The 2024 Land Law does not change the essence of land auctions but introduces new regulations that aim to enhance transparency, ensure fairness, and minimize land speculation, especially in the context of public land allocation and lease. These new provisions also seek to rectify loopholes in the previous process of auctioning land use rights. So, under what circumstances must land use rights be auctioned? What are the procedures and conditions for participating in such auctions? This article outlines some key highlights and important legal grounds governing the auction of land use rights under the current Land Law framework.
1. Circumstances Requiring Auction of Land Use Rights
Under the amended Law No. 37/2024/QH15, which supplements and modifies the provisions of the Law on Property Auction 2016, Clause 4 clarifies that land use rights can be subject to auction if required by land law and other relevant legal instruments.
Clause 1, Article 125 of the 2024 Land Law stipulates that the State shall allocate or lease land through public auction of land use rights in cases where multiple parties are interested and meet the statutory conditions, except for the following scenarios:
a) Allocation or lease of land to agencies, organizations of the State, or entities listed under Clause 1, Article 2 of the Land Law for public purposes, where the allocation is not subject to land use right auction, or where allocation without auction is allowed under Article 124, or in cases of land lease with rent paid annually and the land is not part of an investment project subject to auction (Article 126);
b) Allocation of land to households or individuals under Article 124.
2. Conditions for Auction Participation
Clauses 3 and 4, Article 125 of the 2024 Land Law set out detailed provisions on the eligibility and conditions for participating in land use rights auctions. These provisions apply to both individuals and organizations, each of whom must comply with specific requirements as stipulated in Clauses 1 and 2, Article 55 of Decree No. 102/2024/ND-CP. Among these, particular attention should be given to the following condition applicable to participating organizations:
b) … In cases where an auction involves a single land parcel, a land area, or a project comprising one or multiple land parcels, members of the same corporate group must agree to nominate only one company within the group to participate in the auction for land use rights.
c) Pay a deposit equal to 20% of the total value of the land lot, based on the starting price;
d) Not fall into any of the categories prohibited from participating in auctions under the law;
đ) Meet all conditions prescribed by land laws and relevant legislation on real estate business in cases where the auctioned land use rights pertain to implementation of real estate projects.
Additionally, participants must comply with all other legal requirements on asset auctions as prescribed in Point c, Clause 3, Article 125 of the 2024 Land Law.
These provisions are intended to filter out investors who lack financial capacity or are unable to fulfill their commitments post-auction, thus ensuring only those bidders capable of implementing the project according to its intended objectives are selected. This minimizes delays or abandonment of land after auctions.
3. Auction Procedures
With respect to the auction of land use rights, Clause 7, Article 125 of the 2024 Land Law stipulates that the procedure shall follow the regulations in the Law on Property Auction 2016, specifically Chapter III on auction order and procedures. In addition, Article 37 of Law No. 37/2024/QH15 amending the Law on Property Auction supplements and refines several provisions, notably defining the roles of the “Owner of the Auctioned Asset” and the “Auction Organization”.
3.1 Acceptance of auction services (Article 33)
– Both parties signing the asset auction service contract must execute it in writing, ensuring compliance with the provisions of civil law and the Asset Auction Law.
– The person possessing the auctioned asset is responsible for providing sufficient documentation proving ownership or legal usage rights of the asset, in accordance with legal requirements.
– The auction organization is obligated to verify the provided documents and confirm the legal status of the asset before proceeding with the auction.
3.2 Survey and Listing of Assets (Article 35)
– Determining the Actual Condition of Assets: The auction practice organization must inspect and evaluate the assets from both legal and physical perspectives, ensuring that the assets meet the necessary conditions for listing and auction.
– Listing Period: According to Clause 21 of Law No. 37/2024:
b) In cases where land use rights are auctioned for land allocation or lease to implement an investment project, the listing must be published at least 30 days before the auction session.
– Survey Report Preparation: After the survey, a report must be prepared to record the condition of the assets, including images, documents detailing the asset name or asset list, asset lots or individual assets, the quantity and quality of the auctioned assets, the location of the auctioned assets, and documentation regarding ownership and usage rights of the auctioned assets.
3.3 Auction Announcement (Clause 37)
The results of the auction survey must be publicly announced twice on the National Property Auction Portal, with each announcement at least two days apart, and at least once in a printed newspaper or television broadcast of the central government or the province/municipality where the auctioned asset is located. Additionally, the auction session may be publicly announced through other mass media channels as requested by the asset owner.
3.4 Auction Organization (Articles 38 – 44)
– Clause 24, Article 37 of Law No. 37/2024: Individuals and organizations registering to participate in an auction must submit valid participation documents and pay a deposit, which must be at least 10% and at most 20% of the starting price of the auctioned asset, specifically land use rights.
– The deposit must be placed into a separate payment account, which the auctioneer profession organization is required to block for the deposited amount.
– The auction participant, the asset owner, and the asset auctioneer organization may mutually agree to substitute the deposit with a bank guarantee.
– The auction process may be conducted based on mutual agreement through one of the following methods:
Direct verbal bidding: The procedure follows Clause 2, Article 43 of Law No. 37/2024. The highest bidder wins the auction. If two or more participants offer the highest bid, the auctioneer organizes a further bidding round among them to determine the winner.
Direct voting: The auction procedure is conducted according to Article 42 of the Law on Asset Auction and Clause 26, Article 37 of the amended law. The auction concludes when no further bids are submitted. The auctioneer announces the highest bidder as the auction winner.
Sealed bidding: This is an indirect voting method that also includes additional provisions for online auction procedures, amended and supplemented under Clause 27, Article 37 of Law No. 37/2024 and Article 43 of the 2016 Law on Asset Auction.
The auction must be conducted openly and transparently, under the supervision of regulatory authorities, to prevent fraud or collusion.
3.5 Handling of Auction Results:
– Upon winning the auction, the deposit and any accrued interest (if applicable) shall be converted into a down payment (Clause 5, Article 39).
– The auction minutes must bear the signatures of the auctioneer, the recorder, the successful bidder, the asset owner, and representatives of the participating parties after the conclusion of the auction session.
– The asset auctioneer organization must record the auction results in the Asset Auction Registration Book and provide written notification to the asset owner.
3.6 Completion of the Transfer Procedures:
– Fully implement the rights and obligations corresponding to each party under Articles 47 and 48 of the 2016 Law on Asset Auction.
– The auctioneer profession organization shall transfer the auction results, auction minutes, and the list of successful bidders to the asset owner for signing the asset purchase agreement or to the competent authority for approval.
– Ensure the storage of auction records and documents in accordance with legal provisions on archival storage for a minimum period of five years from the date the auction concludes, except in other specified cases (Clause 1, Article 54).
4. Approval Authority
Pursuant to Clause 7, Article 126 of the 2024 Land Law and Clause 4, Article 55 of Decree No. 102/2024/ND-CP, the authority responsible for approving land use rights auctions, where land is allocated or leased by the State for the first time, is the District-level People’s Committee or the Provincial-level People’s Committee, depending on the land management level.
In cases where the land belongs to the Provincial People’s Committee, the provincial Land Development Center is tasked with organizing the auction of land use rights in accordance with legal procedures (Clause 5, Article 55 of Decree No. 102/2024/ND-CP).
The 2024 Land Law also emphasizes a progressive approach toward institutional reform by introducing a market-oriented land pricing mechanism. Accordingly, auctions of land use rights are expected to become a fundamental and regular method to determine land prices for State allocation or lease, particularly in urban areas and locations with high development potential. This approach aims to improve transparency, boost budget revenues, and enhance public confidence in the State’s land management. At the same time, it ensures that land users can be more confident in the legality of their land use rights, thereby contributing to the effective operation of the real estate market.
📞 CONTACT LEGAL CONSULTANT:
TLA Law is a leading law firm with a team of highly experienced lawyers specializing in criminal, civil, corporate, marriage and family law, and more. We are committed to providing comprehensive legal support and answering all your legal questions. If you have any further questions, please do not hesitate to contact us.
1. Lawyer Vu Thi Phuong Thanh, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Ha Noi Bar Association
Email: https://tlalaw.vn/
TTQ