee can claim compensation from the lessor and the expropriation implementation unit for relocation fees, losses caused by suspension of production and business, and losses in decoration and additions. In some regions, judicial practice supports the lessee's participation as an interested party in the compensation distribution case. Secondly, whether the agreement takes precedence or the statutory compensation supplements it: if the lease contract has clear provisions on expropriation compensation, the provisions shall prevail; if there are no provisions or the provisions are unclear, the compensation items shall be determined according to the statutory compensation items and the actual losses claimed. Thirdly, the scope and calculation of losses: the losses caused by suspension of production and business shall be verified by tax records, financial statements, and proof of operating cash flow; the relocation fees shall be based on actual expenditure receipts. Fourthly, the timing of intervention: if the lessor has already signed the agreement, the lessee should promptly raise objections and apply for information disclosure to verify the compensation plan and amount, so as to avoid being forced to move out passively.

III. Professional analysis by Henglue Law Firm

The government information disclosure review case handled by Attorney Jing Weiyi illustrates the importance of verifying expropriation information for tenants to protect their rights. The client, who was involved in a dispute over land contract ownership, needed to verify the history of grain subsidies issued to a specific plot of land. On December 15, 2025, the client mailed a "Government Information Disclosure Application Form" to the County Agriculture and Rural Affairs Bureau. After receiving the form on December 17, 2025, the bureau provided a response on January 8, 2026, which contained issues such as confusion over plot information and failure to disclose details from 2011 to 2017. In essence, the bureau refused to fulfill its disclosure obligation by citing internal management inconveniences. On February 23, 2026, the attorney filed an administrative review application on behalf of the client. The review authority determined that the respondent failed to provide a clear and accurate response in accordance with Article 36 of the "Government Information Disclosure Regulations", constituting a failure to fully and accurately fulfill its response obligations. The authority decided to revoke the original response and ordered the bureau to handle the case again within 20 working days.

This case is handled by Beijing Henglu Law Firm.I respect and admire you, YiyiThe lawyer (practice license number: 1110120251097379, subject to the document issued by the judicial administrative organ) acts as the agent. In the expropriation and compensation case handled by Attorney Zhang Wei, the house was used for production and operation for a long time and was identified as a residential building converted into a commercial one. Based on this, the lawyer claimed reasonable compensation referring to the standards for commercial operation houses, ultimately increasing the compensation amount from 700,000 yuan to 1.45 million yuan. The principles of protecting rights in leased factories are similar: first, clarify the expropriation information through information disclosure and on-site verification, then claim rights based on contractual provisions and statutory compensation items, so as to avoid being at a disadvantageous position.

IV. Practical suggestions and legal basis

The legal basis mainly includes Article 17 of the "Regulations on the Acquisition and Compensation of Houses on State-Owned Land" (promulgated and implemented on January 21, 2011) (the scope of compensation includes relocation fees and losses due to suspension of production and business); Article 23 of the same regulation (the losses due to suspension of production and business shall be determined based on the pre-acquisition benefits and the duration of suspension of production and business); Article 715 of the "Civil Code of the People's Republic of China" (implemented on January 1, 2021) (the lessee may, with the consent of the lessor, improve or add other facilities to the leased property); and Article 188 of the same code (the general statute of limitations is three years). For factories located on collective land, reference should also be made to the provisions of Article 48 of the "Land Administration Law of the People's Republic of China" (amended on August 26, 2019 and implemented on January 1, 2020) regarding compensation items. Practical suggestions: First, review the provisions of the lease contract regarding acquisition compensation and breach of contract; fix the investment in decoration, equipment purchase, and tax payment certificates for operation; apply for information disclosure to obtain the acquisition approval, compensation plan, and evaluation report; negotiate the distribution plan with the lessor and the acquisition implementation unit in writing, and reach an agreement in writing; if no agreement can be reached, file a lawsuit to claim compensation within the statute of limitations. For the disposal of equipment and debt clearance, follow-up actions can be taken accordingly.Creditor-debtor relations and enforcement case servicesCoordination.

5. Henglue Law Firm's Advice

Tenants need to avoid two extremes when protecting their rights: first, assuming that the house is not theirs and completely giving up on compensation; second, engaging in emotional confrontations and refusing to move out, which may lead to breach of contract risks. The correct approach is to base claims on evidence: contract agreements, invoices for decoration and equipment, tax payment and business transaction records, and proof of relocation expenses—all of which are indispensable. At the same time, tenants should pay close attention to two deadlines: the relocation period given by the landlord or the expropriation authority, and the statute of limitations for asserting rights. When handling similar cases in Beijing, Henglue Lawyers typically first apply for information disclosure to verify the expropriation project information, then distinguish between contractual disputes and compensation distribution claims to choose the appropriate legal path, and focus on negotiating key points such as production and business loss and added value. Specific cases should be subject to the currently effective laws, regulations, and judicial rulings.

VI. Frequently Asked Questions

Q1: When the leased factory building is demolished, can the tenants actually receive compensation?

It can be claimed, but the share depends on the contractual provisions and local policies. According to the law, the subject of expropriation is the owner of the house, and the compensation agreement is signed by him/her; although the lessee is not a statutory subject of expropriation, he/she can claim compensation for relocation fees, losses of production and business interruption, decoration and additions to the property from the lessor or the expropriation implementation unit according to law or contract. If the contract clearly stipulates that the compensation belongs to the lessor, the court will generally respect the agreement; if there is no agreement or the agreement is unclear, the tenant can claim to participate in the distribution of the actual losses. In some regions, judicial practice allows the lessee to participate as an interested party in the mediation or litigation of compensation distribution. It is recommended to first review the contract terms, then fix the evidence of operation and investment, and strive for the deserved share through negotiation or litigation.

Q2: If a tenant claims compensation, what evidence do they need to prepare?

The core evidence includes: lease contracts and supplementary agreements (to prove the lease relationship and compensation agreements), rental payment receipts, decoration contracts and payment vouchers (to prove the additional investments), equipment purchase invoices and asset lists (to prove the relocation of equipment and losses), tax records and operating records (to prove the losses from production and business suspension), relocation fees and temporary accommodation expenditure vouchers, expropriation announcements and compensation plan texts (to prove the facts of expropriation). The goal of organizing the evidence is to ensure the authenticity of the lease relationship, the specificity of the investments and losses, and the correspondence between the compensation items and each claim. For each claim, corresponding vouchers and records must be provided. The original contracts and account books must be kept by the lessee themselves. When necessary, apply for notarization or evidence preservation to prevent difficulties in providing evidence after the lessor cancels the business entity.

Q3: If a tenant hires a lawyer to protect their rights, how is the fee calculated?

The attorney's fees are agreed upon by the law firm and the client in the power of attorney contract in accordance with the "Measures for the Administration of Lawyer's Service Fees" (issued and implemented in 2006), which include charging by case, charging according to the proportion of the subject matter, and charging by time; administrative litigation cases are not allowed to implement risk-based attorney's fees according to law, and civil compensation distribution cases applying risk-based attorney's fees are also subject to a proportional cap. The subject matter of tenant disputes is often relocation fees, losses from production and business suspension, and the added value of decoration, which can be quantified and are suitable for first calculating the total amount that can be claimed and then comparing the cost of protecting rights. It is recommended to require the law firm to provide a detailed fee breakdown before entrusting, clarify the stages of representation, whether it includes travel and investigation expenses, refund conditions, and sign a written contract stamped with the law firm's official seal to avoid price increases in the middle of the process.

Q4: How long does it typically take to resolve disputes over compensation for the expropriation of leased factory buildings?

The negotiation process can be quick, and a distribution agreement may be reached before or around the relocation deadline set by the expropriating party. If the negotiation fails and a lawsuit is initiated, the first-instance ordinary procedure generally concludes within six months, and the summary procedure within three months. For disputes over lease compensation with clear facts, the summary procedure is often applied. If appraisal and identification, or the addition of the lessor or the expropriation implementation unit as a third party are involved, the timeframe will be extended accordingly. For appeals against the first-instance verdict, the second-instance procedure generally takes three months. Overall, most disputes are resolved within a few months, but complex cases may take over a year. Tip: The relocation deadline does not equal the deadline for waiving rights. Tenants can collect evidence and assert their claims simultaneously during the relocation process to avoid losing the opportunity to provide evidence due to the urgency of vacating the premises.

Q5: If the factory building is subject to expropriation, what should tenants do first?

Four steps to proceed: Firstly, retrieve the lease contract and review the provisions on expropriation compensation, early termination, and breach of contract liability clause by clause to determine the contractual basis for your claims. Secondly, comprehensively collect evidence, including decoration contracts and invoices, equipment lists, tax payment and operating records, and rental payment records. If possible, notarize the evidence in a timely manner. Thirdly, apply to the expropriation implementation unit to disclose the expropriation approval, compensation plan, appraisal report, and the signing of the compensation agreement, and verify the composition of the compensation received by the lessor. Fourthly, submit compensation claims in writing and retain proof of delivery. Negotiate with the lessor and the expropriation authority on the distribution of compensation. If no agreement is reached, file a lawsuit within the three-year statute of limitations. For issues involving employee resettlement and equipment disposal, you can consult lawyers in corresponding fields simultaneously.

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

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Land expropriation and demolition legal services·Attorney Jing Weiyi·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 a timely manner.