Land Lease Law of the Democratic People’s Republic of Korea (2011)

Suggested citations
AGLC4 |
토지임대법 2011 [Land Lease Law of the Democratic People's Republic of Korea (2011)] [tr Daye Gang].
Bluebook | Tojiimdaebeob 2011 [Land Lease Law of the Democratic People's Republic of Korea (2011)] translated in Law and North Korea by Daye Gang, https://www.lawandnorthkorea.com/.


Adopted on October 27, Juche 82 (1993), as Decision No. 40 of the Standing Committee of the Supreme People’s Assembly

Amended and supplemented on February 26, Juche 88 (1999), as Directive No. 484 of the Presidium of the Supreme People’s Assembly

Amended and supplemented on August 19, Juche 97 (2008), as Directive No. 2842 of the Presidium of the Supreme People’s Assembly

Amended and supplemented on November 29, Juche 100 (2011), as Directive No. 1995 of the Presidium of the Supreme People’s Assembly


CHAPTER I. BASICS OF LAND LEASE LAW

Article 1 (Objectives of Land Lease Law)

The Land Lease Law of the Democratic People’s Republic of Korea shall serve to adopt an order for leasing the required land to foreign country investors and foreign country investment enterprises, and for using leased land.

Article 2 (Lessee of land)

Corporations and individuals of other countries can lease land and use it.

Article 3 (Land use rights and limits of lessee)

Lessees of land shall have land use rights. Natural resources and mineral deposits on the leased land shall not be included in the subject of land use rights.

Article 4 (Parties to land lease contract)

Land leases shall be done under the approval of the central land environmental protection guidance institution. Land lease contracts shall be concluded by the relevant province (or municipality directly under central authority) People’s Committee land and environmental protection division.

Article 5 (Investments of land use rights)

Institutions, enterprises and organizations of our country may invest land use rights in equity joint ventures or contractual joint venture enterprises. In these cases, the approval of the province (or municipality directly under central authority) People’s Committee that manages the given land must be received.

Article 6 (Lease period of land)

The period of land lease shall be agreed by the contracting parties within 50 years.

Article 7 (Property rights of lessee about land)

The right of use over leased land shall be the property rights of the lessee.

Article 8 (Use of leased land)

Leased land shall be used according to the land related regulations and land lease contracts of our country. 


CHAPTER II. LEASE METHOD FOR LAND

Article 9 (Lease method for land)

The leasing of land shall be done by the method of negotiation. In special economic zones, land may also be leased by the method of bidding and auctions.

Article 10 (Materials to be supplied by the land lease institution)

An institution that leases land shall supply the following materials to a person wishing to lease land.

1. Location, surface area, geographical features map of the land

2. Use of land

3. Plans related to construction surface area, land development

4. Minimum limit of construction period and investment

5. Requirements related to environmental protection, hygiene and epidemic prevention, firefighting

6. Period of land lease

7. Land development state

Article 11 (Negotiation)

The lease of land done through negotiation shall be done in the following manner.

1. A person wishing to lease land shall research the land materials supplied, then must submit a land use application document attaching an enterprise establishment approval or a copy of the residential approval document to the institution leasing the land.

2. The institution leasing the land shall inform the applicant of approval or rejection within 20 days of the day the land use application document was received.

3. The institution leasing the land and the person wishing to lease the land shall conclude a land lease contract that contains content about the surface area of the land, its use, the purpose and period of the lease, the total investment sum, construction period, lease fee, and other required particulars.

4. The institution leasing the land shall receive the price for handing over the land use rights according to the land lease contract, and shall then issue and register the land use certificate.

Article 12 (Bidding)

The leasing of land through bidding shall be done in the following manner.

1. The institution leasing the land shall publicly announce particulars required for the bidding, including materials for the land, the place of bidding, the bidding date and date of opening of the bids, and the bidding process, and shall send the invitations to bid to the designated subjects.

2. The institution leasing the land shall sell the bidding documents to the person eligible for the bidding.

3. The institution leasing the land shall consult related to the bidding.

4. The bidder shall pay a determined bidding security deposit and shall place a sealed bid into the bidding box.

5. The institution leasing the land shall include members of related sectors including the economic and legal sectors, and shall organise a bid selection committee.

6. The bid selection committee shall select and evaluate bids and shall decide the successful bidder by taking into consideration the development and construction of the land and the lease fee conditions.

7. The institution leasing the land shall issue a successful bid notification to the successful bidder decided by the bidding selection committee.

8. The successful bidder shall conclude a land lease contract with the institution leasing the land within 30 days from the day the successful bid notification is received, shall pay the relevant price for the land use rights, then shall issue and register the land use certificate. In cases where entry into the contract is sought to be delayed because of circumstances, an application may be made to the institution leasing the land 10 days before the determined period ends and may receive a prolongation of 30 days.

9. A bidder who did not make the successful bid shall be notified of the relevant reason within 5 days of the day the successful bid has been decided, and shall return the bidding security deposit. In these cases, interest for the bidding security deposit shall not be paid.

10. In cases where the successful bidder has not concluded the land lease contract within the determined period, the successful bid shall be nullified and the bidding security deposit shall not be returned.

Article 13 (Auctions)

The lease of land through auction shall be done in the following manner.

1. The institution leasing the land shall publicly announce the particulars required for an auction such as land materials, the land auction date, the place, process, and the reference value of the land.

2. The institution leasing the land shall use the publicly announced reference value of land as the starting point to run the auction, and shall determine as the successful bidder the person wishing to lease land that has raised the highest price.

3. The successful bidder shall conclude a land lease contract with the institution leasing the land, then shall issue and register a land use certificate.

Article 14 (Use of leased land, supplementary contracts)

The lessee of land must use the land in conformity with the use determined in the lease contract. The lessee of land seeking to change the land use must conclude a supplementary contract changing the use with the institution leasing the land.


CHAPTER III. TRANSFER OF LAND USE RIGHTS AND SECURITY AS COLLATERAL

Article 15 (Transfer of land use rights, security as collateral and the period)

A lessee of land shall receive the approval of the institution that leased the land to transfer (sale, sublet, gift, bequeath) to a third party the relevant right of use over a whole or party of the leased land, or secure it as collateral. The period for transferring land use rights or securing it as collateral may not exceed the period for use left in the period determined in the land lease contract.

Article 16 (Conditions for transferring land use rights)

A lessee of land may only sell, sublet, gift, or secure as collateral the right of use of leased land if they invest the investment portion pointed out in the contract and pay the full sum of the price for handing over the land use rights determined in the lease contract.

Article 17 (Scope of transfer of land use rights)

In cases where land use rights are transferred, the rights and duties related to the land use, the structures on the land, and other extraneous matters are also transferred.

Article 18 (Sale of land use rights)

The sale of land use rights shall be done in the following manner.

1. The vendor and purchaser of land use rights shall conclude a contract and shall receive the notarization of the public notary office.

2. The vendor of land use rights shall submit the land use rights sale application document with a contract of the copy attached to the institution leasing the land and, shall receive approval.

3. The vendor and purchaser of land use rights shall make a land use rights title amendment registration to the institution that leased the relevant land.

Article 19 (Right of first refusal of leased land)

In cases where a lessee of land sells land use rights, the institution leasing the land has the preferential right to purchase them.

Article 20 (Subletting leased land)

The lessee of land may sublet leased land. In these cases, the subletting application document with a copy of the land lease contract attached shall be submitted to the institution leasing the land and approval must be received.

Article 21 (Securing land use rights as collateral)

The lessee of land may use land use rights as collateral to receive a loan from a bank or other finance institution. In these cases, the structures and other extraneous matters on the land shall also be secured as collateral.

Article 22 (Entry into contract to securing land use rights as collateral)

In cases where land use rights are secured as collateral, the mortgagor and the mortgagee must conclude a mortgage contract in conformity with the content of the land lease contract. In these cases, the mortgagee may require the lease contract or a copy of the transfer contract for the land, a copy of the land use certificate, and materials on the state of the land from the mortgagor.

Article 23 (Registration of securing land use rights as collateral)

The mortgagee and mortgagor of land use rights must register the securing of land use rights as collateral with the institution leasing the land within 10 days of the day the mortgage contract is concluded.

Article 24 (Disposal of land secured as collateral)

In cases where a mortgagor has not repaid the debt even after the mortgage period has ended or dissolves or makes insolvent the enterprise during the period of the mortgage contract, a mortgagee of land use rights may dispose of the land use rights and structures and other extraneous matter on the land secured as collateral, according to the mortgage contract.

Article 25 (Use of disposed land secured as collateral)

A person who has land use rights, or structures and other extraneous matter on the land, disposed of by a mortgage of land use rights, shall receive the notarization of the public notary office shall file a name amendment registration with the relevant registration institution, and must use the land in conformity with the land lease contract.

Article 26 (Prohibition on remortgaging and transferring land secured as collateral)

A mortgagor of land use rights may not remortgage or transfer land use rights secured as collateral during the period of the mortgage contract without the approval of the mortgagee

Article 27 (Cancellation of registration of land use rights secured as collateral)

In cases where a land mortgage contract lapses because of debt repayment or another cause, the mortgagee and mortgagor must take the procedure of cancelling the registration of securing land use rights as collateral within 10 days.


CHAPTER IV. LAND LEASE FEE AND LAND USAGE FEE

Article 28 (Duty to pay land lease fee)

The lessee of land must pay a land lease fee according to what has been decided. The land lease fee shall be paid to the relevant land lease institution.

Article 29 (Land development fee)

In cases where an institution leasing land leases developed land, a land development fee shall be included in the land lease fee to be received by the lessee. The land development fee includes expenses expended in land arrangement, road construction, and constructing water, sewage, electricity, communication, and heating facilities.

Article 30 (Payment period for land lease fee)

A lessee of land must pay the full sum of the land lease fee within 90 days of the day the land lease contract was concluded. In cases where land with a large surface area has been leased, such as the subject of comprehensive land development, the land lease fee may be divided and paid within the period approved by the land lease institution.

Article 31 (Duty to pay execution security deposit)

A person who has leased land through negotiation or auction must pay an execution security deposit equivalent to 10% of the land lease fee within 15 days of the day the lease contract was concluded. The execution security deposit may make up part of the land lease fee.

Article 32 (Arrears charges for default on land lease fee)

In cases where a lessee has not paid a land lease fee within the determined period, the land lease institution shall impose arrears charges equivalent to 0.05% of the unpaid amount every day from the day the period ends. In cases where arrears charges have not been paid for 50 successive days, the land lease contract may be cancelled.

Article 33 (Duty to pay land usage fee)

Foreign country investment enterprises and foreign country investment banks must pay land usage fees to the relevant financial institution every year. For subjects of encouragement, the land usage fee may be lowered or exempted for up to 10 years.


CHAPTER V. REPAYMENT OF LAND USE RIGHTS

Article 34 (Repayment of land use rights repayment and residual value compensation)

Land use rights are automatically returned to the land lease institution at the end of the lease period determined in the contract. In these cases, structures and extraneous matter on the relevant land shall be returned without cost. In cases where the period of land lease is more than 40 years, for structures completed within 10 years of the end of that period, residual value may be compensated.

Article 35 (Registration cancellation procedure of land use rights)

When a lease period ends, a lessee of land shall return the land use certificate to the relevant issuing institution and must undergo the registration cancellation procedure for the land use rights.

Article 36 (Prolongation of period of land lease)

A lessee of land seeking to prolong the period of land lease shall submit a land use extension application document to the institution that leased the land 6 months before the period ends, and approval must be received. In these cases, the land lease contract shall be concluded again, the relevant procedure shall be undertaken, and the land use certificate must be reissued.

Article 37 (Return costs and cleanup of leased land)

In cases where a lease period has ended, a lessee of land shall demolish structures, facilities and subsidiary facilities at their expense according to the requirements of the institution that leased the land, and clean up the land.

Article 38 (Cancellation of land use rights)

Land use rights shall not be cancelled during the lease period. In cases where land use rights are to be cancelled within the lease period due to inevitable circumstances, the land lease institution shall agree with the lessee of land 6 months in advance, and shall exchange it for land in the same conditions or the relevant compensation shall be given.


CHAPTER VI. SANCTIONS AND DISPUTE RESOLUTION

Article 39 (Penalty, recovery, restore, nullification of contract)

In cases where land has been used without a land use certificate, or the use of the land has been changed or land use rights have been transferred or secured as collateral without approval, a penalty shall be imposed and facilities constructed on the land shall be recovered, the land shall be restored, and the transfer and mortgage contract shall be cancelled.

Article 40 (Cancellation of land use rights)

In cases where .. a lessee has failed to invest more than 50% of the total investment sum within the period determined in the land lease contract, or the land has not been developed according to the contract, the land use rights may be cancelled.

Article 41 (Complaints and their handling)

In cases where a lessee of land has an opinion about a sanction received, they may make a complaint within 20 days to a higher level institution from the institution that imposed the sanction. An institution that has received a complaint must investigate and resolve it within 30 days.

Article 42 (Dispute resolution)

Differences in opinion related to land leases shall be resolved by the method of agreement between the parties. In cases where it cannot be resolved by the method of agreement, it shall be resolved by method of conciliation, arbitration, or court proceedings.

Last updated 18 September 2020

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