Real Estate Issues Regarding Foreign Investment

Q1：What kind of land must be obtained through the granting of landusing right?

The land must be obtained by means of granting of land use right if any of the following situations occurs:

1. Land for projects of commerce, tourism, entertainment, finance, service, commercial buildings, etc.

2. The land user is overseas natural person, legal person or other organizations, except for those otherwise stipulated in the law.

3. Other circumstances stipulated by laws, regulated by laws, regulations and rules of municipal government.

4. When the land obtained by means of allocation is to be transferred, if any of the above mentioned situations occurs, the transferee should sign a Transfer Contract with the transferor, and pay the land-using right transfer fee. (hereinafter referred to as "granting fee") according to relevant regulations before obtaining the land use right.

5. The collective-owned land must be converted to State-owned land before its land-using right can be transferred.

Q2：How are the time limits and means for the granting of land-use right regulated?

(1) The maximum time limits for granting of land-using right is determined according to its purpose as shown below:
a. Land for residence purpose:70 years;
b. Land for industrial purpose:50 yeas;
c. Land for the purposes of education, scientific research, culture, public health and sports:50 years;
d. Land for commercial, tourist and recreational purposes:40 years;
e. Land for comprehensive or other purposes:50 years;

(2) The following methods can be adopted for the granting of land-using right:
a. by agreement;
b. by tender;
c. by auction;
d. other means approved by the Municipal Government.

The granting of land-using right for commercial, tourist, recreational and luxury residence purposes should be done by tender or auction. Details are stipulated by the Municipal Government separately.

Q3：What are the main contents of the granting contract of land-using right?

(1) The foreign investor shall sign the contract concerning the granting of using right of state-owned land directly with Shanghai Real Estate Administration Bureau, otherwise the contract will be invalid.

The contract of the wholly foreign owned projects should be signed between foreign investors and Shanghai Real Estate Administration Bureau, while for the joint-venture and cooperative enterprise, it should be signed among foreign investor, Chinese partners and Shanghai Real Estate Administration Bureau.

(2) The following items should be included in the contract:
a) Both parties of Grantor and Grantee;
b) The location of the land, its surroundings and area;
c) The planned use of the land and technical parameter for the planning;
d) The tem of the granting of the land;
e) The amount, payment and term of land granting fee;
f) The responsibility, expense undertaking and completion deadline for the demolition of original buildings, other constructions and accessories on the land;
g) The responsibility for the requirement and expenses undertaking of the public utilities related to the land;
h) Delivery time of the land granted;
i) Start and completion date of the construction of the project;
j) Both parties' rights and liabilities after termination of the granting of land-using right;
k) Responsibility concerning violating of the contract;
l) Settlement of disputes;
m) Other items reached by two parties.

The planned requirements and figures of the land provided by the City's Planning and Administration Bureau according to the approved detailed plan should e attached to the contract. The contract should refer to the standard form which is regulated by Shanghai Municipal Real Estate & Land Administration Bureau.

Q4：What are the basic requirements for development, utilization and management of the land?

The grantee shall develop, utilize and manage the land according to the planned use and planning requirements, duration and conditions of the development stipulated in the contract. If the grantee develops real estate on the land, it shall follow the relevant applying and examining procedures respectively according to the regulations by Departments of Planning and Administration, Construction, Real Estate Administration. Transportation, Hygiene, Environment Protection, Environmental Sanitation. Fire Prevention and other administrations.

Q5：What if the violation of the land administration regulations occurs?

The land administration departments can penalize the grantee who violates the terms stipulated in the contract such as the developing period or conditions according to the relevant laws and regulations and can even withdraw the land-using right freely following relevant legal procedures under a worse situation.

Q6：Can the land-using right be re-transferred?

1) The grantee can re-transfer, collateralize and lease the land-using right or engage in other economic activities legally permitted within the granting period according to the contract and relevant laws and regulations. The new grantee shall continue to follow the contract, fulfill the liabilities and enjoy the rights after the re-transfer.

2) The on-land buildings, constructions and accessories should be transferred together with the land-using right.

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