Background
Under the business cooperation contract (BCC) structure, the parties do not establish an entity but usually cooperate to use their available resources, including land use rights (LUR) to do business. The party having LUR (Landlord) will “contribute” its LUR to the BCC and allow the other party (Developer) to develop house/construction works on the land while retaining title to the LUR.
Discussion
Under the current land law, implementing a project involving LUR via BCC is arguably possible. However, the relevant regulations seem vague and may give rise to certain legal issues. With new regulations of the Land Law 2024, the BCC structure will have a more concrete legal framework. In particular,
Article 148 and 149 of the Land Law 2024 now codifies regulation on granting ownership certificates to owners of ready-built house/construction works who are not simultaneously land user under Decree 43/2014 guiding the Land Law 2013. In this regard, the Land Law 2024 now expressly recognizes BCC as valid evidence of the owners’ lawful right to use the other party’s land for building their houses/construction works. In light of this clear regulation, the Developers to the BCCs now may find it confident that its title to the building on land will be protected.