In 2001, Company A signed a "Land Use Right Transfer Contract" with the Land and Resources Bureau of County B, which stipulated that the Land and Resources Bureau of County B would transfer 45 acres of land located in Village A of County B to Company A for use as a construction plant. Before the signing of the transfer contract, the People's Government of County B issued an "Approval for the Acquisition and Transfer of 45 Mu of Land in Village A". In 2019, Company A signed a "Land Transfer Contract" with Company C due to a transfer of production, which stipulated that Company A would transfer the land use right obtained by it through transfer to Company C. After the signing of the transfer contract, Company A delivered the land to Company C, but Company C only paid a portion of the transfer payment. After several unsuccessful reminders, Company A filed a lawsuit with the court to require Company C to continue to perform the contract and bear the liability for breach of contract. Company C claimed that the farmland under the Land Transfer Contract had not been subject to the approval procedures for the conversion of agricultural land in accordance with the law, which violated the mandatory provisions of the law, Request that the "Land Transfer Contract" be determined to be invalid and that Company A return the paid transfer payment.

Focus of controversy: The effectiveness of the Land Transfer Contract?

Lawyer Analysis

Article 490 of the Civil Code stipulates that if the parties enter into a contract in the form of a written contract, the contract shall be established upon the signature, seal, or fingerprint of the parties. "In this case, the Land Transfer Contract signed by Company A and Company C is a true expression of intent by both parties and shall be deemed to have been established.

Article 502 of the Civil Code stipulates that a legally established contract shall take effect from the time it is established, except as otherwise provided by law or agreed upon by the parties. "If a contract is subject to approval and other procedures in accordance with the provisions of laws and administrative regulations, such provisions shall apply.". Article 44 of the "Land Management Law" stipulates that land occupied for construction, involving the conversion of agricultural land to construction land, should undergo the approval procedures for the conversion of agricultural land. It also stipulates that the conversion of agricultural land should be approved by the people's governments of provinces, autonomous regions, and municipalities authorized by the State Council.

In this case, when the Land and Resources Bureau of County B expropriated and transferred 45 acres of land to Company A, there was only an approval from the People's Government of County B, which was not approved by the People's Government of the province where County B is located, and the approval procedures were not completed according to law. Therefore, the "Land Use Right Transfer Contract" signed between Company A and the Land and Resources Bureau of County B is invalid. Company A has no right to dispose of land that has not completed the approval procedures for the conversion of agricultural land to construction land according to law, so the Land Transfer Contract involved in the case is invalid. Company A shall return the transfer payment already paid by Company C.

Recommendations:

It is a basic national policy of our country to cherish and rationally utilize land and effectively protect cultivated land. When obtaining the use right of state-owned land by way of transfer, if the land was previously collectively owned farmland or other agricultural land, the company should pay attention to reviewing whether the transfer plot has gone through the approval procedures for agricultural land conversion according to law. If the transferred land was previously agricultural land and the approval procedures for the transfer of agricultural land have not been completed, timely contact the relevant local departments to complete the relevant procedures.