[Direct answer]In the Beijing area, the equipment losses during the demolition of factories are usually evaluated according to the "replacement cost × depreciation rate": for equipment that can be relocated and continued to use, compensation is provided for the costs of dismantling, transportation, installation, and commissioning; for equipment that cannot be restored to use or is scrapped after relocation, compensation is given based on the replacement price minus the residual value. According to Article 17 of the "Regulations on the Acquisition and Compensation of Houses on State-Owned Land" (promulgated and implemented on January 21, 2011), compensation includes the value of the acquired houses, the costs of relocation and temporary resettlement, and the losses of production and business suspension. According to the provisions of the "Evaluation Methods for the Acquisition of Houses on State-Owned Land" regarding re-evaluation, if there are objections to the evaluation results, the enterprise shall apply to the original evaluation agency for re-evaluation within ten days from the date of receipt of the evaluation report. If there are still objections, the enterprise may apply for expert appraisal. The enterprise shall promptly inventory, number, and photograph each piece of equipment, retain the purchase invoices and original book values, and claim the equipment losses and relocation costs separately.

1. Problem background and typical scenarios

After the factory building is included in the scope of expropriation, the most concern of the enterprise owner is often not the factory building itself, but the machinery and equipment on the production line. Typical situations include: a large number of equipment with various models, for which the expropriator only compensates at a rough "package price"; the accuracy of precision equipment is damaged after disassembly, but it is priced as scrap material during the evaluation; some equipment is obtained through leasing or financial leasing, and the ownership is unclear, leading to disputes over the ownership of the compensation; and the enterprise fails to clear the ledger in time, with purchase invoices and asset details missing, so the evaluation can only be priced at will. Equipment losses and relocation fees, as well as losses from production and business suspension, often intertwine with each other, and each item needs to be listed in the same compensation plan. For disputes involving equipment ownership and contract performance, reference can be made to the relevant provisions.Business and contract dispute services for enterprisesThe processing approach of this problem.

II. Key points of contention

The disputes usually focus on three aspects. Firstly, the evaluation methods: the application conditions of the replacement cost method, the market method, and the income method are different, and the same batch of equipment may lead to widely differing conclusions. Which method to use and the value of the depreciation rate are often the focus of negotiations. Secondly, the scope and ownership of the equipment: different standards apply to movable and non-movable equipment, and there are also differences in whether leased equipment and equipment subject to mortgages can be included in the compensation scope. Thirdly, the evaluation process: who commissions the evaluation agency, how the evaluation timepoint is determined, and whether the enterprise has the opportunity to participate in the on-site inventory all affect the credibility of the conclusion. In the practice of expropriation, the evaluation report is often the direct basis for the amount of compensation, and procedural defects are often more worthy of attention than the numerical value. Disputes over the determination of the value and area of the house can be referred to together.Real estate sales and construction project servicesMy relevant experience in this field.

III. Professional analysis by Henglue Law Firm

The premise of claiming compensation for equipment losses is to first confirm that one is indeed in a legitimate and effective expropriation and compensation relationship. 【Case Review】On May 19, 2022, a company and a village committee signed a "Non-Residential House Demolition and Compensation Agreement," which stipulated that the company would demolish a building with a floor area of 4,945.24 square meters, and the village committee would pay a total of 2,599,039 yuan in compensation fees. The agreement also specified that the company would vacate the premises for inspection and receive the remaining payment after 50% of the funds were deposited. However, the village committee failed to fulfill its obligations after signing the agreement, leaving the fate of the factory building uncertain and its continued operation in question. 【Lawyer's Strategy】After the company engaged Beijing Henglu Law Firm, the lawyer applied for government information disclosure and found that the factory building in question was not included in the expropriation scope. Therefore, the lawyer argued that the village committee had committed fraud by signing the agreement under the guise of expropriation and requested that the agreement be declared invalid. 【Parties' Arguments】The company requested that the agreement be declared invalid and that the other party bear the arbitration fees; the village committee argued that the agreement was valid and should be implemented as agreed. 【Arbitration Result】The arbitration tribunal held that, according to Article 47 of the 2020 amendment to the "Land Administration Law of the People's Republic of China," after the expropriation of land is approved through legal procedures, the local people's governments at or above the county level shall announce and organize its implementation. Village committees do not have the subject qualification to sign such agreements, and the signed agreement is an invalid contract. An invalid civil legal act is not legally binding from the outset. The arbitration tribunal ruled that the agreement was invalid. This case was handled by Beijing Henglu Law Firm.Zhai Chao LiThe attorney (practice license number: 11101202311629788, subject to the document issued by the judicial administrative organ) acts as the agent. For enterprises, verifying the scope of expropriation and the qualifications of the contracting parties before signing the contract is the first step to obtaining compensation for equipment losses.

IV. Practical suggestions and legal basis

Action List: First, establish an equipment inventory upon receipt of the expropriation notice, registering the name, model, purchase time, original value, and net value of each piece of equipment, and simultaneously taking photos and videos; Second, retain purchase invoices, bookkeeping vouchers, depreciation calculation tables, and lease contracts, etc. as proof of ownership and value; Third, participate in the on-site inventory throughout the process, sign and confirm the inventory results on the spot, and record any objections in writing; Fourth, after receiving the appraisal report, compare each item and, within ten days, apply for a review of the appraisal if there are objections to the methodology, the value of the depreciation rate, or omitted items. If there are still objections, apply for an expert appraisal; Fifth, itemize and claim for relocation fees, installation and commissioning fees, and losses of non-relocatable equipment. The main basis is Article 17 and Article 19 of the "Regulations on the Expropriation and Compensation of Houses on State-Owned Land" (promulgated and implemented on January 21, 2011), the "Asset Appraisal Law of the People's Republic of China" (adopted on July 2, 2016 and implemented on December 1, 2016), and Article 47 of the "Land Administration Law of the People's Republic of China" (amended on August 26, 2019 and implemented on January 1, 2020). For disputes involving the validity of agreements and compensation decisions, relevant provisions of the Civil Code and other laws may also be referred to.Land expropriation and demolition services, and administrative litigation servicesEvaluate the relief pathways.

5. Henglu Law Firm's Advice

Whether an enterprise can obtain reasonable compensation for equipment losses largely depends on the evidence in its possession. Claims based on oral statements are difficult to be accepted, and complete inventory records, receipts, and video materials are the cornerstones of negotiations and litigation. It is crucial to avoid dismantling equipment on your own before compensation is finalized, or signing clauses such as "one-time settlement and mutual waiver of claims" in documents. Once you sign such clauses and waive your right to appeal, it will be extremely difficult to seek compensation afterwards. If you disagree with the appraisal report, you must request a review of the appraisal within ten days. Failure to do so may be deemed as accepting the conclusion. It is recommended that you consult a professional lawyer as soon as you receive the appraisal report. The lawyer will review the report, verify the depreciation rate and omissions, and then decide whether to request a review, appeal, or initiate litigation.

VI. Frequently Asked Questions

Q1: Is there a high chance of success in claiming compensation for the loss of factory equipment?

Whether or not one can obtain support depends on three factors: ownership, evidence of value, and assessment procedures, rather than a mere promise. If the equipment indeed belongs to the enterprise legally, the purchase invoices and accounting records are complete, and the assessment by the expropriator contains omissions, methodological errors, or fails to involve the enterprise in the on-site inventory, there is usually a basis for claiming compensation; conversely, if the equipment is leased, lacks invoices, and has been disposed of by the enterprise itself, the burden of proof will be significantly increased. According to Article 17 of the "Regulations on the Expropriation and Compensation of Buildings on State-Owned Land", property losses are an essential part of the compensation scope, and courts often review the legality of the assessment procedures and the objectivity of the losses. Before suing, one should first evaluate the strength of the evidence and the cost involved.

Q2: What evidence do I need to prepare to claim compensation for the equipment?

The core evidence includes: equipment purchase invoices and bookkeeping vouchers, fixed asset ledgers and depreciation tables, equipment photos and videos, on-site inventory records and appraisal reports, lease or finance lease contracts, relocation and installation and commissioning expense receipts, review and appraisal applications and responses, and written communication records with the expropriator. The evidence should be able to answer three questions - who owns the equipment, how much it is worth, and how the loss occurred. If the evidence is insufficient, the party concerned may apply to the court or the review authority to retrieve the expropriation files and appraisal drafts, to avoid having the compensation amount being lowered due to insufficient evidence.

Q3: How much do lawyers' fees and litigation costs amount to when seeking legal redress for equipment losses?

The litigation fees shall be paid in accordance with the "Measures for the Payment of Litigation Fees", and shall be paid in stages based on the amount of the litigation request. The losing party shall bear the fees, and if the plaintiff partially wins and partially loses, the fees shall be shared proportionally. For non-property-related requests such as requesting confirmation of the illegality of administrative acts, the fees shall generally be paid per case. The attorney's fees shall be determined through negotiation on a per-case basis or based on the amount of the claim, and the written power of attorney shall prevail. It is prohibited to implement risk-based representation in administrative litigation cases. It is recommended to first compare the potential compensation gap with the cost of protecting rights. For small-amount disputes with weak evidence, priority shall be given to resolving them through review and evaluation or administrative reconsideration, so as to keep the cost within a reasonable range.

Q4: How long does it usually take to resolve equipment compensation disputes?

The timeframe depends on the selected procedure. If you disagree with the assessment results, you should apply for a review of the assessment within ten days from the date of receiving the assessment report. If you still have objections to the review results, you should apply for an expert appraisal within ten days. For administrative procedures, the administrative review organ generally makes a decision within sixty days from the date of acceptance, and the timeframe may be extended if the case is complex. For administrative litigation, the first-instance ordinary procedure is concluded within six months, and the summary procedure is concluded within 45 days. The appeal period for dissatisfaction with the first-instance judgment is 15 days, and the second-instance review generally takes three months. Adding the appraisal and assessment stages, the entire process often takes several months to over a year, so enterprises should set aside funds and make operational arrangements in advance.

Q5: Specifically, how should I proceed? What's the first step?

The four-step approach is recommended: First, immediately fix the evidence, complete the inventory of each piece of equipment and keep the receipts and images, while applying for government information disclosure to verify the scope of expropriation, compensation plans, and the availability of funds; Second, in writing, require the expropriator to supplement the evaluation of the missing equipment. After receiving the evaluation report, apply for a review of the evaluation within ten days, and if there are still objections, apply for expert appraisal; Third, if you are not satisfied with the compensation decision or compensation agreement, apply for administrative reconsideration or initiate administrative litigation within the statutory time limit; Fourth, if there are fraudulent circumstances in the agreement, you can claim revocation in accordance with Article 148 of the Civil Code of the People's Republic of China (effective January 1, 2021). It is recommended that professional lawyers review the evaluation reports and legal documents throughout the entire process.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

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. →Legal services for land expropriation and demolition·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. In the event of a dispute, please consult a practicing lawyer in a timely manner.