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Questions from owners of demolished businesses in Chongqing:

I have a factory in Chongqing. The land is a state-owned industrial transfer land of 8,000 square meters and the factory building is 4,000 square meters. I would like to ask what standard the government will use to assess the compensation for expropriating the factory building. Is it based on the local residential price or some other standard? Also, if it is to be replaced, what standard will it be based on? Is it based on the land area or the house area?

Yingting demolition lawyer explains the calculation standards and included items of compensation for factory demolition:

Nowadays, many cities are building industrial parks and moving some companies in. In this way, the original companies will be demolished and other commercial facilities will be built. When a company encounters demolition, the issue of compensation naturally becomes the focus of attention of the person in charge of the company. They want to know how the government subsidizes the company. So, what is the compensation standard for company relocation? Now let's hear what the lawyers have to say.

1. Compensation for demolished assets

Including: compensation for land, houses, buildings and ground attachments that cannot be relocated, as well as machinery and equipment that are indeed lost due to relocation.

1. Problems regarding land compensation fees in practice

The business premises of an enterprise are generally obtained through leasing. There are two types of leased land: leasing state-owned land and leasing collective land. The demolition of an enterprise will inevitably lead to the termination of this lease relationship, so how to protect the interests of the enterprise in the lease contract? According to the "Regulations on the Expropriation and Compensation of Houses on State-owned Land", the objects of demolition compensation are buildings and attachments on state-owned land. There is no unified provision in the demolition regulations for compensation for vacant land or clean land. There are no regulations on the demolition of buildings on collective land.

There are also cases where state-owned land use rights are obtained directly through bidding, auction or allocation. However, the Land Management Law only stipulates appropriate compensation for the recovery of state-owned land use rights, but there are no detailed provisions.

Demolition compensation and land compensation in various places are often calculated together with house and building compensation. There are a lot of unclear and opaque situations, making it impossible for the rights holders to obtain corresponding reasonable compensation.

2. Determination of compensation costs for houses and buildings

Compensation for houses and buildings shall be calculated based on the building area registered in the relevant property certificate. If it is impossible to apply for real estate certificate and land certificate due to historical reasons, it can be determined through actual measurement. The value of houses and buildings should generally be jointly entrusted by the demolishers and the demolished persons to an appraisal company. The appraisal company will determine the actual value of the houses and buildings based on relevant appraisal technical standards.

3. Equipment replenishment costs are calculated based on the replacement price.

Equipment relocation and installation costs shall be calculated based on the goods transportation price and equipment installation price stipulated by the local authorities. Machinery and equipment are divided into two categories: one is removable equipment; the other is non-removable equipment. The loss costs caused by the demolition of removable equipment can be divided into physical loss costs and functional loss costs. Physical damage costs include disassembly costs, transportation costs, installation costs, debugging costs, etc. Functional loss costs include the decrease in machine accuracy caused by relocation and the increase in substandard products. For non-removable equipment, demolition will lead to the abandonment of the equipment, so the new price and replacement price should be combined to calculate the replacement price of the equipment and compensate the owner.

In the actual operation of demolition, when non-residential houses are demolished, the equipment relocation and installation costs should be determined in each place; equipment that cannot be restored to use will be compensated based on the replacement price of the equipment.

2. Compensation for losses caused by suspension of production and business

Including actual operating losses and expected operating losses.

This part is a controversial part in legal practice. The author believes that the cost of production and business suspension should not only include the actual loss of raw materials, semi-finished products and other items, but also include the amount of compensation determined based on the actual sales or profits of the same period in previous years. This part of the cost is often the part that directly affects the total amount of compensation for the company. Therefore, it is also the top priority to protect rights.

Article 23 of the Regulations on the Expropriation and Compensation of Houses on State-Owned Land stipulates that compensation for losses due to production and business suspension due to house expropriation shall be determined based on factors such as the benefits before the house was expropriated, the period of production and business suspension, and other factors. Specific measures shall be formulated by provinces, autonomous regions, and municipalities directly under the Central Government. The specific standards and calculation methods are not uniformly stipulated in the regulations, nor are they stipulated in other laws and administrative regulations. In legal practice, the standards and basis for compensation are often stipulated in policy documents by local governments at the municipal level. Compensation standards vary from place to place, and the calculation methods are also different.

3. Compensation for demolition costs

The use and relocation include the preliminary costs of relocation, the downtime costs incurred during the relocation process, the costs of debugging and repairing machinery and equipment, as well as the disassembly, packaging and transportation of materials, compensation for laid-off employees, etc.

1. Equipment relocation and installation fees

For removable equipment, the principle of continued use should be followed, relocation and installation should be carried out in other places, and the equipment should continue to be put into use. The equipment relocation and installation costs incurred accordingly are inevitable losses caused by the demolition, and the demolition party shall compensate them.

2. Resettlement compensation costs for laid-off employees

The resettlement compensation fees for employees laid off due to demolition are not specified in detail in laws, regulations and policy documents, and are items that the demolition parties must negotiate with each other. If demolition results in the dismissal of employees, compensation should be provided in accordance with the specific labor contracts signed with the employees and in conjunction with relevant provisions of the labor law.

4. Compensation for demolition incentives

Incentive fees incurred based on the demolition policy include expedited relocation fees, demolition incentive fees, etc.

In the process of demolition, in order to speed up the progress of demolition, demolishers often use prompt relocation incentives to encourage demolished persons and lessees to sign demolition and resettlement compensation agreements as soon as possible and move out of the demolition scope. The amount of the incentive fee shall be determined by the demolisher based on the actual demolition, or may be determined through negotiation among the demolisher, the person being demolished, and the actual lessee. It should be noted that if the owner and user of the demolished factory building are separated, the incentive fee should be paid to the lessee who actually uses the demolished factory building. This has been stipulated in policy documents and is a reasonable approach.

Through this article, the lawyer elaborated on the company relocation compensation projects and standards from four major aspects. The compensation content includes compensation for demolished assets, compensation for suspension of production and business, compensation for demolition costs and policy compensation, etc. Among them, compensation for demolished assets and compensation for suspension of production and business operations are the two most important, and they are also areas where problems often arise. The company should list them as the focus of rights protection. It is best for the company to hire a professional Beijing Yingting demolition lawyer to jointly handle demolition compensation issues.

The above are the relevant answers about the compensation standards and compensation project assessment for factory demolition in Chongqing. The specific compensation needs to be assessed according to the detailed situation of the enterprise. Business owners involved in related issues, please call Yingtong Enterprise Demolition Lawyer to make an appointment for an interview.