[Direct answer]In the Beijing area, when enterprises lease factories and encounter demolition, the calculation of compensation requires distinguishing between ownership and project nature: lessees can usually claim compensation for production and business losses, relocation subsidies, and compensation for the relocation of equipment and decorative fixtures, but the compensation for the value of the house generally belongs to the owner. According to Article 48 of the Land Administration Law of the People's Republic of China, the compensation for expropriation includes land compensation, resettlement subsidies, and housing for rural villagers; Article 17 of the Regulations on the Expropriation and Compensation of Buildings on State-Owned Land clearly states that compensation includes the value of the expropriated house, relocation and temporary resettlement, and production and business losses. The key lies in the provisions of the lease contract, the actual operating entity, and the local compensation plan. It is recommended to first verify the scope of expropriation and the objects of compensation, and then calculate the projects that can be claimed. For more details, please refer to the following link:Legal services for land expropriation and demolition, and administrative litigation.

I. Problem Background and Typical Scenarios

Disputes over demolition compensation for leased factories are common in three situations: when the lease period has not expired and the lessee is faced with the demolition of the decorations and equipment they have invested in; when the contract stipulates that the ownership of the demolition compensation is unclear, and the lessor and the lessee dispute over the losses caused by the suspension of production and business; and when the lessee only realizes after the announcement of the demolition scope that there are doubts about whether the leased factory is actually within the red line. Many business owners only focus on the total compensation amount and ignore the items that they, as the actual operators, can independently claim, thereby missing out on the losses caused by the suspension of production and business and the relocation fees. The essence of demolition compensation for leased factories is the separation of "ownership compensation" and "use rights losses", and clarifying the two is the prerequisite for calculation. For assets involving the enterprise, they can be combined with other factors to determine the compensation amount.Business and contract dispute services for enterprisesReview the lease terms.

II. Key points of dispute

There are three focal points of the dispute. Firstly, the identification of the compensation object: the compensation for production and business suspension and relocation assistance are generally intended for the lessee who actually operates and uses the property, while the compensation for the value of the house belongs to the owner of the property rights, and the two cannot be confused. Secondly, the connection between the contractual provisions and the statutory compensation: the lease contract takes precedence in the allocation of demolition compensation, but if the agreement is unclear, it shall be determined according to the statutory items and the local plan. Thirdly, the scope of expropriation and its legality: whether the factory building is truly within the expropriation red line and whether the project approval documents are complete directly determine whether the compensation is established. For related disputes over property rights confirmation, reference can be made to the relevant provisions.Special services and other case servicesClarify the nature of the issue.

III. Professional analysis by Henglue Law Firm

In combination with the case handling description. He Ningning, a lawyer from Beijing Henglu Law Firm, once represented a case of disclosure of land expropriation information: Liu **'s legal house in Shuguang Village, XX Town, H City was included in the expropriation for high-speed rail construction but was not compensated. On September 23, 2025, he applied to the municipal government for disclosure of seven core land expropriation information, but the municipal government refused to disclose it on the grounds of "non-existence of the information". The lawyer keenly identified the evasion of disclosure obligations and filed for administrative reconsideration twice. In the second reconsideration (on April 14, 2026), the reconsideration organ found that the respondent failed to perform its statutory duties of government information disclosure in accordance with the law and ordered it to provide information such as the land expropriation announcement. This case reveals that when enterprises lease factories and encounter demolition, the first step is to verify the scope and legality of the expropriation through information disclosure to avoid wasting resources outside the expropriation scope. This case was handled by Beijing Henglu Law Firm.He NingningThe lawyer (practice certificate number: 11101202511925103, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis is Article 48 (Scope of Compensation for Expropriation) of the Land Administration Law of the People's Republic of China (amended on August 26, 2019 and implemented on January 1, 2020); the provisions on compensation and resettlement plans and information disclosure in the Implementing Regulations of the Land Administration Law of the People's Republic of China (amended on July 2, 2021 and implemented on September 1, 2021); Article 17 (Scope of Compensation Including Losses Due to Suspension of Production and Business) and Article 23 (Compensation for Losses Due to Suspension of Production and Business) of the Regulations on Expropriation and Compensation for Buildings on State-Owned Land (implemented on January 21, 2011); and the Methods for Payment of Litigation Costs (implemented on April 1, 2007). Practical suggestions: First, apply for information disclosure to verify the four boundaries of the expropriation area and the approval documents; sort out the provisions on demolition compensation in the lease contract; entrust an appraisal to evaluate the losses due to suspension of production and business and equipment relocation; and legally claim disputes over the compensation objects. For issues involving rent and breach of contract, these can be combined with other legal provisions to address them comprehensively.Creditor-debtor relations and enforcement case servicesHandle it.

5. Henglu Law Firm's Reminder

When a company leases a factory and faces demolition, the key to calculating compensation lies in "verifying first and then claiming". It is essential to first confirm through information disclosure whether the factory is truly within the scope of the demolition and whether the project is legal, to avoid unnecessary negotiations with the demolition authorities outside the scope. Then, based on the lease contract and the local plan, calculate the losses from production and business suspension, relocation subsidies, and compensation for ancillary facilities item by item. Never trust verbal promises. All compensation must be documented in a written agreement. If needed, professional support can be obtained throughThe official website of Beijing Henglu Law FirmThe appointment for evaluation will help lawyers identify the legal claims and evidence chain that you can pursue.

VI. Frequently Asked Questions

Q1: If the factory building leased by the company is demolished, how much compensation will I receive, and what are my chances of winning the case?

The lessee's chances of obtaining compensation depend on whether the items that can be claimed are clear and whether the evidence is solid. Generally, the compensation for the value of the house belongs to the owner of the property rights, and the lessee can independently claim compensation for losses from production and business interruption, relocation subsidies, equipment relocation fees, and compensation for decoration accessories. If the lease contract clearly stipulates the distribution of demolition compensation, the compensation shall be in accordance with the contract; if the contract is unclear, it shall be in accordance with the statutory items and local plans. Whether and how much compensation can be obtained depends on proving the actual operation, the amount of losses, and the scope of the demolition. Taking the case of information disclosure as an example, first verify that the factory building is indeed within the scope of the demolition, and then the subsequent claims for compensation will have a basis. It is recommended to entrust a lawyer to evaluate the contract and the plan, and never give up rights due to the misjudgment that "there is no compensation for leased houses".

Q2: If a company leases a factory and it is demolished, what evidence do I need to prepare?

The core evidence includes: lease contracts and rental payment receipts (to prove the lease relationship and actual operation), business licenses and tax records (to prove the losses from suspension of production and business), equipment lists and purchase invoices (to prove the relocation and losses of ancillary facilities), expropriation announcements and compensation plans (to clarify the compensation objects and standards), as well as approval documents and red line maps obtained through information disclosure. The evidence is organized around the "legality of the lease - actual operation - amount of losses - scope of the facts". If there are missing materials, you can apply for information disclosure to retrieve them. The more complete the evidence is, the clearer the project claims can be made, and the stronger the bargaining and litigation leverage will be.

Q3: How much do lawyers' fees and litigation costs amount to when defending against the demolition of a company's factory building?

The litigation fees shall be calculated in accordance with the "Measures for the Payment of Litigation Fees" (effective from April 1, 2007) on the basis of the amount of the litigation request, and shall be borne by the losing party. The attorney's fees are related to the subject matter of the case and its complexity, and are usually charged on a per-case basis or as a percentage of the subject matter amount. The specific fees shall be subject to the terms of the entrustment contract. For large-scale enterprise demolition projects, it is recommended to clarify the fee calculation method and upper limit before entrusting, and to distinguish between the cost of the information disclosure application to confirm the scope of the project and the cost of the subsequent compensation litigation. It is necessary to invest in stages and control risks.

Q4: How long does it usually take for enterprises to protect their rights against demolition of leased factories?

The timeframe depends on the specific procedures. Generally, applications for government information disclosure are responded to within 20 working days, and the deadline may be extended for complex cases. Decisions on administrative appeals against responses are typically made within 60 days. If the case proceeds to compensation litigation, the first-instance ordinary procedure takes six months and the simplified procedure takes three months; the appeal in the second instance takes three months. Overall, it often takes several months to more than a year from verifying the scope of compensation to obtaining the compensation decision. It is recommended to initiate information disclosure and evidence collection at the early stage of the expropriation process to shorten the subsequent rights protection cycle and avoid making hasty responses when the eviction is imminent.

Q5: If a company leases a factory and encounters demolition, what should I do first?

It is recommended to follow four steps: First, retrieve the lease contract and business license to confirm the projects that the actual operating entity can claim; Second, apply for government information disclosure to verify whether the factory building is truly within the scope of the expropriation and whether all the project approval documents are complete; Third, entrust an appraisal agency or a lawyer to calculate the losses from production and business suspension, the value of equipment relocation and ancillary facilities; Fourth, negotiate with the expropriator on the compensation object and amount. If no agreement is reached, initiate administrative reconsideration or litigation within the statutory time limit. Throughout the process, keep records of operations and communication, and, if necessary, engage a lawyer to intervene and control the pace of rights protection in advance.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglue Lawyers about specific situations.

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