Land Law of Mongolia

Posted on Sep 30,2016, at 04:41 pm.

Author : none

By David C. Buxbaum (Attorney) and Enkhgerel Deleg (Attorney)

Preface

Dear Readers,

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Land Law of Mongolia

Preamble
Most of the Current Court Cases are Caused by Land Disputes

The State Specialized Inspection Agency (Ulsiin Mergejiliin Khynaltiin Gazar) recently implemented an action plan called, “Protect Environment and Civil Responsibility”. On the occasion of this action plan, the Agency revealed 312 violations of Land Law provisions.

As a result, some landowners, whether they were companies or citizens, have had their land expropriated and their land lease contracts cancelled by the State. The loss of land led to a feeling of helplessness among the population and to a dramatic increase in land disputes in court.

The report of the Administration of Land Affairs, Geodesy, and Cartography of 2009 recorded 2652 land disputes, where 1490 were related to land possession (56%), 441 to land ownership (17%), 618 to borders of administrative units (23%), and 103 to land use (4%).

According to statistics, most disputes concern: purchase of real estate properties without the consent of the land owner and/or the State; loss of land rights for non-use of land for 2 years; violation of land possession contracts; non-payment of land fees, and extension of the form of a land possession contract.

In general, land related litigation is mainly due to: the overlapping of people's land rights; the lack of understanding of the legal system by the citizens; corruption; coordination problems; and market instability.

The purpose of this article is to explain the fundamental principles of land law in Mongolia and provide details of land law practice.

Introduction

Mongolian Land Law and Regulation Background

Mongolia's territory is very wide, with a total area of 1.566 million square kilometers, it is the 19th widest country in the world covering 0.31 percent of the world's surface. The Mongolian land area is characterized as 76.1 percent agriculture and pasture, 8.2 percent is covered by forests, 1.1 percent is covered by water and 0.2 percent is categorized as lands of cities, villages and other settlements.

The land of Mongolia is strongly connected to the Mongolian way of life and culture and the land is traditionally considered, as Modun Shanui, the King of Khunnu Dynasty said, “The Roots of the State”. Indeed issues related to the land of Mongolia are of a major importance for the descendants of Chinggis Khan.

In 1990, the Mongolian system converted into a democracy. Simultaneously, its economy started its transition to a free market economy. However, until 1992 land could not be privately owned by citizens. Therefore it was collectively and freely used by everyone.

In 1992 the Mongolian Democratic Constitution was enacted. This new Constitution provided the conditions allowing the transfer of state-owned land to citizens of Mongolia for private ownership. These articles of Constitution entered into force in 1992, but they could not be applied without concrete statute laws.

The Mongolian Land Law is regulated by several legislative and government acts such as:

The Land Law: In 1994 the first Land Law was enacted. It was revised on 7th June, 2002, effective on 1st January, 2003. The new Land Law maintains many of the 1994 law’s provisions;
The Law on Allocation of Land to Mongolian Citizens for Ownership was enacted by Parliament, on 27th June 2002;
Other special legislative provisions related to the Land; include Subsoil Law; Law on Land Fees; Forest Law; Water Law; Law on State Special Protected Areas; Law on Butter Zone of State Special Protected Areas for Protection of Nature; Immovable Property Tax Law; Civil Law and Foreign Investment Law; Order 83rd of the Director of Administration Land Affairs, Geodesy, Cartography dated 2008; 2nd and 3rd annex of the Government Order 152 dated 1997; the 1st annex of the Government Order 81st dated 2007; are the 5/39th Decision of City Counsel dated 2010.

The Land Law

The Land Law regulates land relationship regarding citizens, companies and organizations, for land use, land possession and other relevant relations.

Land use right (gazar ashiglakh): consists of the right to use land (Latin: usus), pursuant to the Land Law. Art. 3.1.1. It defines land use as a “legitimate and concrete activity to make use of some of land's characteristics in accordance with contracts made with owners and possessors of land”.

The right of land use is given to citizens of Mongolia, Mongolian business entities, organizations, foreign citizens and stateless persons permanently residing in Mongolia, foreign legal entities, foreign diplomatic missions, consulates and representative office of international organizations.

Land use duration and land area size rights vary among persons, legal entities and foreign diplomatic missions. For instance foreign citizens and stateless person may only use up to 0.05 hectares and an additional 0.1 hectares for cultivation of vegetables and fruits, and the duration of land use is limited to five years, with an additional extension of up to five years. Foreign legal entities may use land for an initial duration not to exceed 60 years, which can be extended once, for a period of up 40 years. Foreign diplomatic missions, consulates and representative office of international organization can use land, if international treaties with Mongolia so provide. In practice, Mongolian citizens and Mongolian legal entities, often use land in mining areas and State Special Protected Areas, as they cannot possess or own land in these areas.

Land possession right (gazar ezemshikh): consists of the right to use the land (Latin: usus) and the right to collect the fruits of the land (Latin: fructus).

The Land Law, Art. 3.1.1, defines land possession as a “legitimate control of land in accordance with purpose of its use and terms and conditions specified”. Mongolian citizens, governmental and non-governmental companies, and non-profit organizations have the right to possess land and are eligible to sign up for land possession contracts with the State. The duration of land possession contracts are 15-60 years, and licenses for land possession may be extended once for no longer than 40 years.

Land ownership (gazar umchlukh): Pursuant to the Law on Allocation of Land to Citizens of Mongolia for Ownership. Art. 3.1.3 land ownership is defined as “legitimate control of land with the right to dispose of that land”. Only Mongolian citizens can own the land within the territory of Mongolia. In the city ownership is limited to 0.07 hectares of land. Residents of provinces may own 0.35 hectares. In the soums, the limit is 0.5 hectares of land. Regarding agricultural land, possessors of the land have a preferential right to buy this specific land for agricultural purposes. Without any possession right on agricultural land, citizens can, however, buy agricultural land via auction.

Land owners have the full rights to their land, but are strongly prohibited from transferring land to foreign citizens or stateless persons pursuant to law.

Land Fees, Taxes and Price

Fees. Land users and land possessors must pay land fees. Land fees are established pursuant to the Law on Land Fees, enacted in 1997.

The Land Fees Law determines fees, basic policies of the government and local government orders regulating the fees. In 1997, the Mongolian Government determined, through the 152nd Rule, the highest and lowest standard of land fees for each year.

In the city, depending on the location, land fees for 1 meter square vary from 44 to 440 Mongolian tugrugs. Land fees are the most expensive in the cities. Land fees in the outskirts of the city are however cheaper. In distant districts, land fees are around 40 to 80 Mongolian tugrugs. Land fees in provinces vary depending on the population. For provinces with a population of 30.0-50.0 residents, land fees for 1m² are estimated from 5 to 10 Mongolian tugrugs. In provinces of 15.0-30.0 inhabitants, land fees for 1m² are estimated from 4 to 8 Mongolian tugrugs. Land fees for 1m² in villages and bigger soums are 0.8 Mongolian tugrugs. For small soums, the fee is 0.5 Mongolian tugrugs. 2nd Annex of 152nd Government Order, 1997.

The government's orders determine the year's lowest land fees for agricultural land, pastureland, and hay-field land. These lands are divided into 4 zones: Khan-khentii mountainous land; Altais mountainous land; Gobi mountainous land; and steppe zones. Each zone has specific land fees. For instance, agricultural land annual fees in the Khan-Khentii's zone for 1 hectare are 386 Mongolian tugrugs; in Altai, 1 hectare is 225 Mongolian tugrugs; in the Gobi, 1 hectare is 174 Mongolian tugrugs, in the steppe, 1 hectare is 384 Mongolian tugrugs. 3rd Annex of 152nd Government Order, 1997.

Herders are exempt from paying fees for pastureland and hay fields. Only Mongolian citizens are exempt from paying 90% of their land fees for up to 0.07 hectares of land possession and use for residential purposes. Kindergarten lands, nursing homes, children's camps, secondary schools and orphanage; etc, regardless of their ownership are also exempt from land fees.

Tax. Land Owners must pay immovable property tax in land. This tax is equal to 0.6 percent of the land's cost. In 2004, an Amendment was passed to the Immovable Property Tax Law, the Amendment exempted Mongolian citizens from paying 95-98% of the immovable property tax on the land they possess for their residential use did not exceeding 0.07 hectares. This exemption for taxes is equal to 95% in the city; 97% in provinces; and 98% in the soums.

Price. In 1997, The Mongolian Government determined land compensation per square meter of land to be between 13.200 to 44.000 Mongolian tugrugs. For agricultural land, 1 hectare can be valued from 1.738.000 to 3.859.000 MNT, pursuant to 152nd Government Order. This applies to lands sold via auction by the Government. Basic land prices are determined by compensation costs, however, these prices are different in practice.

In practice, the average developed land price is 59.8 million Mongolian tugrugs with the highest price being 97.2 million Mongolian tugrugs and the lowest being 43.1 million MNT. The undeveloped average land price is 183.8 million Mongolian tugrugs, the highest value being 121.8 million Mongolian tugrugs, lowest 11 million Mongolian tugrugs. These values' variations are by caused development of infrastructures and nearby roads and transportation.

Special Laws Related to the Land–Laws Regulating Subsoil and Mining Activities

The Mongolian Constitution provides that the subsoil of Mongolia is Mongolian State Property. Land subsoil and mining activities are regulated by the Subsoil Law and the Mining Law. The Land Subsoil Law enacted in 1988 is an important source of regulation for the management of resources and mining activities.

Subsoil is generally used for various reasons such as geological surveys, exploration, mining, real estate construction, etc. The right to use the subsoil is granted for no more than 30 years through a license, with a possible extension of up to 20 years. The subsoil used for exploration and mining is regulated by special laws such as the Mining Law.

The Mining Law was enacted in 2006. Citizens and companies using and possessing land may use their land’s subsoil exclusively to access common mineral deposits such as mud, sand, gravel, and stones for construction, stones and lime which are construction materials. If citizens and companies explore and mine, they obtain special licenses from Mongolian Regulatory Authority on Mining, and must enter into agreement with the governor on the land and water use. Land fees for mining fields are twice the land fees of agricultural fields, cities, villages or other settled areas existing on the field prior to the beginning of mining operations (according to their then current rate).

Laws Regulating Special Protected Areas, Water and Forest Zones

The Law on State Special Protected Areas of 15th, November, 1995 and the Nature of the Law Butter Zone of State Special Protected Areas Nature Protection of 23rd October, 1997 classify protected areas and determine their management conditions. State special protected areas are classified as follows: national conservation parks, natural complex areas, natural reserves and national monument areas.

Foreign legal entities, international organizations, foreign citizens, stateless persons and Mongolian foreign invested entities are prohibited from using land in special protected areas except for specific research projects; Law on the State Protected Areas, Art 33.1, 33.2.

Only Mongolian citizens, business entities and organizations have to right to use land in limited zones of conservation areas and natural parks, nature reserves and monuments. However this right is subject to several conditions related to the purpose of use, the term and conditions that the use is not harmful to environment.

The duration of land use contracts in special areas is five years with one possible extension of up to five years; and land fees in specially protected area are three times higher than regular fees.

The Forest Law was enacted in 2007 and the Water Law in 2004. These texts determine the existing conditions and regimes of forest reservoirs and water reservoirs. Pursuant to these laws, a forest reservoir is an area located within a 100 meter perimeter from the outskirts of a body of water. A water reservoir is an area located in a 50-200 meter perimeter from a river.

Private ownership of land within a forest and water reservoir is prohibited; but it is possible to use and possess land within these territories.

In general, land fees of lands in forest or water reservoirs, are twice regular fees.

Conclusion

Mongolia has good and extensive laws and regulations with regard to land ownership, possession, use and exploration. However, the administration of land rights is poor and corruption of the Mongolian Land Authority is endemic. Mongolia can benefit from the following reforms:

(a) computerization of the registration of all land ownership, use and possession;

(b) strict control on abuse of authority by personnel in the Mongoliam Land Authority;

(d) training a corps of judges as specialists in land law.

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References:

Laws:

1. Land Law

2. Law on Allocation of Land to Mongolian Citizens to Ownership

3. Subsoil Law

4. Law on Land Fees

5. Forest Law

6. Water Law