[Direct answer]To increase the compensation in the negotiation of demolition compensation, the key is to replace verbal bargaining with legal requirements: apply for government information disclosure before the negotiation to verify the land expropriation approval, the scope of the expropriation area, and the compensation and resettlement plan; during the negotiation, strictly follow Article 17 of the "Regulations on the Expropriation and Compensation of Houses on State-Owned Land" to claim the three statutory compensations of housing value, temporary resettlement, and loss of production and business operations; if the evaluation result is obviously too low, apply for a review within ten days after receiving it; before signing the contract, verify the qualifications of the expropriation subject and put the total compensation amount, payment milestones, and breach of contract liability all in writing.Land expropriation and demolition legal servicesEvaluate the negotiating leverage. For more details, please refer to the following link:Beijing Henglu Law Firm.

I. Legal basis and interpretation of provisions

1. Article 17 of the Regulations on the Acquisition and Compensation of Houses on State-Owned Land (effective from January 21, 2011)

The municipal and county-level people's governments that make housing expropriation decisions shall provide three types of compensation to the expropriated persons: compensation for the value of the expropriated houses, compensation for relocation and temporary resettlement caused by the expropriation of houses, and compensation for the loss of production and business caused by the expropriation of houses. The municipal and county governments shall also formulate assistance and incentive measures. The legislative purpose is to ensure that the compensation obtained by the expropriated persons is sufficient to restore their original living and operating conditions. In the application of negotiation, the three types of compensation should be listed and compensated one by one. The loss of production and business and the cost of relocation and temporary resettlement are most often overlooked. The key evidence includes business licenses, tax records, lease contracts, employee rosters, and other operating evidence. The more complete the materials are, the more support there will be for the claim.

2. Article 48 of the Land Administration Law of the People's Republic of China (effective from January 1, 2020)

The land expropriation shall provide fair and reasonable compensation to ensure that the original living standards of the farmers whose land is expropriated will not be reduced and their long-term livelihoods will be guaranteed; the land compensation fees and resettlement assistance fees for expropriated agricultural land shall be determined by announcing the comprehensive land price of the area, and the compensation fees for attached buildings and seedlings shall also be paid in full. This article establishes the bottom line standard of "not reducing the original living standards" for the compensation of collective land expropriation, which is the most powerful overall basis for negotiation. During the negotiation, the total amount of compensation can be compared with the prices of similar real estate markets in the surrounding area, the comprehensive land price of the area, and the operating losses, and any proposal lower than this bottom line can be reasonably requested to be raised; common disputes include the identification of the nature of the house and the measurement of its area, which should be fixed in writing before signing the contract.

3. Practical adjudication approach (where do the negotiation chips come from?)

When the court and arbitration authorities review the compensation for expropriation and demolition, the focus is on the legality of the expropriation process and the qualifications of the contracting parties. If there is no land expropriation approval, no legal announcement, or unqualified contracting parties, the validity of the agreement and the compensation decision may be denied. This is the greatest bargaining chip for the expropriated parties. In the appraisal process, the court generally insists on the order of first review, then appraisal, and finally adjudication. Review and appraisal are formal channels to increase compensation. It is crucial to avoid using delay or even refusing to move as a means of resistance at the negotiation table. The most common pitfall for parties is rushing to sign the agreement without verifying the scope of expropriation and the qualifications of the contracting parties. Later, they may find that the house is not within the red line, but the agreement has already been signed, which greatly increases the cost of protecting their rights. The combination of information disclosure, appraisal review, and qualification review is the only compliant and effective path to increase compensation.

II. Henglue Law Firm's Real Cases (Detailed Review)

Review of the case:On May 19, 2022, a company signed a "Non-Residential Building Demolition Compensation Agreement" with the villagers' committee of a certain village, agreeing to demolish its factory building with a floor area of 4945.24 square meters, and for the respondent to pay a total of 2,599,039 yuan in various compensation fees. The agreement stipulated that after the agreement was signed and 50% of the funds were in place, the company would vacate the premises for inspection and then pay the remaining balance. However, after the agreement was signed, the village committee has failed to fulfill its obligations, and whether the factory building would be demolished or not, and whether the company could continue its operations remain uncertain. The company has entrusted Beijing Henglu Law Firm to handle the matter.Zhai Chao LiThe lawyer represented the client to protect their rights. After applying for the disclosure of government information, the lawyer made a crucial discovery: the client's factory location had not actually been expropriated.

The focus of the controversy:First, if the factory building has not been expropriated despite the signing of the agreement in the name of expropriation, is the agreement invalid due to fraud? Second, does the villagers' committee have the subject qualification to sign the demolition compensation agreement? Third, how should the liability for compensation for losses be determined after the agreement is invalidated?

Our position and that of the other party are as follows:The company requests that the "Non-Residential House Demolition Compensation Agreement" be confirmed as invalid and that the village committee bear the arbitration fees; the village committee signed the agreement under the guise of expropriation, claiming that the agreement is valid and should be performed in accordance with the agreement.

Attorney's Strategy and Legal Opinions:Attorney Xi Chao Li first applied for government information disclosure to verify that the factory building had not been expropriated and secured the core evidence of "non-expropriation". Secondly, she cited Article 148 of the Civil Code of the People's Republic of China to argue that the other party's signing of the contract under the guise of expropriation had coerced the company into making a decision to sign the contract against its true intention, constituting fraud. Thirdly, she cited Article 47 of the Land Administration Law of the People's Republic of China, as amended in 2020, to demonstrate that after the expropriation of land is approved through legal procedures, the local government at or above the county level shall announce and organize its implementation. Village committees do not have the qualification to be contracting parties. On this basis, she requested the arbitration to confirm the invalidity of the agreement.

The court's reasoning and the outcome of the case:The arbitration tribunal held that, according to Article 47 of the newly amended Land Administration Law in 2020, after the state's land expropriation is approved through legal procedures, the local governments at or above the county level shall announce it and organize its implementation. The respondent village committee does not have the subject qualification to sign the "Non-Residential House Demolition and Compensation Agreement", and the signed agreement should be an invalid contract. An invalid legal act is not legally binding from the outset, and the tribunal confirmed that the agreement is an invalid contract. The expropriator intentionally concealed the scope of the demolition and intended to implement the demolition, and should bear compensation liability for the losses of the expropriated persons. This case shows that verifying the scope of the expropriation and the subject qualification before signing the agreement is the decisive factor for the success or failure of the compensation negotiation.

This case is handled by Beijing Henglu Law FirmZhai Chao LiAttorney (Practice Certificate No.: 11101202311629788, subject to the certificate issued by the judicial administrative organ) acting as an agent.

III. Frequently Asked Questions

Q1: What preparations should be made before the demolition negotiation?

First, apply to natural resources, housing and construction departments for government information disclosure, retrieve land expropriation approval documents, red line maps, expropriation announcements, and compensation and resettlement plans, and verify whether your own house is within the scope of expropriation and whether the project is legal; Second, organize property certificates, land certificates, business licenses, tax records, lease contracts, and other ownership and operation evidence; Third, refer to Article 17 of the "Regulations on the Expropriation and Compensation of Houses on State-Owned Land" to list the three compensation items you are entitled to, and form a written negotiation draft. The more thorough the preparatory work is, the more proactive the negotiation will be, and the less likely it will be counterattacked by procedural flaws.

Q2: If the appraisal value is too low, how can I strive to increase it?

If there are any objections to the assessment report, the party concerned shall apply for a review of the assessment in writing within ten days from the date of receipt; if the party is still not satisfied with the review result, he/she may apply to the Real Estate Price Appraisal Expert Committee for appraisal within the prescribed time limit. During the negotiation, the party may point out the omissions in the assessment one by one, such as the failure to include the decoration, the loss of production and business, the relocation expenses, or the incorrect valuation according to the use, and request a recalculation. The review and appraisal are formal channels for raising the price provided by law, which are more powerful than simply refusing to sign the contract, and also avoid losing the opportunity for relief due to exceeding the time limit.

Q3: What documents can I ask the other party to present during the negotiation?

You can request to see and keep documents such as the land expropriation approval, the expropriation decision and announcement, the compensation and resettlement plan, the evaluation report, and the proof of the availability of compensation funds. According to Article 47 of the Land Administration Law and the Implementing Regulations of the Land Administration Law, the expropriation announcement, compensation plan, and proof of funds are all legally required contents. If the other party refuses to show these documents, this itself constitutes important information. The contracting parties should verify that the contracting parties are municipal or county-level people's governments or their designated expropriation departments. The validity of agreements signed by non-statutory entities such as village committees is questionable, and this case is a prime example of this.

Q4: How should the terms of the compensation agreement be written to ensure legal validity?

At a minimum, the agreement should include the following five items: the total amount of compensation and the breakdown of each item; the payment deadlines and the liability for late payments; the timing of vacating the premises and the order of compensation followed by relocation; the location, size, and delivery standards of the resettlement housing or transitional arrangements; and the calculation method for production and business loss and relocation expenses. It is crucial to avoid signing blank agreements or allowing the original copy to be taken away by the other party. Always keep a copy of the original agreement for yourself. Oral promises that are not included in the agreement will be difficult to prove later. The more specific the terms are, the less room there will be for disputes in the future, and you will have a basis for claiming rights if the other party breaches the contract.

Q5: If we can't reach an agreement after a long time, will our house be forcibly demolished?

In legal expropriation, only if the compensation decision has been made and the expropriated person does not appeal, litigate, or move out within the statutory time limit can they apply to the court for compulsory enforcement according to law. It is illegal for administrative authorities to carry out forced demolitions on their own. If an agreement cannot be reached, the expropriated person should promptly file an appeal or lawsuit against the compensation decision to continue to fight for their rights through legal procedures, and at the same time, preserve evidence such as the current state of the house, decorations, and items for claiming compensation. Once faced with illegal forced demolitions, the expropriated person can file a lawsuit to confirm the illegality and apply for state compensation, and should not resort to violent means to resist.

IV. Suggestions for Protecting Your Rights

  • Before signing the contract, it is necessary to apply for government information disclosure to verify the land expropriation approval, the boundaries of the red line, and the qualifications of the contracting parties. If the house is not within the scope of expropriation, the agreement must not be signed under any circumstances.
  • Within ten days after receiving the low-valuation result, apply for a review and then apply for an appraisal. Use the review and appraisal opinions as bargaining chips in the negotiation process.
  • In accordance with Article 17 of the "Regulations on the Acquisition and Compensation of Houses on State-Owned Land", claim the three statutory compensations item by item, and do not forget to calculate the losses of production and business suspension.
  • Keep the original copy of the agreement, and formalize the amounts, milestones, and breach of contract liabilities in writing. Reject blank clauses and verbal commitments.
  • When the compensation dispute reaches an impasse, it is necessary to resolve it promptly throughLand expropriation and demolition legal servicesEvaluate the review and litigation paths to avoid missing legal deadlines.

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