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Property Rights Law of the People¡¯s
Republic of China
The Property Rights Law of the People¡¯s Republic of China, adopted at
the 5th Session of the 10th National People's Congress of the People¡¯s
Republic of China on March 16,
2007, is hereby promulgated and shall come into effect on October 1,
2007.
CONTENTS
PART I GENERAL PROVISIONS
Chapter I Fundamental Principle
Chapter II Establishment, Modification, Transfer and Lapse of Property
Rights
Chapter III Protection of Property Rights
PART II OWNERSHIP
Chapter IV General Stipulations
Chapter V State Ownership, Collective Ownership and Individual Ownership
Chapter VI Building Distinction Ownership of the Owner
Chapter VII Neighborhood Relationship
Chapter VIII Joint Ownership
Chapter IX Special Regulations Pertaining to Attainment of the Ownership
PART III USUFRUCTUARY RIGHTS
Chapter X General Stipulations
Chapter XI Right to Land Contractual Management
Chapter XII Right to the use of the Construction Land
Chapter XIII Right to the use of the Residential Housing Land
Chapter XIV Easement on Land
PART IV SECURITY INTEREST IN PROPERTY RIGHTS
Chapter XV General Stipulations
Chapter XVI Mortgage Right
Chapter XVII Right of Pledge
Chapter XVIII Lien
PART V POSSESSION
Chapter XIX Possession
Supplementary Provisions
PART I GENERAL PROVISIONS
Chapter I Fundamental Principle
Article 1 This
Law is formulated with a view to maintaining the national basic economic
system and the economic order of the socialist market, clarifying the
ownership of property,
giving full effect to the meaning of property, protecting the obligee¡¯s
property ownership rights, in accordance with the Constitution.
Article 2 This Law shall apply to civil relationship arising from the
ownership and utilization of property.
The word ¡°property¡± as a term used in this Law includes movable and real
property.
Where there are laws stipulating rights as the objects of property
rights, they shall be observed.
The phrase ¡°property rights¡± as a term used in this Law refers to the
exclusive right enjoyed by the obligee to directly control specific
properties including ownership,
usufructuary and security right in property rights.
Article 3 During the primary stage of socialism, the State shall adhere
to the basic economic system, with public ownership playing a dominant
role and diverse forms of ownership
developing side by side.
The State shall consolidate and develop unswervingly the public sector
of the economy and at the same time encourage, support and guide the
development of the non-public
sectors of the economy.
The State implements the socialist market economy, ensuring equal legal
status and right for development of all market players.
Article 4 The property rights of the State, collective, individual and
other obligees shall be protected by laws and shall not be infringed by
any institute or individuals.
Article 5 The types and content of property rights shall be stipulated
by laws.
Article 6 The establishment, modification, transfer and lapse of the
right in real property shall be registered in accordance with relevant
laws and regulations. The establishment and
transfer of the movable property shall be delivered pursuant to laws and
regulations.
Article 7 The attainment and exercise of property rights shall comply
with laws, social morality and shall not do harm to the public interests
and the legitimate rights and interests of
others.
Article 8 Where there are laws stipulated otherwise in respect of
property rights, such laws shall be observed.
Chapter II Establishment, Modification,
Transfer and Lapse of the Property Right
Section I Real Property Registry
Article 9 Unless otherwise provided by law, the establishment,
modification, transfer and lapse of the right in real property shall
only take effect upon registration pursuant to laws.
The ownership with regard to State-owned natural resources might not be
registered.
Article 10 The real property shall be registered in the registration
department of the place where it is located.
With regard to real property, the State pursues a uniformed registration
system, of which the scope, departments and methods shall be stipulated
by laws and administrative
regulations.
Article 11 While applying for registration, the party interested shall
provide evidentiary materials
showing the ownership as well as other necessary materials specifying
the site and size of
the real property.
Article 12 The registration department shall perform such duties as
stated below:
(i) Check and examine the evidentiary materials showing the ownership
and
other necessary materials submitted by the applicant;
(ii) Raise inquiries to the applicant in respect of the registration;
(iii) Conduct registration according to facts and in a timely manner;
(iv) Other duties provided by laws and administrative regulations;
In the event where further evidence is needed in respect of relevant
items of the real
property to be registered, the registration department may require the
applicant to provide
supplementary materials and conduct field survey if necessary.
Article 13 The registration department shall not conduct any of the
following:
(i) Require evaluation with regard to the real property;
(ii) Require repetitive registration in the name of annual inspection;
(iii) Other actions beyond the scope of registration authority.
Article 14 The
establishment, modification, transfer and lapse of right in real
property, which is
required to be registered, shall take effect upon being registered.
Article 15 The contract entered into by interested parties in respect of
the establishment,
modification, transfer and lapse of the right in real property shall
take effect immediately
upon execution thereof unless otherwise provided by law or in the said
contract. The
validity of the contract shall not be affected if the registration in
respect of the right in
property is not carried out.
Article 16 The Real Property Register shall be the basis of evidence
pertaining to the ownership and
content of the property rights and shall be supervised by the
registration department.
Article 17 The ownership certificate of real property is the evidentiary
material showing the rightful
ownership of the obligee in such real property. Items recorded in the
ownership
certificate of real property shall be in conformity with that registered
in the registration
certificate, otherwise, the real property registration certificate shall
apply.
Article 18 The registration department shall provide assistance to the
obligee and interested party to
review and make a copy of the registration information.
Article 19 Where the obligee, interested party considers items recorded
in the real property register
had been wrongly entered, may apply for correction of the registration.
In the event that
the obligee of the real property register agrees with the correction in
writing or have
evidences to prove the existence of the mistakes with regard to the
registration, the
registration department shall make relevant corrections.
In the event that the obligee of the real property register does not
agree with the
correction, the interested party may apply to oppose to the
registration. Where the
opposition registration is approved by the registration department, the
applicant may
bring a suit to a court within fifteen (15) days from the date of
registration of such
opposition, failing which such opposition registration shall become
invalid. When the
obligee suffers from inappropriate opposition registration, the obligee
may claim
damages from the applicant.
Article 20 Where concerned parties reach an agreement pertaining to
purchase or sale of a house or
other real properties, it may, in order to ensure realization of
property rights, apply for
pre-notice registration with the relevant registration department in
accordance with the
agreement. Upon completion of the pre-notice registration, the disposal
of such real
property without consent from the obligee of the pre-notice registration
shall not take
effect with regard to property rights.
Upon the registration of the pre-notice, the creditor¡¯s rights lapses or
within three (3)
months from the date on which such registration can be registered, but
fails to apply for
registration of real property within, the pre-notice registration shall
become null and void.
Article 21 The party concerned shall, if providing false materials for
registration that does harm to
others, bear the responsibility for compensation.
Where the registration department brings damage to others as a result of
mistakes in
registration, it shall bear the responsibility for compensation and
shall have the right of
recourse to the person who is liable for such mistake.
Article 22 The registration of real property shall be charged according
to the quantity and may not
be charged according to the size, volume or price of the real property.
Specific charge
standard shall be jointly stipulated by relevant department of the State
Council and the
competent department in charge of pricing.
Section II Delivery of Movable Property
Article 23 Unless otherwise provided by law, the establishment and
transfer of the right in movable
property shall take effect upon delivery.
Article 24 The establishment, modification, transfer and lapse of the
right to property in respect of
water-crafts, aero-crafts and motor vehicles without first being
registered, shall not affect
any bona fide third party.
Article 25 Where the obligee has already in possession of the movable
property before the
establishment, transfer of the right in such movable property, the
property rights shall
become effective upon the validity of the legal action.
Article 26 Where a third party has been in possession of the movable
property before the
establishment, transfer of the right to such movable property, the
delivery of such
movable property right may be replaced by transfer of the right to
request the third party
to return the property by the person entitled with the delivery
obligation.
Article 27 The assignor shall deliver the movable property to the
assignee in case of an assignment
of the right to such movable property, provided, however, that both
parties agree on a
continuous possession of such movable property by the assignor, the
right to property
shall take effect upon the validity of such agreement.
Section III Miscellaneous
Article 28 The establishment, modification, transfer and lapse of the
property rights as a result of the
legal amanuensis of the people¡¯s court and the arbitration commission,
the expropriation
decision of the people¡¯s government shall become effective upon the
effective date of
such legal amanuensis or expropriation decision of the people¡¯s
government.
Article 29 The property rights obtained as a result of inheritance or
acceptance of donation shall
take effect upon the commencement of the inheritance or the donation.
Article 30 The establishment or lapse of property rights due to such
actual actions as legal
construction and demolition of houses shall become valid and effective
upon the
occurrence of such actions.
Article 31 The disposal of such property rights as enjoyed pursuant to
the provisions of Article 28 to
Article 30 hereof shall not become effective in respect of the property
rights if not being
registered, provided that such disposal needs to be registered.
Chapter III Protection of the Property rights
Article 32 Where the property rights are infringed, the obligee may
handle the problem through such
means as pacification, mediation, arbitration or litigation.
Article 33 In case that disputes arise in respect of the ownership and
content of the property rights,
the interested party may request affirmation of such right.
Article 34 Where the real property or movable property is possessed by
people without rights, the
obligee shall have the right to request return of such property.
Article 35 Where the property rights are infringed or likely to be
infringed, the obligee may request
to remove such encumbrance or hazard.
Article 36 Where the real property or movable property is damaged, the
obligee may request repairs,
remake, replacement or restoration.
Article 37 Where the obligee suffers from infringement done to the
property rights, it may claim
damages and request the infringing party to bear other civil
liabilities.
Article 38 The methods with regard to the protection of the property
rights provided in this chapter
may be used separately or jointly according to specific circumstances of
the infringement
of the right.
Where the infringement of the property rights violates administrative
regulations, the
infringing party shall, in compliance with laws, assume the
administrative liability, in
addition to the civil liability; if such infringement constitutes a
crime, the party concerned
shall be investigated for criminal responsibility in accordance with
law.
PART II OWNERSHIP
Chapter IV General Stipulations
Article 39 The
owner shall have the right to possess, utilize, dispose off and obtain
profits from its
real or movable property in accordance with the laws.
Article 40 The owner shall have the right to establish usufructuary and
security right in property
rights with regard to its real or movable property. The obligee of the
usufructuary and
security right shall not do harm to the rights and interests of the
owner while exercising
their own rights.
Article 41 No institute or individual shall be allowed to obtain the
ownership of real or movable
properties that are exclusively owned by the State in accordance with
the laws.
Article 42 For the purpose of public interest, the collectively-owned
land, houses and other real
property owned by institutes or individuals may be expropriated in line
with the
procedure and within the authority provided by laws.
For expropriation of collectively-owned land, such fees shall be paid as
compensations
for the land expropriated, subsidies for resettlement, compensations for
the fixtures and
the young crops on land, and the premiums for social security of the
farmers whose land
is expropriated shall be allocated in full, in order to guarantee their
normal lives and
safeguard their lawful rights and interests.
Where houses and other real properties of institutes and individuals are
expropriated,
compensations for demolition and resettlement shall be paid according to
law in order to
maintain the legal rights and interests of the expropriated; where
individual residential
house is expropriated, the residential conditions of the expropriated
shall be guaranteed.
No institution or individual shall withhold, misappropriate, embezzle or
privately divide
the compensation for expropriation.
Article 43 The State adopts special protection with regard to the
agriculture land, strictly limiting
the transfer of agriculture land to construction land so as to control
the total quantity of
the construction land. No expropriation of the collectively-owned land
in violation of the
authority and procedure prescribed by laws shall be allowed.
Article 44 For the purpose of emergency handling or disaster relief,
real or movable properties of
institutions or individuals may be expropriated in line with the
procedure and within the
authority provided by laws. After such use or expropriation, the real or
movable
properties shall be returned to the owner. Compensation shall be made if
the real or
movable properties of institutions or individuals were damaged or lost
after being
expropriated.
Chapter V State Ownership, Collective Ownership
and Private Ownership
Article 45 With regard to the properties belong to the State according
to law, they are owned by the
State, that is, by the whole people.
The State of Council shall, on behalf of the State, exercise the
ownership with respect to
the State properties; if there are provisions otherwise provided, they
shall be observed.
Article 46 The mineral resources, waters, sea areas are owned by the
State.
Article 47 The urban lands are owned by the State. Such rural land and
the land on the outskirt of
the city as belonging to the State according to law shall be owned by
the State.
Article 48 All natural resources such as forests, mountains, grassland,
unclaimed land and beaches
are owned by the State, with the exception of the resources that are
collectively-owned in
accordance with the law.
Article 49 Such wild animals and plants as belong to the State according
to law shall be owned by
the State.
Article 50 The radio spectrum resource shall be owned by the State.
Article 51 Such cultural relics as belong to the State according to law
shall be owned by the State.
Article 52 The national defence resource shall be owned by the State.
Public facilities like railways, roads, electric power, communications
and gas pipes that
belong to the State in accordance with the law shall be owned by the
State.
Article 53 The State organs shall have the right to possess, use and to
dispose of the real or movable
properties controlled directly by them in accordance with law and
relevant regulations
stipulated by the State Council.
Article 54 The institutions held by the State shall have the right to
possess, use and obtain benefits
from and dispose of the real or movable properties directly controlled
by them according
to law and relevant regulations stipulated by the State Council.
Article 55 Enterprises that are funded by the State, shall be the
responsibility of the State Council,
the local people¡¯s governments, separately, and shall also enjoy the
rights and interests of
a capital contributor pursuant to laws and administrative regulations.
Article 56 The properties owned by the State shall be protected by law
and shall not be occupied,
privately divided, withheld, damaged by any institution and individual.
Article 57 The institution and its staff in charge of management and
supervision of the State-own
properties shall, in conformity with the laws, reinforce the
administration, supervision of
the State-owned properties, fostering the value saving and adding of the
State properties
and preventing them from being damnified.
Where losses are brought to the State-own properties as a result of
malpractice and
misusing of authority, the parties concerned shall bear relevant legal
liabilities according
to law. Where damnification is brought to the State-owned properties as
a result of
transfer at lower price, private partition, discretionary surety in
breach of the regulations
on administration of the State-own properties during the course of
system reform, merger
and division, connected transaction of the enterprises, the party
concerned shall, pursuant
to law, bear the relevant legal responsibilities.
Article 58 The collectively owned real and movable properties shall
include:
(i) Lands, forests, mountains, grasslands, unclaimed land and beaches
owned collectively according to law;
(ii) Buildings, production devices, cultivate land and water power
facilities owned collectively;
(iii) Facilities with regard to education, science, culture, health and
gymnasium collectively owned;
(iv) Other real and movable properties owned collectively.
Article 59 The
real and movable properties which are collectively-owned by the urban
collective shall be collectively owned by members of such collective.
Things stated below shall be decided collectively by the members of the
respective collective in accordance with relevant legal procedure:
(i) The land contract scheme and subcontracting of the lands to
institutions or individuals outside of this collective;
(ii) The adjustment of the contracted lands among contractor of the
right to land contractual management;
(iii) The utilization and distribution ways in respect of such fees as
land compensations;
(iv) Such matters as changes of ownership of the enterprises whose
capital is contributed by the collective;
(v) Other matters required by law.
Article 60 The
exercise of the ownership of the collectively-owned lands, forests,
mountains,
grasslands, unclaimed land, beaches shall be in accordance with
provisions as follows:
(i) As to those owned collectively by peasants of a village, the
village¡¯s
collective economic organization or villagers¡¯ committee shall, on
behalf
of the collective, exercise the ownership;
(ii) As to those owned collectively by two or more peasants of a
village, the
collective economic organizations or groups of villagers shall, on
behalf of
the collective, exercise the ownership;
(iii) As to those owned collectively by peasants of the townships
(town), the
collective economic organizations of the townships (town) shall, on
behalf
of the collective, exercise the ownership.
Article 61 With regard to the real and movable properties
collectively-owned by the urban collective,
this collective shall, according to laws and administrative regulations,
enjoy the right to
possess, utilize, dispose of and obtain benefit from such properties.
Article 62 The collective economic organization or villagers¡¯ committee
or village group shall, in
light of the laws, administrative regulations, articles of association
and rules of the village,
make public to the collective members the status of the collectively
owned properties.
Article 63 The collectively-owned properties shall be protected by law
and shall not be occupied,
privately divided, withheld, damaged by any institution and individual.
Where the decisions made by the collective economic organizations,
villagers¡¯ committee
or other principals infringe upon the legal rights and interests of
members of the
collective, the infringed members may claim revocation of such decisions
with the
people¡¯s court.
Article 64 An individual shall enjoy ownership with respect to such real
and movable properties as
legitimate income, houses, living goods, production tools and raw
materials.
Article 65 The legal savings, investment and returns of individuals
shall be protected by law.
The State shall protect the right of inheritance and other legal rights
and interests of
individual.
Article 66 The legitimate properties of individuals shall be protected
by law and shall not be
occupied and damaged by any institution and individual.
Article 67 The State, collective and individual may, according to law,
make contributions to
establish limited liability company, joint stock limited company or
other enterprises.
Where the real or movable properties of the State, collective and
individual are made
investment into the enterprise, the capital contributor shall, according
to agreement or in
proportion to its capital contribution, enjoy the right and fulfill the
relevant obligation
with regard to the lucre of the asset, major decision and designation of
managerial staff of
the business.
Article 68 The enterprise as a legal person shall have the right to
possess, utilize, obtain benefit
from and dispose of its real and movable properties in accordance with
laws,
administrative regulations and articles of association.
Legal person other than enterprise as a legal person shall have the
right to its real and
movable properties according to the provisions of relevant laws,
administrative
regulations and articles of association.
Article 69 The real and movable properties legally owned by social
communities shall be protected
by law.
Chapter VI Building Distinction Ownership of
the Owner
Article 70 The owner shall enjoy the ownership in respect of such
exclusive parts within theapartment building as the apartments for
residential or commercial purposes, and the coownership and common
management right with regard to jointly-owned parts other than the
exclusive parts.
Article 71
The owner shall enjoy the right to possess, utilize, obtain profits from
and dispose of the exclusive parts of the apartment building, provided
that the exercise of its rights neither
endangers the security of the apartment building, nor do harm to the
legitimate rights and
interests of other owners.
Article 72 The owner shall enjoy the rights and take on the obligation
with respect to the jointly-owned parts other than the exclusive parts
of the apartment building and may not flee
from its obligation upon waiver of its rights.
Where the owner transfers its apartments of residential or commercial
purpose within the
apartment building, the co-ownership and the right of common management
enjoyed by
the owner with regard to the jointly-owned parts of the building shall
be deemed to be
transferred accordingly.
Article 73 The roads within the zoning of the apartment buildings shall
be co-owned by the owners,
with the exceptions of those belonging to urban public roads. The green
fields within the
zoning of the apartment buildings shall be co-owned by the owners, with
the exceptions
of those belonging to urban public green fields or individuals. Other
public sites, facilities
and rooms for realty service purpose shall be jointly owned by the
owners.
Article 74 The parking lots and garages within the zoning of the
apartment buildings shall firstly
meet the demands of the owners. The ownership of the parking lots and
garages within
the zoning of the apartment buildings shall be decided via such means as
selling,
donation or leasing by the party concerned.
The parking lots occupying the co-owned roads of the owners or located
at other sites
shall be jointly owned by the owners.
Article 75 The owner my establish the owners¡¯ meeting and elect the
owners¡¯ committee.
The local people¡¯s governments shall provide instructions and assistance
with regard to
the establishment of the owners¡¯ meeting or the election of the owners¡¯
committee.
Article 76 The owners shall, in accordance with law, decide matters as
Stated below:
(i) The constitution and modification of the rules of the procedure for
the
owners¡¯ meeting;
(ii) The constitution and modification of the management regulations
with
regard to the apartment buildings and their accessory facilities;
(iii) Election and changing of the member of the owners¡¯ committee;
(iv) Employment and dismissal of the realty service organizations or
other
managerial personnel;
(v) Raising and utilization of the funds pertaining to the maintenance
of the
buildings and their accessory facilities;
(vi) Repairing, reconstructing, rebuilding the buildings and their
accessory
facilities;
(vii) Other major and important events with regard to the co-ownership
and
right of common management.
The decision with regard to matters provided in item 5 and item 6 of the
foregoing
paragraph shall be made with the consent from owners whose exclusive
parts account for
over two-thirds of the gross area of the apartment buildings and whose
number accounts
for over two-thirds of the total number of the owners. The decisions
made with regard to
other matters of the foregoing paragraph shall be made with the consent
from owners
whose exclusive parts accounts for over half of the gross area of the
apartment buildings
and whose number accounts for over half of the total number of the
owners.
Article 77 The owner may not, in violation of the laws, regulations and
management rules, change
the residential apartment into apartment for commercial purpose. The
owner must, in
addition to observing laws, regulations and the management rules, obtain
consent from
the owners in interest before turning the apartment into apartment for
commercial
purpose.
Article 78 The decision made by the owners¡¯ meeting or committee shall
be binding upon the
owners.
Where the decision made by the owners¡¯ meeting or committee infringes
upon the
legitimate rights and interests of the owner, the infringed owner may
apply for
cancellation with the people¡¯s court.
Article 79 The maintenance funds for the apartment building and its
accessory facilities shall be coowned by all owners and be used for the
maintenance of such community spaces as
elevators and water tanks. Status quo with regard to raising and use of
the maintenance funds shall be made public.
Article 80 The fee apportionment and profits distribution of the
apartment building and its accessory
facilities shall be in accordance with relevant provisions (if any), or
shall be determined
in proportion to the exclusive parts possessed by the owners if there is
not any or
expressly-Stated provisions.
Article 81 The owners may, at their own discretion, either manage the
building and its accessory
facilities by themselves or realty-services company or other managerial
personnel
entrusted by the owners.
The owners shall have the right to make changes with regard to the
realty management
company or other managerial personnel employed by the construction
entity.
Article 82 The realty management company or other managerial personnel
shall, in accordance with
the entrustment of the owners, manage the apartment building and its
accessory facilities
within the zoning of the apartment buildings and accept the supervision
from the owners.
Article 83 The owners shall abide by laws, regulations and the
management provisions stipulated by
the owners¡¯ meeting.
The owners¡¯ meeting and committee shall have the right to request the
parties concerned
to stop infringement, get rid of the effect, remove impediment and make
compensations
with regard to such actions that impairing the legal rights and
interests of others as willful
throwing away of the garbage, possession of the passageways, release of
sources of air
pollution, making noises, raising animals in breach of regulations,
construction in
violation of rules and refusal to pay the realty management fee. The
owner may, in
accordance with laws, bring a lawsuit with the people¡¯s court in respect
of such actions as
infringing its own legitimate rights and interests.
Chapter VII Neighborhood Relationship
Article 84 In the spirit of providing convenience for production, life
of the people, enhancing unity
and mutual assistance, and being fair and reasonable, neighboring users
of the real
property shall maintain proper neighborhood relationship.
Article 85 The handling of neighborhood relationship shall be in
accordance with relevant
provisions stipulated by laws and regulations (if any) or the local
practice if there is no
such provision stipulated by laws and regulations.
Article 86 The obligee of the real property shall provide necessary
convenience to its neighboring
user with regard to water supply and drainage.
The natural running water shall be reasonably distributed among the
neighboring users of
the real property and shall be drained in accordance with the natural
running direction.
Article 87 The obligee of the real property shall offer necessary
convenience for its neighboring
user who has to use the obligee¡¯s land for passage.
Article 88 In the event that the obligee of the real property has to use
the neighboring lands or
buildings for construction or repairing the buildings and installation
of wire lines, electric
cables, pipe lines, heating and gas pipes, the obligee of such lands or
buildings shall
provide necessary convenience.
Article 89 The construction of buildings shall abide by relevant
provisions stipulated by the State
with regard to the construction planning and shall not affect the
ventilation, sightseeing
and lighting of the neighboring buildings.
Article 90 The obligee of the real property may not, in violation of
laws of the State, release gas
polluters, water polluters, solid waste and discharging such harmful
objects as noises,
lights, magnetic wave radiation.
Article 91 The obligee of the real property may not endanger the
security of the neighboring real
property while digging the land, constructing the buildings, laying the
pipes and lines and
installing the equipments; the obligee of the neighboring real property
shall have the right
to request the obligee of the real property under construction to
provide relevant
guarantee.
Article 92 The obligee of the real property shall, while making use of
the neighboring real property
usage of water supply, drainage, traffic and installation of pipes and
lines, make every
effort not to do harm to the obligee¡¯s neighbors, and shall make
appropriate
compensations in case of any damages arising therefrom.
Chapter VIII Joint ownership
Article 93 The real or movable property may be owned jointly by two or
more institutions or
individuals. There are two kinds of joint ownership, namely co-ownership
by proportion
and common ownership.
Article 94 Each of the co-owners by shares shall enjoy the ownership in
respect of the joint real or
movable property in proportion to its share.
Article 95 Each of the common owners shall enjoy the ownership in
respect of the joint real or
movable property.
Article 96 The co-owners shall carry out management with regard to the
real or movable property in
accordance with relevant agreement; each of the co-owners shall enjoy
the rights and
assume the obligations respecting the management of the joint property.
Article 97 Unless otherwise agreed by the co-owners, the disposal of and
major and big repairing
with regard to the co-owned real or movable property shall be conducted
with the consent
from the co-owners by shares whose shares account for two-thirds of the
total shares or
from the entire co-owners.
Article 98 The management fee and other charges for the joint property
shall be in accordance with
relevant agreement (if any); if there is no any or expressly-Stated
agreement thereof, the
co-owners by shares shall bear the relevant responsibility in proportion
to his shares
while the common owners shall jointly bear the relevant responsibility.
Article 99 Where the co-owners reach an agreement that no partition in
respect of the joint real or
movable property shall be conducted in order to maintain the
co-ownership relations,
such agreement shall be observed; however, if the co-owners desire to
divide the joint
property for important reasons, the co-owners may make such a claim. If
there is no such
or express agreement respecting the partition, the co-owners by shares
may at any time
require the partition; the common owners may require partition in the
event that the
foundation for joint ownership perishes or there are important reasons
for such partition.
Where the partition results in damages to other co-owners, relevant
remedies shall be
made.
Article 100 The co-owners shall determine the methods for partition
through consultation. Where, if
no agreement can be reached, the real or movable property may be divided
and, what¡¯s
more, will not be devaluated due to the partition, the practicality
shall be divided; where
the joint property is difficult to be divided or may be devaluated due
to the partition,
partition can be carried out with regard to the payment obtained as a
result of the auction,
sale of the joint property or make relevant reimbursement of the
estimated price
respecting the joint property.
As for any flawed real or movable property gained by any co-owner from
the division,
the other co-owners shall share losses arising therefrom.
Article 101 Each co-owner by shares shall have the right to transfer the
joint real property he owned
or his own shares of the real property. When he offers to sell his
share, the other coowners shall have a right of pre-emption if all other
conditions are equal.
Article 102 For public purposes, the co-owners shall, enjoy the joint
creditor¡¯s right and bear the joint
liability with regard to creditor¡¯s rights and debts occurring from the
joint real or movable
property, unless otherwise provided by law or there is a third party who
is aware that the
co-owners shall not bear the joint creditor¡¯s rights or joint debts. In
internal, except as
otherwise agreed upon by the co-owners, each of the co-owners by shares
shall enjoy the
creditor¡¯s rights and bear the relevant debt in proportion to his shares
and each of the
common co-owners shall jointly enjoy the creditor¡¯s rights and bear the
relevant debts.
The co-owner by shares who repays debts over its due shall be entitled
to a recourse to
other co-owners.
Article 103 In case that there is no agreement, express or implied, on
whether it is ownership by
shares or common ownership with respect to the joint real or movable
property among
the co-owners, the co-owners shall be deemed as co-owners by shares,
with the exception
that there exists a family relations among the co-owners.
Article 104 The shares enjoyed by the co-owners by shares with regard to
the joint real or movable
property shall, if there is no or express agreement hereon, be decided
in proportion to the
capital contribution of the co-owners, if no such proportion of capital
contribution may be
specified, shall be construed as equal.
Article 105 Where usufructuary or security property right is jointly
owned by two or more
institutions or individuals, the provisions of this Chapter shall apply.
Chapter IX Special Regulations pertaining to Attainment of the Ownership
Article 106 Where the real or movable property is transferred to a
transferee by a person without the
power to do so, the rightful owner shall have the right to recover such
property. Unless
otherwise provided by law, the transferee shall obtain the ownership
respecting such real
or movable property in any of the following events:
(i) The Transferee accepts the transfer in a bona fide;
(ii) Such property is transferred with a reasonable price;
(iii) The transferred property has been registered in accordance with
the laws
requiring such registration, and those not required to be registered has
been delivered to the transferee.
Where the transferee has obtained the ownership in respect of the real
or movable
property in accordance with the preceding paragraph, the original holder
of the right shall
enjoy the right to claim damages to the non-holder of the right to
dispose of the property.
Where the parties concerned have obtained the other property rights in
good faith, the
above two paragraphs shall apply.
Article 107 The rightful owner or such other obligee shall have the
right to claim and recover
properties so stolen, robbed or lost. Where such movable property has
been transferred or
possessed by others through transfer, such obligee as the holder or the
owner of the lost
property shall have the right to claim damages against the non-holder of
the right to
dispose of such property. Where, if such obligee as the holder or the
owner of the lost
property claim the property within two (2) years from the date on which
he knows or
should know the loss of such movable property, the transferee has
purchased such
property through auction or from an operator with the operation
qualification, such
obligee as the holder shall pay the transferee the amount the latter one
has paid for
repossession of the same. Where there are regulations stipulated
otherwise by law, such
regulations shall be observed.
Article 108 The original rights in the movable property shall lapse upon
the attainment of such
movable property by the bona fide assignee, except that the bona fide
assignee know or
should know such rights.
Article 109 The lost property shall be returned to the obligee once
being picked up. The person who
picks up the lost property shall notify the obligee of such lost the
property to take it back
or submit it to the public security department.
Article 110 Where the departments concerned receiving the lost property
shall, if knowing the
obligee or person who lost the property, notify them to take the
property back in a timely
manner; if not, the person who collected the lost property, shall issue
a Lost Property
notice in a timely manner.
Article 111 The lost property shall be appropriately kept by the person
picking up the property before
being submitted to the departments concerned or by departments concerned
before being
taken back. Where damages or lapse occur to the lost property as a
result of deliberate or
serious negligence, the parties concerned shall bear relevant civil
liabilities.
Article 112 When taking back the lost property, the obligee shall pay
such necessary fees as
safekeeping fee regarding the lost property to the person picking up
such property or
departments concerned.
The obligee shall pay the person picking up the property such reward as
it has offered
while looking for the property.
Where the person picking up the lost property misappropriates such
property, the person
shall neither have the right to claim such necessary fees as safekeeping
fee and reward
nor to require the obligee to perform such obligations as the obligee
has promised to do.
Article 113 The lost property shall, if not claimed within six months as
of the date of issuance of the
Lost Property notice, be owned by the State.
Article 114 Where items are picked up from drift, buried or the hidden
are discovered, relevant
regulations with regard to picking up of the lost property shall apply.
Where there are
provisions stipulated otherwise in the Law of the People¡¯s Republic of
China on the
Protection of Cultural Relics, such provisions shall be observed.
Article 115 Where the principal property is transferred, the affiliated
ones shall be transferred
accordingly, except as otherwise provided among parties concerned.
Article 116 The natural benefits shall be obtained by the title holder
of such properties; where there
are both the title holder and owner of the usufructuary right to the
natural benefits, the
property shall be owned by the owner of the usufructuary right, where
there are
agreements separately made by parties concerned, such agreements shall
be observed.
The legal interests shall be obtained in accordance with relevant
agreement between
parties concerned (if any); if there is no such or express agreement,
the transaction
practice shall apply.
PART III USUFRUCTUARY RIGHTS
Chapter X General Stipulations
Article 117 The owner of the usufructuary right shall, within the extent
permitted by law, enjoy the
rights to possess, utilize and obtain profits from the real or movable
properties owned by
others.
Article 118 Institutions and individuals may occupy, utilize and obtain
profits from such natural
resources as owned by the State, or owned by the State while used by the
collective
and/or collectively-owned according to law.
Article 119 Unless otherwise provided by law, the State introduces the
system of compensated use of
natural resources.
Article 120 In exercising its rights, the owner of the usufructuary
right shall abide by the regulations
respecting the protection and reasonable exploration of the resources.
The obligee may
not intervene in the exercise of rights by the owner of the usufructuary
right.
Article 121 Where the expropriation of the real or movable properties
lead to the lapse of the
usufructuary right or affect the exercise of the usufructuary right, the
owner of the
usufructuary right shall be entitled to gain relevant compensations
pursuant to the
provisions of Article 42 and 44 of this Law.
Article 122 The right to use the sea areas gained legally shall be
protected by law.
Article 123 The right relating to mineral exploitation, mining, drawing
water and the right to engage
in aquaculture, fishing from inland waters and beaches obtained legally
shall be protected
by law.
Chapter XI Right to Land Contractual Management
Article 124 Rural collective economic organizations apply the dual
operation system characterized by
the combination of centralized operation with decentralized operation on
the basis of
operation by households under a contract.
Land contractual operation system shall be applied according to law in
respect of
farmlands, forestlands, grasslands collectively owned by peasants and
land owned by the
State but collectively used by peasants as well as other lands used for
agricultural purpose.
Article 125 The contractor of the right to land contractual management
shall enjoy the right to
possess, utilize and obtain profits from the farmlands, forestlands and
grasslands, and
shall have the right to engage in such agricultural production as crop
farming, forestry
and animal husbandry.
Article 126 The contracted term of farmland shall be thirty years,
thirty to fifty years for grassland
and thirty to seventy years for forestland. The contracted term for
forest land with special
forests may be prolonged upon approval of the relevant competent
forestry administration
department of the State Council.
Where the contracted term provided in the preceding paragraph expires,
the contractor of
the right to land contractual management may continue the contract
according to relevant
provisions of the State.
Article 127 The right to land contractual management shall be
established upon the effective date of
the contract relating to the right to contractual land management.
The people¡¯s government above county level shall issue to the contractor
of the right to
land contractual management the certificate of right to land contractual
management, the
forest management certificate, certificate(s) of the right to use
grassland and register and
record them, confirming the right to land contractual management.
Article 128 The contractor of the right to land contractual management
shall be entitled to circulate
such right by adopting such means as subcontract, exchange and
assignment in
accordance with the provision is of the Rural Land Contract Law. The
circulated term
may not exceed the remaining period of the contract term. The contracted
land, without
being approved in accordance with law, may not be used for purpose other
than
agricultural construction.
Article 129 Where the contractor of the right to land contractual
management exchanges with others
or assigns the right to land contractual management, the contractor
shall, if required by
parties concerned, apply for modification registration regarding the
right to land
contractual management with the people¡¯s government above county level,
and shall not
be against bona fide third party if no such registration is conducted.
Article 130 The contract letting party may not adjust the land under
contract within the contract term.
Where it is necessary to appropriately adjust the farm land and
grassland in case that the
contracted land is severely damaged by natural disaster, such adjustment
shall be handled
according to Rural Land Contract Law.
Article 131 The contract letting party shall not withdraw the contracted
land within the contract term.
If there are provisions otherwise provided for by Rural Land Contract
Law, such
provisions shall be observed.
Article 132 The contractor of the right to land contractual management
shall, pursuant to the
provisions of the 2nd paragraph of Article 42 of this Law, obtain the
relevant
compensations in the event of expropriation of its contracted land.
Article 133 With regard to such rural lands as wasteland contracted out
by means of invitation to bid,
auction, open consultation, the right to land contractual management
shall be circulated
by adopting such means as assignment, mortgage and ways otherwise
according to Rural
Land Contract Law and relevant regulations of the State Council.
Article 134 Where the State-owned farmland is contracted out for
operation, relevant provisions of
this Law shall apply.
Chapter XII Right to the Use of Construction
Land
Article 135 The owner of the right to the use of land for construction
use shall, according to law, be
entitled to possess, utilize and obtain profits from the State-owned
land, and have the
right, by utilizing such land, to build buildings and their accessory
facilities.
Article 136 The right to the use of land for construction use shall
include right to the use of the land¡¯s
surface, ground or underground. The newly-established right to the use
of land for
construction use may not infringe upon the rights of already-established
usufructuary
right.
Article 137 The right to the use of land for construction use may be
established by means of
assignment or transfer.
Such operation lands as for industrial, commercial, tourism,
entertainment and
commercial use and one land with two or above intentional users shall be
assigned by
auction or invitation to bid.
The establishment of the right to the use of land for construction use
by way of transfer is
strictly restricted. Where the way of transfer is adopted, provisions
relating to land use
stipulated by laws, administrative regulations shall be observed.
Article 138 Where the right to the use of land for construction use is
established by means of auction,
invitation to bid and agreement, the parties concerned shall enter into
a written contract
on assignment of the right to the use of land for construction use.
The contract on assignment of the right to the use of land for
construction use shall
include the following terms:
(i) The names and domiciles of the parties concerned;
(ii) The location and size of the land;
(iii) The space occupied by the buildings, structures and the relevant
accessory facilities;
(iv) The purpose of the land;
(v) The term of the use;
(vi) Such fees as the assignment fee and terms of payment;
(vii) Disputes resolution;
Article 139
The application for registration of the right to the use of land for
construction use shall be
filed with the registration departments. The right to the use of land
for construction use
shall be set up upon registration. The registration department shall
issue to the owner of
the right to the use of land for construction use the certificate of the
right to the use of
land for construction use.
Article 140 The owner of the right to the use of land for construction
use shall in a reasonable way
utilized the land and shall not change the purpose of the land; such
change (if necessary)
shall occur with the approval from relevant competent administrative
department
according to law.
Article 141 The owner of the right to the use of land for construction
use shall pay such rates as
assignment fee pursuant to relevant provisions provided for by law and
the terms of the
contract.
Article 142 The ownership of the building, structure and their accessory
facilities built by the owner
of the right to the use of land for construction use shall belong to
such owner, unless there
is evidence to the contrary sufficient to invalidate that.
Article 143 Except as otherwise provided for by law, the owner of the
right to the use of land for
construction use shall have the right to transfer, exchange, make as
capital contribution,
donate or mortgage the right to the use of land for construction use.
Article 144 Where the owner of the right to the use of land for
construction use transfer, exchange,
make as capital contribution, donate to others or mortgage the right to
the use of land for
construction use, the parties concerned shall enter into corresponding
contract in writing.
The term of such contract to be determined by parties concerned shall
not exceed the
remaining duration of the right to the use of land for construction use.
Article 145 Where the owner of the right to the use of land for
construction use transfer, exchange,
make as capital contribution, donate to others or mortgage the right to
the use of land for
construction use, application for modification registration shall be
filed with the
registration department.
Article 146 Where the right to the use of land for construction use is
transferred, exchanged, made as
a capital contribution or donated, the buildings, structures and their
accessory facilities
affiliated with such land shall be disposed of accordingly.
Article 147 Where the buildings, structures and their accessory
facilities affiliated with a land for
construction use is transferred, exchanged, made as a capital
contribution or donated, the
right to the use of such land for construction use as being occupied by
such buildings,
structure and their accessory facilities shall be disposed of
accordingly.
Article 148 Where, prior to expiration of the term of the right to the
use of land for construction use,
it is necessary to retract such land for public interest, compensations
shall be provided
with regard to the houses and other real property built on the land
pursuant to the
provisions of Article 42 of this Law and the corresponding transfer fee
shall be returned.
Article 149 The term of the right to the use of land for building houses
shall automatically renewed
upon expiration.
The term of the right to the use of land for non-house building purpose
shall be renewed
according to laws and regulations upon expiration. With regard to
ownership of the
houses built on the land and other real property related, relevant
agreement (if any) shall
be abided by, or, if there is no such agreement, the relevant provisions
stipulated by law
and administrative regulations shall be observed.
Article 150 The assignor shall, promptly upon lapse of the right to the
use of land for construction
use, proceed with the cancellation registration with the registration
department that shall
take back the certificate of the right to the use of land for
construction use thereafter.
Article 151 Where the collectively-owned land is used for construction
purpose, it shall be managed
in accordance with such laws and regulations as the Law of Land
Adeministration.
Chapter XIII Right to the use of the
Residential Housing Land
Article 152 The owner of the right to the use of residential housing
land shall enjoy the right to
possess and utilize such land as collectively owned, and the right to
build residential
house and its accessory facilities on such land.
Article 153 Such laws as the Law of Land Administration and relevant
regulations of the State shall
be applicable to the attainment, exercise and assignment of the right to
the use of
residential housing land.
Article 154 The right to the use of residential housing land shall lapse
accordingly in the event that
such land is destroyed and lost due to natural disasters. New
residential housing land
shall be relocated to those villagers losing their residential housing
land.
Article 155 Where the registered right to the use of the residential
housing land lapses or is assigned,
modification or cancellation registration shall be handled in a timely
manner.
Chapter XIV Easement
Article 156 The owner of easement shall have the right to improve the
benefits of the real property of
its own by utilization of real property of others according to terms of
a contract.
The term ¡°real property of others¡± as used in the preceding paragraph
shall refer to the
Land for Easement, and the ¡°real property of its own¡± shall refer to the
¡°Land Needing
Easement¡±.
Article 157 To establish easement, the parties concerned shall enter
into a written easement contract,
the terms of which are as follows:
(i) The names or titles and domiciles of the parties concerned;
(ii) The location of the Land for Easement and the Land Needing
Easement;
(iii) The purpose and methods with regard to the utilization of the Land
for
Easement;
(iv) The term for the utilization;
(v) Relevant fees and the terms of payment;
(vi) Disputes resolution.
Article 158
The easement shall be established upon the effective date of the
easement contract.
Where the parties concerned require registration, the application for
easement registration
may be filed with the registration departments; if no registration for
easement is
conducted, such easement shall not be against any bona fide third party.
Article 159 The obligee of the Land for Easement shall, in accordance
with terms of the contract,
allow the easement owner to utilize the land and may not prevent the
easement owner
from exercising relevant rights.
Article 160 The easement owner shall make use of the Land for Easement
in conformity with the
purpose and methods agreed upon in respect of the utilization of the
Land for Easement
and make reasonable efforts to reduce restriction upon the property
rights of the obligee
of the Land for Easement.
Article 161 The term of the easement to be decided by the parties
concerned shall not exceed the
remaining duration of the term of such usufructuary right as the right
to land contractual
management and to the use of land for construction use.
Article 162 Where the owner of the land who enjoys or burdens the
easement establishes the right to
land contractual management and/or the right to the use of residential
housing land, the
contractor of the land contractual management and/or the owner of the
right to the use of
the residential housing land shall continue enjoying or burdening the
established
easement.
Article 163 Where the right to land contractual management, the right to
the use of land for
construction use and/or the right to the use of residential housing land
have been
established, the owner of the land may not set up the easement without
the consent from
the owner of the usufructuary right.
Article 164 The easement may not be assigned alone. Except as otherwise
agreed upon in the contract,
along with the right to land contractual management, the right to the
use of land for
construction use, the easement shall be transferred accordingly
according to law.
Article 165 The easement may not be mortgaged alone. Where the right to
land contractual
management and the right to the use of land for construction use is
mortgaged, the
easement shall be assigned accordingly upon the realization of such
mortgage.
Article 166 Where part of the right to land contractual management and
the right to the use of land
for construction use of the Land Needing Easement are assigned and the
assignment
involves the easement, the assignee shall enjoy the easement.
Article 167 Where part of the right to land contractual management and
the right to the use of land
for construction use of the Land for Easement are assigned and the
assignment involves
the easement, the easement shall be abiding by the assignee.
Article 168 The obligee of the Land for Easement shall have the right to
rescind the easement
contract to give rise to lapse of such easement in case of any of the
following on the part
of the owner of the easement:
(i) Abusing the easement in violation of regulations provided by law or
terms
of the contract;
(ii) Failing to pay the fee after being reminded to make the payment
twice
within a reasonable time limit upon the expiration of the scheduled term
for payment while utilizing the Land for Easement with charges.
Article 169
Modification or cancellation registration shall be handled promptly in
case of
modification, assignment or lapse of the registered easement.
PART IV SECURITY INTEREST IN PROPERTY RIGHTS
Chapter XV General Stipulations
Article 170 Unless otherwise stipulated by laws, holder of security
interest shall have priority in
satisfying its claim if a debtor defaults in its obligations.
Article 171 If any guarantee is necessary for the creditor to enforce
its claim in civil activities like
accommodation of funds and the circulation of commodities, security
interest may be
provided in accordance with this Law and other laws.
Where a third party provides a guarantee to a creditor for a debtor, the
third party may
require the debtor to provide him with a counter-guarantee. The
provisions on guarantee
in this Law and other laws shall apply to the counter-guarantee.
Article 172 When the security interest is provided, a guarantee contract
should be entered into in
accordance with this Law and other laws. A guarantee contract is an
ancillary contract of
the principal contract. If the principal contract is null and void, the
guarantee contract
shall be null and void accordingly, unless otherwise stipulated by laws.
.
If a guarantee contract is determined to be null and void, the debtor,
the guarantor or the
creditor who is in default shall bear civil liability according to their
respective fault.
Article 173 The scope of security interest covers principal creditor's
right and its interest, penalty,
liquidated damages and expenses for storage of pledged assets and
enforcement of
security interests, unless otherwise agreed in the contract.
Article 174 In case of destruction, loss and requisition of the
mortgaged property during the period of
the surety-ship, the holder of security interest shall have priority in
satisfying his claim
from the guarantee fund, compensation money or compensatory amounts. The
holder of
security interest may also have such guarantee fund, compensation money
or
compensatory amounts deposited when the time limit for the performance
of the security
interest does not expire.
Article 175 Where a third party provides a guarantee to creditor for a
debtor, if the creditor permits
the debtor to transfer its debt without written consent of such third
person, the guarantor
shall not undertake surety-ship liability.
Article 176 Where there are both surety-ship and property security for
the same claim, the creditor
shall enforce its claim according to the agreement if the debtor fails
to perform its debt; in
the absence of an agreed or explicitly agreed mode of surety-ship, if
the debtor provides
the property security, the creditor shall enforce its claim from such
property security;
where a third person provide the property security, the creditor may
enforce its claim
from such property security or request the guarantor to undertake
surety-ship liability.
The third person that has undertaken the surety-ship liability shall
have the right of
recourse against the debtor.
Article 177 The security interest shall lapse under any of following
circumstances:
(i) The principal debt lapses,
(ii) The security interest is enforced;
(iii) The creditor waive the security interest;
(iv) Other circumstances provided by law under which the security
interest lapses.
Article 178 In case of any discrepancy between the Guarantee Law of the
People¡¯s Republic of China
and this Law, this Law shall prevail.
Chapter XVI Right to Mortgage
Section 1 General Mortgage Right
Article 179 Where a debtor or a third party, for performance of the
mortgaged debt, secures the
creditor's rights with property without transference of its possession,
if the debtor defaults,
the creditor shall have priority in satisfying his claim from such
property;
The debtor or the third party specified in the preceding paragraph is
the mortgagor; the
creditor is the mortgagee, and the property provided as security is the
mortgaged property.
Article 180 The following property which the creditor or third person is
entitled to dispose of may be
mortgaged:
(i) Houses and other things firmly fixed on the land;
(ii) Land use right to building lot;
(iii) The land-use right to barren land contracted by the mortgagor by
way of
bidding, auction and discussion;
(iv) Production equipment, raw materials, semi-finished products and
finished
products;
(v) Buildings, ships and aircrafts under construction;
(vi) Means of transportation;
(vii) Other property that may be mortgaged according to law and
administrative rules.
A mortgagor may at the same time mortgage all the property listed in the
preceding
paragraph.
Article 181 Enterprises, small business of industry and commerce and
rural contractors may
mortgage their existing and future production equipment, raw materials,
semi-finished
products and finished products according to the agreement between the
parties, if the
debtor defaults, the creditor shall have priority in satisfying his
claim from such property.
Article 182
Where houses are mortgaged, the land use right to the construction lot
occupied by the
houses shall be mortgaged at the same time. Where the land use right to
the construction
lot is mortgaged, the houses fixed on the land shall be mortgaged at
same time.
If the mortgagor fails to comply with the preceding paragraph, property
not mortgaged
shall be deemed as mortgaged at the same time.
Article 183 The land-use right to the land used by a township (town) or
village enterprise may not be
mortgaged separately. Where factories and other buildings of township
(town) or village
enterprises are mortgaged, the land-use right to the land occupied by
such buildings shall
be mortgaged at the same time.
Article 184 The following property may not be mortgaged:
(i) Ownership of the land;
(ii) Land-use right to the land owned by the collectives such as
cultivated land,
house sites, private plots and private hills, with the exception of
those provided by law;
(iii) Educational facilities, medical and health facilities of schools,
kindergartens,
hospitals and other institutions or public organizations established in
the
interest of the public and other facilities in the service of public
welfare;
(iv) Property in relation to which the ownership or the right of use is
unknown or disputed;
(v) Property sealed up, distrained or placed under surveillance in
accordance with law; or
(vi) Other property which may not be mortgaged as prescribed by law.
Article 185 A
mortgagor and a mortgagee shall conclude a mortgage contract in writing.
A mortgage contract shall include the following particulars:
(i) The kind and amount of the debt secured;
(ii) The time limit for the debtor to perform his obligation;
(iii) The name, quantity, quality, condition, location, ownership or
ownership of
The right to the use of the mortgaged property;
(iv) The scope of the guarantee of mortgage.
Article 186 The mortgagor and the mortgagee may not stipulate that the
ownership of the mortgaged
property shall be transferred to the creditor in case the mortgagee's
claim is not satisfied
after maturity of the debt.
Article 187 Where a party mortgages assets provided for in Article 180 (i)-(iii)
of this Law or houses
under construction provided for in Article 180 (v) of this Law, he shall
register the
mortgaged property, and the mortgage contract shall become effective as
of the date of
registration.
Article 188 Where a party mortgages movable property provided for in
Article 180 (iv)-(vi) of this
Law or ships and aircrafts under construction provided for in Article
180 (v) of this Law,
the mortgage contract shall become effective as of the date of
registration. If a party does
not register the mortgaged property, he may not defend against the
claims of third party
of good faith
Article 189 Where enterprises, small business of industry and commerce
and rural contractors
mortgage movable property provided for in Article 181 of this Law, the
mortgage
contract shall become effective as of the date of registration. If a
party does not register
the mortgaged property, he may not defend against the claims of third
party of good faith.
If a party registers the mortgaged property in accordance with Article
181 of this Law, he
may not defend against the claims of third party which has paid the
consideration and
obtained the mortgaged property in the ordinary course of business
operations.
Article 190 If a mortgagor leases the mortgaged property before the
execution of mortgage contract,
the original contract of lease continues in effect. If a mortgagor
leases the mortgaged
property after the establishment of right of mortgage, the lease may not
defend against
registered right of mortgage.
Article 191 If a mortgagor transfers mortgaged property with the consent
of the mortgagee during the
period of mortgage, the proceeds which the mortgagor obtains from the
transfer of the
mortgaged property shall be used to liquidate the claim secured by the
mortgage or it
shall be deposited with a third party agreed upon by the mortgagor and
the mortgagee.
If the proceeds exceed the claim, the balance shall belong to the
mortgagor; if the
proceeds do not cover the claim, the difference shall be paid by the
debtor.
The mortgagor may not transfer the mortgaged property without consent of
mortgagee
during the period of mortgage, unless the transferee pays off debts on
behalf of
mortgagor and the right of mortgage lapses.
Article 192 The right of mortgage may not be separated from the
creditor's rights and transferred
singly, nor used to secure other creditors' rights. If the creditor¡¯s
right is transferred, the
right of mortgage shall be transferred at the same time, unless
otherwise stipulated by
laws or agreed by the parties.
Article 193 Where a mortgagor's acts are likely to cause the value of
the mortgaged property to
decline, the mortgagee shall be entitled to demand that the mortgagor
cease and desist
from such acts. Where the value of the mortgaged property has declined,
the mortgagee
shall be entitled to demand that the mortgagor restore the original
value of the mortgaged
property or provide security corresponding to the amount of the lost
value. Where a
mortgagor fails to restore the original value of the mortgaged property
and fails to
provide security, the mortgagee is entitled to request the mortgagor to
liquidate the claim
in advance.
Article 194 Mortgagee may waive the right of mortgage or order of right
of mortgage. A mortgagor
and a mortgagee may change the order of right of mortgage and amount of
mortgaged
debt by agreement, provided that, the change of right of mortgage shall
not have negative
impact to other mortgagees without written consent of such mortgagees.
Where a debtor shall provide guarantee of mortgage with its own
property, if a mortgagee
waives the right of mortgage or order of right of mortgage or change the
right of
mortgage, other guarantors shall be relieved of the suretyship liability
to the extent that
the mortgagee loses the priority in satisfying his claim, unless other
guarantors commit to
provide a guarantee.
Article 195 The mortgagee, who is not paid at the maturity of the
obligation, may, through agreement
with the mortgagor, be paid out of the proceeds from the conversion of
the mortgaged
property or from the auction or sale of the mortgaged property; other
creditors may
request the People¡¯s Court to cancel such agreement within one year
after they know or
should have known the cause of cancellation if the interest of such
creditors are adversely
affected.
If the mortgagee and mortgagor fail to reach an agreement, the mortgagee
may bring a
lawsuit in a People's Court.
Market price should be taken as reference when converting the mortgaged
assets into
money or selling the mortgaged assets.
Article 196 If the right of mortgage is provided in accordance with
Article 181 of this Law, the
mortgaged property shall be determined if any of the following
circumstances occur:
(i) Claim is not paid at the maturity of the obligation
(ii) Bankruptcy or dissolution of the mortgagor;
(iii) Other circumstances which may seriously affect the enforcement of
right of
mortgage;
(iv) Other circumstances which may seriously affect the enforcement of
claim
Article 197 If
the mortgaged property is seized by a People's Court because of the
debtor's failure to
perform his obligation prior to the maturity of the debt, the mortgagee
shall, from the date
of seizure, be entitled to collect the natural fruits severed from the
mortgaged property
and the legal fruits which the mortgagor may collect from the mortgaged
property. If the
mortgagee fails to notify the person who has the obligation to pay legal
fruits of the fact
that the mortgaged property is seized, the mortgagee's right shall not
extend to such fruits.
The fruits mentioned in the preceding paragraph shall first be used to
pay the expenses
for collecting the fruits.
Article 198 If the proceeds from auction and sales of mortgaged property
exceed the claim, the
balance shall belong to the mortgagor; if the proceeds do not cover the
claim, the
difference shall be paid by the debtor.
Article 199 Where the same property is mortgaged to two or more
creditors, the proceeds from the
auction or sale of the mortgaged property shall be used for liquidation
according to the
following provisions:
(i) Where a mortgage contract takes effect with its registration, the
liquidation
shall be made in the order of the time of registration of the mortgaged
property; if the registration is in the same order, the liquidation
shall be made
according to the respective proportions of the claims;
(ii) The claim secured by registered mortgage shall be satisfied prior
to the claim
secured by unregistered mortgage;
(iii) Liquidation of unregistered mortgage shall be made according to
the
respective proportions of the claims.
Article 200 When land use right of construction lot is mortgaged, newly
built houses on the land are
not mortgaged property. Where it is necessary to auction the land use
right to the
mortgaged construction lot, the newly-built houses on the land may be
disposed of,
according to law, together with the mortgaged property, but the
mortgagee shall have no
right to enjoy the priority of having his claim satisfied with the
proceeds from the newly-
built houses.
Article 201 Where the land-use right prescribed in Article 181 (iii) or
the land-use right to the land
occupied by the factories and other buildings of a township (town) or
village enterprise is
mortgaged prescribed in Article 183, the collective ownership and the
uses of the land
may not be altered without the legal procedure after enforcement of the
right of mortgage.
Article 202 The holder of security interest shall enforce the security
interest upon the expiry of
prescribed period for litigation; if the holder of security interest
fails to enforce the
security interest within such period, it shall not be protected by the
People¡¯s Court.
Section II Maximum Mortgage Right
Article 203 Where a debtor or a third person provides a guarantee with
mortgaged property for the
claim to be occurred within a given period of time, if the debtor fail
to perform his
obligations, the mortgagee shall have the priority in satisfying its
claim to the extent of
the total amount of the claims.
Claim that exists before the establishment of right of mortgage of
maximum amount may
be converted into the debt secured by the mortgage of maximum amount as
agreed by the
parties.
Article 204 Where part of claim is transferred before the claim secured
by the mortgage of maximum
amount is determined, the right of mortgage of maximum amount may not be
transferred,
unless otherwise agreed by the parties.
Article 205 Before the determination of claim secured by the mortgage of
maximum amount, a
mortgagor and mortgagee may change the term, scope and maximum amount of
the claim
through agreement, provided that such change may not cause any negative
impact to
other mortgagees.
Article 206 The claim of mortgagee is determined under any of the
following circumstances:
(i) Agreed term for determination of claim expires;
(ii) In absence of an agreed or explicitly agreed term of claim, the
mortgagee or
mortgagor request to determine the claim upon the expiry of two years as
of
the date of establishment of right of mortgage of maximum amount;
(iii) No new claim will occur,
(iv) The mortgaged property is sealed up or distrained;
(v) Bankruptcy or dissolution of the debtor or mortgagor;
(vi) Other circumstances prescribed by law under which a claim is
determined.
Article 207
The provisions of this section and Section 1 of this Chapter shall apply
to right of
mortgage of maximum amount.
Chapter XVII Right of Pledge
Section 1 Pledge of Movable Property
Article 208 The debtor or a third party transfers the possession of his
movables to the creditor as a
security for debt. If the debtor defaults, the creditor shall be
entitled to enjoy priority of
having his claim satisfied with the proceeds of auction or sale of the
pledged property.
The debtor or the third party mentioned in the proceeding paragraph
shall be the pledgor,
the creditor shall be the pledgee, and the movables transferred shall be
the pledged
property.
Article 209 Movables that transfer is strictly forbidden according to
relevant laws and administrative
regulations must not be used as security for debt.
Article 210 A pledgor and a pledgee shall conclude a pledge contract in
writing.
A pledge contract shall include the following particulars:
(i) The kind and amount of the principal debt secured;
(ii) The time limit for the debtor to perform his obligation;
(iii) The name, quantity, quality and condition of the pledged property;
(iv) The scope of the guarantee of pledge;
(v) The time for delivering the pledged property.
Article 211 A pledgor and a pledgee may not stipulate in the contract
that ownership of the pledged
property shall be transferred to the pledgee if the obligation is not
discharged at its
maturity.
Article 212 The pledge shall be effective upon delivery of the pledged
property.
Article 213 The pledgee shall be entitled to collect the fruits derived
from the pledged property. If
otherwise provided for in the pledge contract, the provisions there
shall apply.
The fruits mentioned in the preceding paragraph shall first be used to
pay the expenses
for collecting the fruits.
Article 214 During the existence of the plegdge, the pledgee, without
consent of the pledgor, shall be
civilly liable for any losses arising from his use, lease or disposal of
the pledged property.
Article 215 The pledgee shall have the obligation to maintain the
pledged property in good condition.
The pledgee shall be civilly liable for the loss or destruction of or
damage to the pledged
property resulting from his negligence in storage.
Where the pledgee is unable to maintain the pledged property in good
condition and may
thus cause loss or destruction of or damage to the pledged property, the
pledgor may
demand that the pledgee have the pledged property deposited, or demand
that his
obligation be discharged in advance and the pledged property returned.
Article 216 Where there is a possibility for the pledged property to
perish or for its value to obviously
decline, the pledgee may demand that the pledgor provide additional
security in like
amount. If the pledgor refuses to provide the additional security, the
pledgee may auction
or sell the pledged property, and conclude an agreement with the pledgor
that the
proceeds from the auction or sale shall be used to pay in advance the
debt secured or be
deposited with a third party as agreed upon with the pledgor.
Article 217 During the existence of the pledge, with the consent of the
pledgor, the pledgee may
transfer the right of pledge. However, the pledgee shall bear civil
liability for any loss or
destruction of or damage to the pledged property.
Article 218 The pledgee may abandon the right of pledge. Where the
debtor pledges his own property
and the pledgee abandon such right of pledge, then other guarantors may
be exempted
from their liability to the extent that the pledgee would have the
priority in satisfying his
claim from the proceeds of auction or sale of the property, unless other
guarantors have
committed to providing security in any event.
Article 219 Where the debtor performs his obligation at its maturity, or
where the pledgor pays, prior
to maturity, the debt secured, the pledgee shall return the pledged
property.
If the pledgee is not paid at the maturity of the obligation, he may
conclude an agreement
with the pledgor that the pledged property be converted into money in
order to pay the
debt, or he may enjoy priority of having his claim satisfied with the
proceeds of auction
or sale of the pledged property.
Market prices shall be used as reference in conversion and/or sale of
the pledged property.
Article 220 The pledgor may request the pledgee to enforce the right of
pledge in a timely manner.
Where the pledgee fails to do so, the pledgor may request the court to
conduct auction
and/or sale of the pledged property.
Where the pledgor requests the pledgee to enforce the right of pledge in
a timely manner,
the pledgee shall compensate for any losses arising from his delay in
exercising his right
that is due.
Article 221 Where the money converted from the pledged property or the
proceeds from auction or
sale exceed the debt secured, the balance shall be paid to the pledgor.
Where the money
or the proceeds do not cover the whole debt secured, the difference
shall be paid by the
debtor.
Article 222 The pledgor and the pledgee may set by mutual agreement a
pledge of maximum amount.
The provisions of mortgage of maximum amount set forth in Section 2,
Chapter 17 of
Part Four, shall apply to the pledge of maximum amount.
Section 2 Pledge Rights
Article 223 The following rights that a debtor or a third party is
entitled to dispose of may be pledged:
(i) Bills of exchange, cheques, promissory notes;
(ii) Bonds, certificates of deposit;
(iii) Warehouse receipts, bills of lading;
(iv) Shares of stocks or certificates of stocks which are transferable;
(v) The rights to exclusive use of trademarks, the property right among
patent rights and copyrights which are transferable according to law;
(vi) The right of collecting fees for use of road and power grid
infrastructures;
(vii) Other rights which may be pledged according to laws and
administrative regulations.
Article 224
Where a bill of exchange, cheque, promissory note, bond, certificate of
deposit,
warehouse receipt or bill of lading is pledged, the pledgor and the
pledgee shall conclude
a pledge contract in written form and the document of title shall be
effective upon
delivery to the pledgee.
Article 225 Where a bill of exchange, cheque, promissory note, bond,
certificate of deposit
warehouse receipt or bill of lading, which carries the date of payment
or the date of
delivery of goods, is pledged and if the date of its payment or delivery
of goods is prior to
the time limit for the performance of the obligation, the pledgee may be
paid or accept
the delivery of the goods, and conclude an agreement with the pledgor
that the payment
or the goods accepted shall be used to pay in advance the debt secured
or be deposited
with a third party as agreed upon with the pledgor.
Article 226 Where portions of fund and/or shares are pledged, the
pledgor and the pledgee shall
conclude a pledge contract in writing. Where the portions of fund and/or
shares that have
been registered with relevant security registration and settlement
authority are pledged,
the right of pledge shall become effective upon registration with the
securities registration
authorities. Where the shares of any other kinds are pledged, the right
of pledge shall
become effective upon registration with the administrative department in
charge of
commerce and commerce.
The portions of fund and/or shares pledged may not be transferred,
unless otherwise
agreed by the pledgor and the pledgee. The proceeds the pledgor obtained
from the
transfer of the portions of fund and/or shares shall be used to pay in
advance the pledgee's
claims secured, or be deposited with a third party.
Article 227 Where the right to exclusive use of trademarks, the property
rights among patent rights
and copyrights are pledged, the pledgor and the pledgee shall conclude a
contract in
writing. The right of pledge shall become effective upon registration
with the
administrative department in charge of commerce and industry.
If the property rights in the foregoing paragraph are pledged, the
pledgor may not transfer
or permit the right to be used by another, unless otherwise agreed by
the pledgee and the
pledgor. The proceeds from the transfer or license of use obtained by
the pledgor shall be
used to pay in advance the pledgee's claims secured or be deposited with
a third party.
Article 228 Where the right of collecting receivables is pledged, the
pledgor and the pledgee shall
conclude a contract in writing and the right of pledge shall become
effective upon
registration with the competent authority.
The right of receivables collection, once it is pledged, shall not be
transferred unless
otherwise agreed by the pledgee and the pledgor. The proceeds from the
transfer of the
right shall be used to pay in advance the pledgee¡¯s claims secured or be
deposited with a
third party.
Article 229 The pledge of rights is governed not only by the provisions
of this Section, but also by
the provisions of Section 1 of this Chapter.
Chapter XIX Lien
Article 230 If a debtor defaults in his debt, the creditor shall be
entitled to retain the property under
legal possession and to the priority of having the debt paid with the
money converted
from the property or proceeds from sale or auction of the property.
The creditor mentioned in the proceeding two paragraphs shall be the
lien holder and the
movables possessed shall be the retained property.
Article 231 Retained movables shall fall within the scope of creditor¡¯s
rights except in the case of a
retention between enterprises.
Article 232 Where the property must not be retained according to law,
such law shall prevail. Where
the property shall not be retained as agreed upon by the parties
concerned, such an
agreement shall prevail.
Article 233 Where the retained property is dividable, the total amount
of the retained property shall
be equal to the value of the debt involved.
Article 234 The lien holder shall have the obligation to maintain the
retained property in good
condition. The lien holder shall be civilly liable for loss or
destruction of or damage to
the retained property resulting from his negligence.
Article 235 The lien holder shall be entitled to collect the fruits
derived from the retained property.
The fruits mentioned in the preceding paragraph shall first be used to
pay fruit collection
expenses.
Article 236 The lien holder and the debtor shall reach an agreement upon
the time limit of the
debtor¡¯s performance of obligations after the property is retained. In
the absence of any
agreement or any explicit agreement thereof, the lien holder shall grant
a time limit of
two (2) months or more for the debtor¡¯s performance of obligations,
except in the case of
movables such as fresh, living and easily decayed goods. If the debtor
defaults within the
specified time limit, the lien holder may convert the retained property
into money upon
agreement with the debtor, or enjoy the priority of having the debt paid
with the money
converted from the property or proceeds from sale or auction of the
property.
Market prices shall be used as reference in conversion and/or sale of
the retained property.
Article 237 The debtor may request the lien holder to enforce the right
of lien in a timely manner.
Where the lien holder fails to do so, the debtor may request the court
to conduct auction
and/or sale of the retained property.
Article 238 Where the money converted from the retained property or the
proceeds from auction or
sale exceed the debt secured, their balance shall be paid to the debtor;
where the money
or proceeds do not cover the entire secured debt; the difference shall
be paid by the
debtor.
Article 239 Where the movable property that have already been mortgaged
or pledged are retained at
a later time, the lien holder shall enjoy the priority of having the
debt paid with the
money converted from the property or proceeds from sale or auction of
the property.
Article 240 Where the lien holder loses his possession of the retained
property or accepts other
security provided by the debtor, the right of retention shall lapse.
PART V POSSESSION
Chapter XIX Possession
Article 241 In the event of possession arising from contractual
relationship, the use, benefits and
breach liabilities of relevant real property and/or movable property
shall be subject to the
terms and conditions of contract. In the absence of such contract or in
the event of
ambiguous terms and conditions thereof, other relevant laws shall apply.
Article 242 Where the possessor causes any damage to the real or movable
property due to his use of
such property, the mala fide possessor shall bear compensation and
liability.
Article 243 Where the real or movable property is possessed, the
relevant right holder may request return of the original item together
with any harvest thereof. A bona fide possessor may deduct necessary
expenses for maintenance of such property.
Article 244 Where the real or movable property is damaged or lost and
the relevant right holder requests compensation, the possessor shall
return the insurance, damages or any compensation fee to the right
holder. Where the losses are not fully recovered by the compensation,
mala fide possessor shall further make up for the deficiency except to
the extent that he was at no fault with regards to the occurrence of the
damage.
Article 245 Where the real or movable property is seized by the use of
force, the possessor shall have the right to request return of the
original property. In the event of any obstruction to the possession,
the possessor shall have the right to eliminate the obstruction. In the
event of any damage incurred from the seizure or obstruction, the
possessor shall have the right to compensation.
The right of request for return of the original property shall lapse if
the possessor has not exercised his right within one year of the date of
seizure.
Supplementary Provisions
Article 246 Prior to the release of any law and administrative
regulations on the scope of real property registration, registration
authority and relevant registration methods, relevant
local regulations may be formulated by reference to this Law by local
People¡¯s Congress and its Standing Committee.
Article 247 This Law shall take effect as of October 1, 2007.
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