Understanding land use rights under an authorization contract

Land use rights under an authorization contract are also quite common in land-related transactions. The article below sets out the legal provisions governing land use rights under authorization contracts and addresses several related issues to help individuals and organizations protect their lawful rights and interests.

I. Current situation relating to land use rights under authorization contracts

A land user has the right to directly exercise their rights or authorize another individual or organization to act on their behalf in exercising part or all rights relating to such land use rights through an authorization contract. The use of authorization contracts in land use right transactions is currently very common; however, it often entails numerous legal risks due to the abuse of such a form to conceal other transactions or evade tax obligations. In practice, many disputes arise as the authorized party performs transactions beyond the authorized scope or causes damage to the owner, leading courts to declare such transactions invalid.

II. Concept of land use rights under authorization contracts

1. What are land use rights under an authorization contract?

Pursuant to Article 138 of the Civil Code 2015, individuals and legal entities may authorize other individuals or legal entities to establish and perform civil transactions on their behalf.

According to Article 562 of the Civil Code 2015, an authorization contract is an agreement between the parties whereby the authorized party is obliged to perform work in the name of the authorizing party, and the authorizing party is only required to pay remuneration if so agreed or prescribed by law.

Accordingly, land use rights under an authorization contract may be understood as the rights of the authorized party to act on behalf of the authorizing party in performing tasks related to land use rights within the authorized scope.

2. Legal nature of land use rights under an authorization contract

Pursuant to Article 562 of the Civil Code 2015, the legal nature of land use rights under an authorization contract is a representative relationship rather than a transfer of ownership rights. The authorized party acts on behalf of the authorizing party to exercise the rights of the land user, such as use, transfer, donation, and other rights as agreed.

3. Does authorization relating to land use rights lead to land use rights for the authorized party?

An authorization contract is an agreement between the parties whereby the authorized party is obliged to perform work in the name of the authorizing party, and the authorizing party is only required to pay remuneration if so agreed or prescribed by law under Article 562 of the Civil Code 2015.

Article 189 of the Civil Code 2015 stipulates that the use right is the right to exploit the utility and enjoy the profits and income derived from property. Such a right may be transferred to another person by agreement or in accordance with the law.

Under the above provisions, the authorized party has the right to perform tasks relating to land use rights on behalf of the authorizing party within the scope agreed by the parties, and the law also permits the transfer of the right of use. Therefore, authorization relating to land use rights may lead to land use rights for the authorized party if the authorizing party agrees to allow the authorized party to exercise such rights. The authorized user of the land has the right to exploit the utility and enjoy the profits and income derived from the land in accordance with the agreement or the law.

III. Legal regulations relating to land use rights under authorization contracts

1. What are the legal conditions for a re-authorization relating to land use rights to be valid?

Pursuant to Article 564 of the Civil Code 2015, the authorized party may re-authorize another person in the following cases:

• With the consent of the authorizing party;
• Due to force majeure: In cases where the re-authorization is unavailable, the purpose of establishing and performing the civil transaction for the benefit of the authorizing party cannot be achieved.

The re-authorization must not exceed the scope of the original authorization. The form of the re-authorization contract must conform to the form of the original authorization.

2. Is a land use authorization contract required to be made in writing?

Pursuant to Article 116 of the Civil Code 2015, a civil transaction is a contract or unilateral legal act leading to, changing, or terminating civil rights and obligations. Accordingly, a land use authorization contract is a civil transaction. The form of civil transactions is prescribed in Clause 1, Article 119 of the Civil Code 2015 as follows:

• Civil transactions may be expressed verbally, in writing, or through specific acts. Accordingly, civil transactions conducted through electronic means in the form of data messages in accordance with the law on electronic transactions shall be deemed written transactions.
• If the law requires a civil transaction to be made in writing with notarization, certification, or registration, such requirements must be complied with.

According to Clause 3, Article 27 of the Land Law 2024, the notarization and certification of contracts and documents relating to the exercise of rights of land users are implemented as follows:

• Contracts for transfer, donation, mortgage, or capital contribution using land use rights or land use rights and land-attached assets must be notarized or certified, except for the case specified at Point b of this Clause;
• Contracts for lease or sublease of land use rights or land use rights and land-attached assets; contracts for exchange of agricultural land use rights; and contracts for transfer or capital contribution using land use rights or land-attached assets where one or more parties are real estate business organizations may be notarized or certified at the request of the parties;
• Documents relating to inheritance of land use rights or land use rights and land-attached assets shall be notarized or certified in accordance with civil law;

Thus, it can be seen that the law does not require land use authorization contracts to mandatorily be made in writing, as they may be expressed verbally or through specific acts. However, it should be noted that if the authorization is granted to conduct transfer transactions (sale, donation, mortgage), the authorization contract must be made in writing and notarized or certified.

3. Common scope of authorization relating to land use rights

In real estate transactions, the scope of authorization relating to land use rights depends on the agreement between the parties in the authorization document or contract. Common scopes include:

- Authorization for management and use of land, consisting of: 

• Management and supervision: Monitoring and protecting land boundaries and preventing unlawful encroachment.
• Exploitation and use: Directly using the land or leasing/lending the land area to others for a certain period.
• Performance of financial obligations: Paying housing and land taxes, annual land fees, or land use fees on behalf of the landowner.
• Administrative procedures: Submitting applications, signing documents, receiving the Certificate of Land Use Rights (red book/pink book), or registering changes with competent state authorities.

- Authorization for disposition of land, including:

• Authorization to donate land use rights;
• Authorization to lease or sublease land use rights;
• Authorization to transfer or mortgage land use rights.

4. Mandatory contents in a land use authorization contract

Article 398 of the Civil Code 2015 provides that parties to a contract have the right to agree on the contents of the contract. A contract may contain the following contents:

• Subject matter of the contract;
• Quantity and quality;
• Price and method of payment;
• Duration, location, and method of performance of the contract;
• Rights and obligations of the parties;
• Liability for breach of contract;
• Methods of dispute resolution.

It can be seen that the law does not specifically prescribe the contents of a land use authorization contract, as such contents depend on the needs and purposes of the parties. However, the parties should ensure the inclusion of the following contents:

• Information of the parties (Authorizing Party and Authorized Party): Full and accurate personal information of both parties must be stated to identify the transaction participants, including full name, date of birth, citizen identification/passport number, date and place of issuance, permanent address, and current contact address. If the land use right certificate is jointly owned by a household or multiple persons, all members/co-owners must sign the authorization.
• Information on the authorized land use rights: The real property must be described in detail based on the Certificate of Land Use Rights, including:
  + Land plot number and map sheet number;
  + Address of the land plot (ward/commune, district, province/city);
  + Land area, form of use, land use purpose, and duration of use;
  +Assets attached to the land (if any).
• Scope and contents of authorization: It is the most important part to avoid risks of exceeding the authorized scope or disputes. It must clearly state the tasks the authorized party is permitted to perform on behalf of the authorizing party, such as:
  + Managing, supervising, and using the land;
  + implementing administrative procedures (registration of changes, land subdivision, tax payment);
  + Signing contracts for transfer, donation, lease, or mortgage (must be expressly stated if the authorized party has disposition rights);
  + Receiving transaction payments (if any).
• Rights and obligations of each party: The specific rights and obligations of each party should be clearly stated.
• Term and remuneration of authorization: The parties may agree upon and specify these terms in the authorization contract.

IV. Questions relating to land use rights under authorization contract 

1. In what cases is an authorization contract relating to land use rights deemed a sham transaction intended to conceal a transfer transaction?

Pursuant to Article 116 of the Civil Code 2015, a civil transaction is a contract or unilateral legal act leading to, changing, or terminating civil rights and obligations. A contract is an agreement between parties on the establishment, modification, or termination of civil rights and obligations (under Article 385 of the Civil Code 2015).

Article 124 of the Civil Code 2015 provides that where parties establish a sham civil transaction to conceal another civil transaction, the sham transaction shall be invalid, while the concealed transaction shall remain valid unless such transaction is also invalid under the Civil Code or other relevant laws.

Where a sham civil transaction is established to evade obligations toward a third party, such transaction shall be invalid. Accordingly, a sham transaction is one established to conceal another contract that the parties genuinely intend to perform. There are two types of sham civil transactions:

• Sham transactions intended to conceal another transaction;
• Sham transactions intended to evade obligations toward third parties.

Accordingly, authorization contracts relating to land use rights are often considered sham transactions intended to conceal transfer transactions.

2. Can a land use authorization contract be used for registration of title transfer?

An authorization contract is an agreement between the parties whereby the authorized party is obliged to perform work in the name of the authorizing party, and the authorizing party is only required to pay remuneration if so agreed or prescribed by law under Article 562 of the Civil Code 2015.

At the same time, Articles 137 and 138 of the Land Law 2024 provide for the types of documents required for issuance of Certificates of Land Use Rights to households, individuals, and residential communities currently using land with or without documents evidencing land use rights. Such provisions do not include land use authorization contracts as a basis for issuance of a Certificate.

Therefore, it may be understood that a land use authorization contract cannot be used for registration of title transfer. In essence, an authorization contract only allows the authorized party to perform tasks in the name of the authorizing party (such as implementing administrative procedures, submitting applications, and receiving registration results on behalf of the land user), rather than constituting one of the legally required documents for title registration procedures.

3. Can a land use authorization contract be used as a substitute for a land use right transfer contract?

Pursuant to Clause 3, Article 140 of the Civil Code 2024, authorization-based representation terminates in the following cases:

• As agreed by the parties;
• Upon expiration of the authorization term;
• Upon completion of the authorized work;
• Where either the represented person or the representative unilaterally terminates the authorization;
• Where the represented person or representative being an individual dies, or where the represented person or representative being a legal entity ceases to exist;
• Where the representative no longer satisfies the conditions prescribed in Clause 3, Article 134 of the Civil Code;
• Other grounds rendering the representation impossible to perform.

In addition, Clause 422 of the Civil Code 2015 provides that a contract terminates where an individual entering into the contract dies, or a legal entity entering into the contract ceases to exist, if such contract must be personally performed by that individual or legal entity.

Therefore, if the parties only execute an authorization contract without entering into a land use right transfer contract, significant legal risks may arise in the future. Instead of relying on an authorization contract, the parties should execute a land use right transfer contract and have it notarized or certified to ensure maximum legal protection of their rights and interests.

V. Why should you seek legal advice from NPLaw regarding land use rights under authorization contracts?

The above information addresses issues relating to land use rights under authorization contracts provided by NPLaw to our readers. With a team of experienced lawyers and legal specialists, NPLaw provides reputable and professional legal services to best protect the lawful rights and interests of clients. If you require legal assistance, you may contact NPLaw for consultation and support.

The above information is for reference purposes only. Should clients require detailed advice regarding a specific case, please contact NPLaw Firm for prompt consultation.