How does one obtain a land use right?
Land use rights can be conveyed as a grant, transfer, lease, or pledge. Grants are only available in the first class market. A grant is issued solely to the State or its authorized agent for a specific purpose and period. Grants are awarded strictly on condition that the recipient invests, develops, and uses the land for a specific purpose in accordance with the instructions issued by the authorities and are normally the subject of a contract. The period of the grant depends on how it is classified for use. Generally, for residential developments the period is 40 years and if the land is used for industrial, scientific and technological, cultural and educational development the period is usually 50 years.
The recipient of the grant may subsequently transfer or lease his "right of use" to the second and third class markets, provided he first fulfils the terms and conditions of the grant. For example, he must make the necessary investment or complete a predetermined percentage of the development of the said land before he transfers or leases the land.
Land use rights may be pledged as security for loans and other financial arrangements. In such arrangements, the creditor has the right to dispose of the land and has priority to the claim in the event of a default.
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