An agreement for lending assets is an arrangement between parties in which the lender delivers an asset to the borrower for use within a specified period without payment, and the borrower is obliged to return the asset upon the expiration of the lending term or when the purpose of borrowing has been fulfilled. An agreement for lending land use rights is one type of property lending agreement.

What are the conditions for validity and dispute resolution regarding an agreement for lending land use rights? NPLAW provides answers for Clients as follows.

I. Understanding of agreements for lending land use rights

1. What is an agreement for lending land use rights?

Under the Land Law 2024, land users have the right to conduct land transactions, including conversion, transfer, lease, sublease, inheritance, donation, mortgage, or capital contribution of land use rights. Notably, the current Land Law does not specifically mention the lending of land use rights.

Although there is no specific regulation allowing land users to lend land use rights, the law does not prohibit such an action either. Additionally, Article 494 of the Civil Code 2015 defines a property lending agreement as a contract where the subject is a non-consumable asset, i.e., an asset that retains its basic characteristics, shape, and functionality even after multiple uses. Since an agreement for lending land use rights are intangible and considered non-consumable assets, they may serve as the object of a property lending agreement.

Thus, while the Land Law does not specifically regulate the lending of land use rights, such an arrangement is still considered a legal transaction.

From the above analysis, an agreement for lending land use rights can be understood as an agreement between two parties, including the lender of the land and the borrower, where the lender provides the land use rights to the borrower for a specific purpose within a defined period.

2. Can an agreement for lending land use rights be made?

To ensure legal certainty, the lender should execute a written lending agreement, signed by all parties, and may also consider notarizing or certifying the agreement at the competent authority.

Additionally, the execution of a land lending agreement is governed by Article 494 of the Civil Code 2015: A property lending agreement is an arrangement in which the lender delivers an asset to the borrower for use within a certain period without payment; the borrower must return the asset after the term expires or once the purpose of the lending is achieved.

For an agreement for lending land use rights, Article 502 of the Civil Code 2015 requires it to be made in a written form suitable for the type of contract. Execution of the agreement must comply with the procedures stipulated in the Land Law and other relevant legislation. Thus, parties are advised to draft an agreement when lending land.

II. Legal regulations on agreements for lending land use rights 

1. Conditions for validity of agreements for lending land use rights 

To be legally valid, the agreement must satisfy the contractual validity requirements under Article 117 of the Civil Code 2015, specifically:

  • Parties to the agreement: Must have legal capacity and civil act capacity appropriate for the type of agreement, and participate voluntarily. The lender must satisfy the conditions for conducting land-related transactions under the Land Law.
  • Purpose and content: Must not violate prohibited acts under the law or social ethics. The agreement must comply with the Land Law and civil legislation.
  • Form of the agreement: Must be in written form and notarized or certified according to legal requirements.

2. Procedures for resolving disputes over agreements for lending land use rights 

  • Negotiation: Parties voluntarily resolve disputes without third-party involvement. Such a method is simple, cost-effective, and preserves personal relationships, suitable for minor disputes.
  • Mediation: Mediation is encouraged by the State for resolving land disputes. Parties can follow mediation procedures with the participation of a mediator as regulated under the Law on Grassroots Mediation. According to Clause 2, Article 3 of Resolution 04/2017/NQ-HĐTP, disputes over reclaiming lent land are considered disputes over land-related transactions. Thus, mediation at the commune-level People’s Committee is not mandatory.
  • Court: If mediation fails, parties may file a lawsuit at a competent court to resolve the dispute over an agreement for lending land use rights.

III. Questions regarding agreements for lending land use rights

1. Competent authority for resolving disputes

  • Mediator: Parties may undergo mediation with a certified mediator, who will guide and assist in reaching a voluntary resolution.
  • Court: Since land use rights are property and lending such rights constitutes a civil transaction under a property lending agreement, courts will apply civil law provisions on property lending in resolving disputes.
  • Arbitration: If parties have agreed to arbitration and meet the conditions, they may submit the dispute to an arbitration tribunal.

2. Maximum duration of the agreement for lending land use rights

The law does not specify a maximum term for lending land use rights. Parties may agree on the term according to their needs and purpose.

However, the lending term must not exceed the remaining term of the land use rights. Depending on the land type, it could be long-term or time-limited land.

3. Termination of the agreement for lending land use rights

Parties have the right to terminate the agreement under the following circumstances without liability for damages:

  • The other party violates agreement terms as a pre-agreed condition for termination.
  • The other party seriously breaches contractual obligations.
  • Other cases as stipulated by law.

Additionally, if a party fails to perform their obligations after a reasonable period despite the other party’s request, the other party may terminate the agreement. In case, a party cannot perform part or all of the obligations, preventing the other party from achieving their purpose, it may terminate the agreement and claim compensation.

4. If the lending term expires but the borrower refuses to return the land

The lender may take measures to reclaim the land:

  • Request return of the land: According to Article 499 of the Civil Code 2015, the lender has the right to reclaim the land, even if the return date has not arrived or the purpose has not been achieved. The lender can notify the borrower in writing, verbally, or by other means.
  • File a lawsuit: If the borrower refuses to return the land despite multiple requests, the lender may seek court intervention. The plaintiff must prepare a lawsuit and supporting documents, e.g., land use rights certificate, lending agreement, or other documents proving the agreement.

IV. Legal consultancy and procedures related to agreements for lending land use rights

The above provides essential information on agreements for lending land use rights from NPLaw. For legal assistance regarding such agreements, contact NPLaw. Our dedicated and professional team offers guidance, especially in resolving disputes arising from these types of contracts.