If someone borrows land to build a house, will they be compensated if the land is reclaimed?
Ms. NTH (Thanh Vinh ward) asks: Three years ago, I borrowed land from my sister to build a small house for my mother and me to live in. The agreement was verbal, with no written documents. Now my sister is demanding the land back. Can I request compensation for the construction costs?
Reply:
According to regulations, only those with legal land use rights are allowed to dispose of, lease, lend, or transfer land. Building a house on someone else's land without clear documentation poses a significant legal risk, because when the landowner reclaims the land, the person who built on it without permission has no right to retain ownership.
However, if it can be proven that the landowner agreed to the loan, even verbally, this relationship can be considered a property loan contract (according to Articles 494-499 of the 2015 Civil Code). In that case, the builder may be considered for reasonable compensation for the construction costs incurred, provided that the landowner consented to the construction or did not object throughout the entire period of use.
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Conversely, if the construction is carried out without the landowner's consent, it may be considered encroachment. In that case, the landowner has the right to demand demolition and restoration of the original state, and the builder has no legal basis to claim compensation.
Therefore, if Ms. H. has evidence showing that the landowner agreed or approved the construction, the competent authority may consider compensating her for a reasonable portion of the costs when resolving the dispute. Conversely, if there is no evidence to prove this, the compensation claim will likely not be accepted.
