[Direct answer]In the Beijing area, if a self-built factory is demolished due to land lease, there is compensation, but the items of compensation and their ownership need to be distinguished. The land compensation fee and resettlement assistance fee generally belong to the land rights holder (the lessor or the collective economic organization), while the lessee can usually claim compensation for the above-ground buildings and structures, decoration and additions, losses from production and business suspension, relocation fees, and temporary resettlement fees, etc. For self-built factories that lack formal procedures, whether they can be compensated as legal buildings needs to be determined based on the construction year, planning policies, and contract provisions. This is in accordance with Article 17 and Article 23 of the "Regulations on the Acquisition and Compensation of Houses on State-Owned Land" (Decree No. 590 of the State Council, implemented on January 21, 2011) and Article 47 of the "Land Administration Law of the People's Republic of China" (amended in 2019 and implemented on January 1, 2020). It is recommended to verify the acquisition documents, fixed assets, and evidence of operating losses as soon as possible, and clarify the distribution of compensation among the three parties. For more details, please refer to the following link:Legal services for land expropriation and demolition, and administrative litigation.

1. Problem background and typical scenarios

When enterprises build factories and operate on leased collective land or state-owned land, the most common dilemma they face during expropriation is that the expropriator only negotiates with the lessor, and the lessee is notified to move out within a specified time limit; self-built factories are compensated at a lower standard or even deemed as illegal construction because the necessary procedures were not completed in the same year; and losses from production and business suspension, as well as equipment relocation fees, are often ignored. Lessee enterprise owners often have questions: The land is not mine, but I built the factory. Does the demolition have anything to do with me? In fact, although lessees are not the land rights holders, they do have independent rights to the improvements on the land and operational losses. The key to protecting their rights lies in evidence and negotiation strategies. For more details, please refer to the relevant guidelines.Legal services for land expropriation and demolition, and administrative litigation.

II. Key points of contention

Such disputes typically revolve around five issues. First, the eligibility of the compensation subject: whether the lessee can sign a compensation agreement as the subject of expropriation or compensation, varies across different regions and needs to be considered in light of the lease term, the ownership of the factory buildings, and local policies. Second, the ownership of the above-ground buildings: whether there is evidence of improvements to the self-built parts, construction and payment receipts, and the determination of compensation for unregistered parts. Third, the scope of losses: how to calculate the losses from production and business suspension based on the operating efficiency and the duration of the suspension, and how to list the losses from equipment relocation, commissioning, and scrapping. Fourth, the provisions of the lease contract: if the contract stipulates the allocation of demolition compensation, the provisions shall prevail, but the statutory compensation cannot be excluded. Fifth, the risk of illegal construction: whether the unregistered factory buildings are identified as illegal structures, which directly affects whether compensation will be provided. When handling similar cases in Beijing, the evaluation report and operational evidence are the core review items.

III. Professional analysis by Henglue Law Firm

Attorney He Ningning once represented a case of information disclosure review arising from multiple project acquisitions, demonstrating the fundamental role of verifying acquisition documents in safeguarding compensation rights. Liu * and Wang * were former herders at a government-run ranch in H County, legally holding land-use certificates for the grasslands involved in the case. These grasslands were subsequently acquired for multiple public welfare projects, including a water purification plant, a brick factory, a bus parking lot, a national middle school, a law enforcement and case-handling center, a detention center, a photovoltaic power plant, a gas station, and an elementary school. To verify the legality of the acquisitions and claim compensation rights, the two individuals submitted a government information disclosure request to the H County People's Government on September 9, 2025, seeking access to project application and approval documents, feasibility studies, land transfer contracts, land acquisition approvals, compensation plans, proof of compensation funds receipt and disbursement, resettlement agreements, and acquisition announcements, among other land acquisition documents and ranch reform-related materials. The county government acknowledged receipt of the request on September 12, 2025 and was required by Article 33 of the Regulations on Government Information Disclosure of the People's Republic of China to respond within 20 working days, but failed to do so until May 27, 2026, exceeding the deadline by over seven months without providing any notification of extension. The response selectively disclosed only partial project materials, refusing to provide core information such as the acquisition announcement, complete land acquisition approvals, resettlement agreements, and compensation fund disbursement details on grounds of privacy or confidentiality concerns, or failing to respond altogether. Attorney He Ningning gathered evidence including fixed express delivery receipts, logistics sign-off records, and application and response documents to file an administrative review, arguing that the delayed response violated legal procedures; the acquisition announcement and compensation plans should have been publicly disclosed under Article 47 of the Land Management Law of the People's Republic of China, while resettlement agreements and compensation fund disbursement proofs constituted proactively disclosable information under Article 19 of the Regulations on Government Information Disclosure; and the blanket refusal on privacy or confidentiality grounds lacked legal basis. The review authority confirmed three violations: delayed response, failure to fulfill reasonable search obligations, and failure to implement differentiated processing. In accordance with Article 64(1) of the Administrative Review Law of the People's Republic of China, the response was revoked and the government ordered to fully disclose the information within a specified timeframe. For leaseholders, the case highlights the importance of obtaining documents first during acquisitions. Land acquisition approvals, acquisition announcements, compensation plans, and appraisal reports serve as the starting point for determining compensation entitlements and standards. This case was handled by Beijing Henglu Law Firm.He NingningThe lawyer (practice license number: 11101202511925103, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis includes Article 17 (Compensation Scope), Article 22 (Relocation and Temporary Resettlement Fees), Article 23 (Losses Due to Production and Business Suspension), and Article 25 (Content of Compensation Agreements) of the "Regulations on the Acquisition and Compensation of Houses on State-Owned Land" (Decree No. 590 of the State Council, implemented on January 21, 2011); Article 47 (Acquisition and Compensation) of the "Land Administration Law of the People's Republic of China" (amended in 2019 and implemented on January 1, 2020); Article 19 (Proactive Disclosure) and Article 33 (Reply Deadline) of the "Regulations on the Disclosure of Government Information of the People's Republic of China" (implemented on May 15, 2019); and the provisions on lease contracts and accessions in the "Civil Code of the People's Republic of China" (implemented on January 1, 2021). Action List: 1. Retrieve the land expropriation approval, expropriation decision, compensation plan, and appraisal report through government information disclosure or channels provided by the expropriation authority. 2. Inventory the self-built factory buildings, renovations, and equipment, and collect construction contracts, payment receipts, drawings, and photos. 3. Preserve evidence of operating losses, including business licenses, tax payment certificates, social insurance payroll records, and order contracts. 4. Clarify the ownership of each compensation item in writing with the lessor and the expropriation authority, and sign a tripartite agreement or supplementary agreement if necessary. 5. Verify the amount, timeframe, and breach of contract liabilities item by item before signing the agreement. For specific steps, please refer to the following link: [Link].Legal services for land expropriation and demolition, and administrative litigation.

5. Henglu Law Firm's Reminder

When leasing land to build a factory and protecting one's rights, it is most important to avoid the practice of "relocating first and then negotiating compensation". Once the equipment is dismantled and relocated, the losses from the interruption of operations will become a fait accompli, and the negotiating position will decline accordingly. If the factory without formal procedures is identified as an unauthorized construction, the compensation space will be greatly reduced. If the lessee and the lessor have an agreement on the ownership of the compensation, they shall handle it in accordance with the agreement, but the statutory compensation items will not be automatically eliminated due to the contractual agreement. The losses from the suspension of production and business operations depend on the supporting evidence of the operation, such as tax invoices, payroll records, and order contracts, which should be preserved in advance. When handling similar cases in the Beijing area, it is recommended to entrust a professional agency as soon as possible.Beijing Henglue Law FirmProfessional lawyers intervened in the negotiations and prioritized the preparation of the asset list and the evidence of losses.

VI. Frequently Asked Questions

Q1: If I lease land to build a factory and then face demolition, can I get compensation?

There's room for negotiation, but ownership needs to be distinguished. Land compensation fees and resettlement assistance fees generally belong to the land rights holders; lessees may claim compensation for aboveground buildings and structures, decoration additions, losses from production and business suspension, relocation fees, temporary resettlement fees, etc. If there are contractual provisions, they shall follow the contractual provisions. Whether they can get compensation and the amount of compensation depend on the construction procedures of the factory building, the evaluation conclusions, the operating evidence, and the local compensation policies. The specific case shall be subject to the expropriation plan and the court's determination, and there is no definite result. It's crucial to fix the evidence in advance.

Q2: What evidence should the leasing company prepare?

The core aspects are assets and operations. **Assets**: Lease contracts and rental payment receipts, construction contracts and payment receipts for self-built factories, completion drawings, photos and videos of factory buildings and equipment, equipment lists and purchase invoices, decoration and add-on certificates. **Operations**: Business licenses, tax payment certificates, social insurance and salary records, order contracts, client lists, and basis for calculating losses from production and business shutdowns. **Procedural documents**: Expropriation decisions, compensation plans, appraisal reports, relocation notices, and communication records with the expropriation authorities and landlords. The more complete the evidence is, the greater the room for negotiation and litigation in compensation matters.

Q3: How much does it cost to hire a lawyer to handle the demolition of a company's premises?

The attorney's fees are determined through negotiation between the client and the law firm. For enterprise demolition cases, fees are typically charged based on a percentage of the contract value or in stages, with no unified government pricing. There are no fees for reconsideration. For litigation, fees are paid according to the standards set out in the "Measures for the Payment of Litigation Fees" (State Council Decree No. 481, implemented on April 1, 2007), with the losing party bearing the costs or sharing them proportionally. Asset and loss appraisal and expert evaluation fees are prepaid by the applicant and shared based on the results. It is recommended to clarify the fee calculation method and stages before entrusting the case, and to include the appraisal fees in the overall budget. Reviewing the contract terms before signing can be entrusted as a separate matter.

Q4: How long does it usually take to negotiate the compensation for enterprise demolition?

It depends on the path. Negotiations can take a few weeks, and those involving a balance of interests among three parties may take several months; for applications for administrative reconsideration, a decision is generally made within 60 days from the date of acceptance; for litigation, the first-instance ordinary procedure takes six months and the summary procedure takes three months, with corresponding extensions for appraisal and identification. In this case, the party applied for the disclosure of expropriation documents in September 2025, but did not receive a timely response until May 2026, indicating that the expropriation process might be delayed. Therefore, it is necessary to initiate legal protection as soon as possible and closely monitor every deadline point.

Q5: The factory building is going to be demolished. What should be done first?

There are four steps to proceed with this. Firstly, suspend the relocation decision and request the expropriation decision, compensation plan, and evaluation report in writing. If necessary, apply for government information disclosure to verify the legality. Secondly, conduct a comprehensive inventory of the factory buildings, equipment, and operating assets, and fix the ownership, construction, and payment vouchers. Thirdly, organize the basis for calculating the losses from production and business suspension and the relocation costs, and form a written list. Fourthly, clarify the compensation ownership with the lessor and the expropriator and negotiate item by item. Before signing the contract, please have a lawyer review the terms. Never relocate before signing a blank agreement or making verbal commitments.

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

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials, so as to avoid missing the statutory time limit. →Land expropriation and demolition legal services·Attorney He Ningning·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on current 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. In the event of a dispute, please consult a practicing lawyer in a timely manner.