New rules seek to end forced demolitions and relocations

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New rules seek to end forced demolitions and relocations, 新“拆迁条例”出台 “暴力拆迁”成为历史

On 21 January the State Council promulgated the Expropriation of and Compensation For Expropriation of Houses on State-owned Land Regulations. They came into force on the date of enactment, with the original Urban Housing Demolition and Relocation Management Regulations being repealed on the same date.

The latest Regulations move towards greater protection of the interests of those whose property is expropriated. The new rules and changes in the following areas are especially worthy of attention.

Scope

The Regulations apply in situations where “housing on state-owned land belonging to units and individuals is expropriated in the public interest”. They are not applicable in cases of the expropriation of collective land and housing built on collective land or compensation for this. This is mainly regulated by the PRC Land Management Law.

Public interest

Article 42 of the PRC Property Law provides that “as required in the public interest, in accordance with the limits of authority and procedures laid down by laws and regulations it is permissible to expropriate the houses and other real estate of units and individuals”. For the first time, the Regulations define the scope of “public interest”, which has long been disputed. At the same time, they exempt demolition and relocation which are a part of commercial development from the scope of the Regulations.

“Public interest” cases include:

  • the needs of national defence and diplomacy;
  • the needs of infrastructure, public utilities, subsidized housing projects and the reconstruction of old urban districts organized by government; and
  • other public interest requirements provided for by laws or administrative regulations.

Responsible bodies

The Regulations confirm that people’s governments at the municipal and county level are the bodies responsible for the expropriation of houses and for compensation for this, with the governments’ house expropriation departments charged specifically with organization and implementation. These departments can also delegate the work of house expropriation and compensation to house expropriation implementation units. Construction units are no longer the bodies responsible for demolition and relocation and cannot be involved in relocation activities.

Compensation

There are three types of compensation available to those whose property is expropriated: compensation for the value of the houses to be expropriated; compensation for relocation and temporary resettlement arising from the house expropriation; and compensation for losses arising from the suspension of production and business caused by the expropriation.

In addition, municipal and county governments should also grant subsidies and incentives.

Regarding compensation standards and price assessment the Regulations provide guarantees so that those who suffer from expropriation receive fair and reasonable compensation:

  • the compensation for the value of houses to be expropriated should not be less than the market price of comparable real estate on the date of the public notice of the house expropriation decisions (market price includes the value of the land use rights);
  • the value of the houses to be expropriated should be assessed by real estate valuation agencies chosen in consultation with the persons whose property is to be expropriated. If the latter are not in agreement with the results of the assessment, they may apply for a review. If they still disagree with the results of the review they can apply to a committee of real estate valuation experts for appraisal;
  • if anything is falsified or there are any major errors in the assessment report, the real estate valuation institutions or real estate appraisers will be held strictly legally liable.

Expropriation procedures

The Regulations establish a series of legal procedures to be followed during expropriation to guarantee the right to know and the right of participation of those whose property is being expropriated.

  • Municipal and county-level people’s governments should announce in advance compensation packages for expropriation, and solicit public comment. If in the course of the reconstruction of old urban districts the majority of those whose houses are to be expropriated believe that the expropriation compensation package does not meet the level set out in the Regulations, the municipal and county people’s governments should organize hearings and amend the package on the basis of the feedback from the hearings.
  • After making a formal decision on house expropriation, municipal and county-level people’s governments should make a public announcement about this in a timely manner. The announcement should specify the final package of compensation for expropriation. Prior to making decisions on house expropriation, the compensation for the expropriation should be fully paid, deposited in special accounts and used exclusively for this purpose.
  • House expropriation departments and persons whose houses are expropriated should sign compensation agreements within the time limit for the execution of such contracts specified in the expropriation compensation programme. If they fail to reach agreement, the municipal and county people’s governments that have made the decisions on house expropriation should make decisions on compensation in accordance with the expropriation compensation programme.
  • When houses are expropriated,
    compensation should be paid first and relocation should be carried out afterwards.
  • If any persons whose house is to be expropriated object to the compensation decision, they may apply for administrative reconsideration or file an administrative lawsuit.

Prohibiting violence and force

The Regulations prohibit any unit or individual from resorting to violence, threats or other illegal methods, such as cutting off water, heat, gas or power supply or suspending road access to force someone whose house is being expropriated to relocate.

If persons whose houses are expropriated fail within the statutory time limit to apply for administrative reconsideration or to institute administrative proceedings, and fail to relocate within the period stipulated in the compensation decision, the municipal and county people’s governments that have made the expropriation decisions should apply to the people’s court for enforcement according to the law. They should not take any decision by themselves to implement forced demolition or relocation. Even where house demolition permits have lawfully been obtained prior to the implementation of the Regulations, governments should not carry out compulsory demolitions or relocations.

If any persons use violence, threats or other illegal acts to force those whose property is being expropriated to relocate or to impede the work of house expropriation and compensation that is carried out according to the law, they must assume the corresponding legal liability, including liability to administrative penalties or even criminal liability.


Business Law Digest is compiled with the assistance of Haiwen & Partners. The authors can be emailed at baochen@haiwen-law.com. Readers should not act on this information without seeking professional legal advice.