Regulations on Realty Management

Decree of the State Council of the People' 's Republic of China  No.379

June 8, 2003

Chapter I General Provisions

Article 1 The Regulations are formulated in order to regulate the realty management activities, to safeguard the legitimate rights and interests of the owners and the realty management enterprises, and to improve the living and working environment of the people.

Article 2 For the purpose of the Regulations, "realty management" shall refer to the activities of maintenance, conservation, and management of the houses and supporting facilities, as well as the relevant sites, and protection of the environmental sanitation and order within the relevant areas carried out by the owners and the
realty management enterprise selected by the owners, pursuant to the stipulations of the realty service contract.

Article 3 The state advocates that owners choose realty management enterprises through open, fair and just market competition.

Article 4 The state encourages realty management enterprises to apply new technology and new methods and to improve the management and service level through the advance of science and technology.

Article 5 The administrative department of construction under the State Council shall be in charge of the supervision and administration of the realty management activities all over the country.
The administrative departments of construction of the local people's governments at the county level and above shall be in charge of the supervision and administration of the realty management activities within their respective administrative areas.
Chapter II Owners and Owners'' Congress
Article 6 The title holder of a house is an owner.
An owner is entitled to the following rights in the realty
management activities:
1) Receiving services provided by the realty management enterprise
pursuant to the stipulations of the realty service contract;
2) Proposing to hold the session of the owners'' congress, and
presenting suggestions in respect of the matters relating to realty
management;
3) Presenting suggestions on the formulation and modification of the
owners'' convention and the rules regarding the owners'' congress;
4) Attending the sessions of the owners'' congress and exercising
the voting right;
5) Electing the members of the owners'' committee and being entitled
to be elected;
6) Supervising the work of the owners'' committee;
7) Supervising the performance of the realty service contract by the
realty management enterprise;
8) Having the right to know and the right to supervise the use of
the common parts, common facilities and relevant sites of the
realty;
9) Supervising the management and use of the special maintenance
fund of the common parts and common facilities of the realty
(hereinafter referred to as special maintenance fund);
10) Other rights provided for by laws and regulations.
Article 7 An owner shall perform the following obligations in the
realty management activities:
1) Abiding by the owners'' convention and the rules of procedures of
the owners'' congress;
2) Abiding by the rules in respect of the use of the common parts
and common facilities of the realty and the maintenance of the
public order and environmental sanitation within the realty
management area;
3) Executing the decisions of the owners'' congress and the
decisions made by the owners'' committee upon authorization of the
owners'' congress;
4) Paying special maintenance funds pursuant to the relevant
provisions of the state;
5) Paying realty service fees on time;
6) Other obligations provided for by laws and regulations.
Article 8 The owners'' congress shall consist of all the owners
within the realty management area.
The owners'' congress shall represent and safeguard the legitimate
rights and interests of all the owners within the realty management
area in the realty management activities.
Article 9 One owners'' congress shall be established in one realty
management area.
The elements, such as common facilities, building scale, and
community construction of the realty etc. shall be taken into
consideration in the division of realty management areas. The
specific measures shall be formulated by the provinces, autonomous
regions, and municipalities directly under the Central Government.
Article 10 The owners in a same realty management area shall, under
the guidance of the administrative department of real estate of the
people''s government of the district or county where the realty is
located, form the owners'' congress and elect the owners''
committee. However, where there is only one owner, or where there
are few owners and they all agree not to form an owners'' congress,
the owner(s) shall (jointly) perform the duties of the owners''
congress and the owners'' committee.
The voting right an owner enjoys in the first session of the
owners'' congress shall be determined according to the building area
and number of houses owned by that owner etc. The specific measures
shall be formulated by the provinces, autonomous regions, and
municipalities directly under the Central Government.
Article 11 The owners'' congress shall perform the following duties:
1) Formulating and modifying the owners'' convention and the rules
of the owners'' congress;
2) Electing and replacing the members of the owners'' committee, and
supervising the work of the owners'' committee;
3) Selecting and dismissing the realty management enterprise;
4) Deciding the scheme on the use and future raising of special
maintenance fund, and supervising the implementation thereof;
5) Formulating and modifying the systems and rules in respect of the
use of the common parts and common facilities of the realty, and the
maintenance of the public order and environmental sanitation within
the realty management area;
6) Other duties relating to realty management as provided for by
laws and regulations or by the rules of procedures of the owners''
congress.
Article 12 The sessions of the owners'' congress may be held by way
of either collective discussion or written inquiries; however, the
session shall have the presence of the owners holding more than half
of the voting rights within the realty management area.
An owner may entrust an agent to participate in the session of the
owners'' congress.
A decision made by the owners'' congress must be subject to the
approval by more than half of the voting rights held by the owners
present at the session. The decision made by the owners'' congress
on the formulation and modification of the owners'' convention and
the rules of the owners'' congress, on selection and dismissal of
realty management enterprises, or on the scheme of use and future
raising of special maintenance funds, must be subject to the
approval by two thirds of the voting rights held by all the owners
within the realty management area.
Article 13 The session of the owners'' congress is divided into
regular session and temporary session.
The regular session of the owners'' congress shall be held pursuant
to the rules of procedure of the owners'' congress. Upon proposal by
over 20% of the owners, the owners'' committee shall hold a
temporary session of the owners'' congress.
Article 14 Where a session of the owners'' congress is to be held,
all the owners shall be notified 15 days prior to the session.
In the event of a session of owners'' congress of any residential
district, the relevant residents'' committee shall be informed at
the same time.
The owners'' committee shall take minutes of the owners'' congress.
Article 15 The owners'' committee is the executive body of the
owners'' congress, and shall perform the following duties:
1) Convening the sessions of the owners'' congress, and reporting
the implementation of the realty management;
2) Signing the realty service contract on behalf of the owners with
the realty management enterprise selected by the owners'' congress;
3) Getting to know the opinions and suggestions of the owners and
realty users in good time, and supervising and assisting the realty
management enterprise in performance of the realty service contract;
4) Supervising the implementation of the owners'' convention;
5) Other duties assigned by the owners'' congress.
Article 16 The owners'' committee shall, within 30 days from the day
of its formation through election, put on record with the
administrative department of real estate of the people''s government
of the district or county of the place where the realty is located.
The members of the owners'' committee shall be the owners who are
enthusiastic about public welfare cause, have high sense of
responsibility, and have certain organizing capacity.
The director and vice director of the owners'' committee shall be
elected from the members of the owners'' committee.
Article 17 The owners'' convention shall stipulate, pursuant to law,
the use, maintenance and management of the relevant real properties,
the common interests of the owners, the obligations of the owners,
and the liabilities for breach of the convention, etc.
The owners'' convention shall be binding on all the owners.
Article 18 The rules of the owners'' congress shall stipulate the
discussion methods, voting procedures, methods for determination of
the voting rights of the owners, composition of the owners''
committee, and tenure of the committee members, etc.
Article 19 The owners'' congress and the owners'' committee shall
perform the duties according to law, and may not make any decision
or engage in any activity irrelevant to the realty management.
Where any decision made by the owners'' congress or the owners''
committee violates laws or regulations, the administrative
department of real estate of the people''s government of the
district or county of the place where the realty is located shall
order the owners'' congress or the owners'' committee to correct
that decision within a prescribed time limit, or to cancel that
decision, and shall notify all the owners.
Article 20 The owners'' congress and the owners'' committee shall
cooperate with the public security organs and assist the residents''
committee in maintenance of the public security within the realty
management area and in other relevant work.
Within the realty management area, the owners'' congress and the
owners'' committee shall actively cooperate with the residents''
committee in performance of the autonomous administration duties
according to law, support the residents'' committee to carry out the
work, and subject themselves to the direction and supervision by the
residents'' committee.
The owners'' congress or owners'' committee of a residential
district shall inform the relevant residents'' committee of any
decision it makes, and shall listen to the suggestions of the
residents'' committee.
Chapter III Prophase Realty Management
Article 21 Where a construction entity selects any realty management
enterprise before the owners and the owners'' congress do so, it
shall conclude a written prophase realty service contract with the
enterprise.
Article 22 A construction entity shall, before selling the realty,
formulate a temporary owners'' convention to stipulate, according to
law, the use, maintenance and management of the relevant realty, the
common interests of the owners, the obligations of the owners, and
the liabilities for breach of the convention, etc.
The temporary owners'' convention formulated by the construction
entity may not infringe upon the legitimate rights and interests of
the buyers of the realty.
Article 23 A construction entity shall, before selling the realty,
expressly show the temporary owners'' convention and make
explanations to the buyers of the realty.
A realty buyer shall, when concluding a realty sales contract with a
construction entity, make written commitments to abide by the
temporary owners'' convention.
Article 24 The state advocates that the construction entity shall
select a realty management enterprise with the corresponding
qualifications through bid tendering pursuant to the principle of
separation of real estate development and realty management.
A construction entity of any residential realty shall select the
realty management enterprise with the corresponding qualification
through bid tendering; where there are no more than 3 bidders or the
residence scale is relatively small, the construction entity may
select the realty management enterprise with the corresponding
qualifications through agreement upon approval by the administrative
department of real estate of the people''s government of the
district or county of the place where the realty is located.
Article 25 A sales contract concluded by the construction entity and
the realty buyer shall include the contents stipulated in the
prophase realty service contract.
Article 26 A prophase realty service contract may stipulate the
contract duration; however, where the realty service contract
concluded by the owners'' committee and the realty management
enterprise takes effect before that duration expires, the prophase
realty service contract shall be terminated.
Article 27 A construction entity may not, without authorization,
dispose of the ownership or use right enjoyed by the owners
according to law in respect to the common parts and common
facilities of the realty.
Article 28 A realty management enterprise shall, when accepting any
realty, inspect the common parts and common facilities of the
realty.
Article 29 In handling of the formalities for examination and
acceptance of any realty, a construction entity shall hand over the
following materials to the realty management enterprise:
1) Completion examination and acceptance materials such as
completion general layout plan, single buildings and structures,
equipment completion drawings, and project completion drawings of
the supporting facilities and underground pipelines etc.;
2) Technical materials of the installment, use and maintenance of
the facilities and equipment etc;
3) Realty quality guarantee documents and realty instruction
documents;
4) Other materials necessary for the realty management.
The realty management enterprise shall, upon termination of the
prophase realty service contract, handover the aforesaid materials
to the owners'' committee.
Article 30 A construction entity shall provide necessary houses for
realty management use within the realty management area pursuant to
the provisions.
Article 31 A construction entity shall undertake to repair the
realty in accordance with the guaranteed period and guaranteed scope
provided for by the state.
Chapter IV Realty Management Services
Article 32 An enterprise engaging in realty management activities
shall be qualified as an independent corporation.
The state applies the system of qualification administration to the
enterprises engaging in realty management activities. The specific
measures shall be formulated by the administrative department of
construction under the State Council.
Article 33 The personnel engaging in realty management shall obtain
the professional qualifications certificate pursuant to the relevant
provisions of the state.
Article 34 A realty management area shall be subject to the realty
management by one realty management enterprise.
Article 35 The owners'' committee shall conclude a written realty
service contract with the realty management enterprise selected by
the owners'' congress.
The realty service contract shall stipulate the realty management
matters, service quality, service fees, rights and obligations of
the two parties, management and use of the special maintenance fund,
houses for realty management use, contract duration, and liabilities
for breach of the contract, etc.
Article 36 A realty management enterprise shall provide the
corresponding services pursuant to the stipulations of the realty
service contract.
A realty management enterprise shall be held legally liable for
failure to perform the stipulations of the realty service contract
and the damages thus caused to the personal and property safety of
any owner.
Article 37 A realty management enterprise shall, when taking up any
realty, go through the realty examination and acceptance formalities
with the owners'' committee.
The owners'' committee shall handover the materials specified in
Paragraph 1 of Article 29 of the Regulations.
Article 38 The ownership of any house for realty management use
shall belong to the owner according to law. Without the consent of
the owners'' congress, the realty management enterprise may not
change the purpose of use of that house.
Article 39 Upon termination of the realty service contract, a realty
management enterprise shall return the houses for realty management
use and the materials specified in Paragraph 1 of Article 29 of the
Regulations to the owners'' committee.
Where the owners'' congress has selected a new realty management
enterprise upon termination of the realty service contract, the
realty management enterprises shall well handle the handover work.
Article 40 A realty management enterprise may entrust the special
services within the realty management area to special service
enterprises, but may not entrust to all the realty management work
within that area.
Article 41 The principle of reasonableness, openness, and accordance
between the fees and the service level shall be observed in the
charging for realty services, the owners and the realty management
enterprise shall, by distinguishing the nature and characteristics
of different realty, agree on the services fees in the realty
service contract according to the measures for charging for realty
services formulated by the administrative department of price under
the State Council in conjunction with the administrative department
of construction under the State Council.
Article 42 An owner shall pay realty service fees pursuant to the
stipulations of the realty service contract. Where the owner agrees
with a realty user that the realty service fees shall be paid by the
realty user, the owner shall assume joint and several liabilities
for the payment.
With respect to any realty already completed but not sold or not
delivered to the realty buyer, the realty service fees shall be paid
by the construction entity.
Article 43 The administrative department of price of the people''s
government at the county level and above shall, in conjunction with
the administrative department of real estate at the corresponding
level, strengthen the supervision over the charging for realty
services.
Article 44 A realty management enterprise may, as entrusted by an
owner, provide services in addition to those stipulated in the
realty service contract, and the remuneration for such additional
services shall be agreed upon by the two parties.
Article 45 Within a realty management area, the entities providing
water, electric power, gas, heat, communication, and cable
television, etc., shall collect the relevant fees from the final
users.
Where the realty management enterprise collects the fees mentioned
in the preceding paragraph upon entrustment, it may not collect any
additional fees, such as handling charges, from the owners.
Article 46 A realty management enterprise shall stop any act that
violates the relevant laws and regulations in respect of public
security, environmental protection, realty decoration and fitment,
and realty use, etc., within the realty management area, and shall
report such act to the relevant administrative department in good
time.
The relevant administrative department shall, after receiving the
report of the realty management enterprise, stop or deal with the
illegal act according to law.
Article 47 A realty management enterprise shall assist in the
security work within the realty management area. In the event of any
security accident, the realty management enterprise shall, while
taking emergent measures, report to the relevant administrative
department in good time and assist in the rescue work.
A realty management enterprise shall observe the relevant provisions
of the state in employing any security personnel. The security
personnel shall, when maintaining the public order within the realty
management area, perform their duties and may not infringe upon the
legitimate rights and interests of the citizens.
Article 48 The rights and obligations of a realty user in the realty
management activities shall be agreed upon by the owner and the
realty user, and may not go against the relevant provisions of the
laws, regulations and the owners'' convention.
Where a realty user violates the Regulations or the owners''
convention, the relevant owner shall bear joint and several
liabilities for the violation.
Article 49 The administrative departments of real estate of the
local people''s governments at the county level and above shall
promptly handle the complaints filed by the owners, owners''
committees, realty users, and realty management enterprises in
realty management activities.
Chapter V Use and Maintenance of the Realty
Article 50 The purpose of use of the public buildings and common
facilities built within a realty management area according to the
planning may not be changed.
Where an owner does need to change the purpose of use of any public
building or common facility according to law, he/she shall inform
the realty management enterprise after going through the relevant
formalities according to law; where a realty management enterprise
dose need to change the purpose of use of any public building or
common facility, after the change is discussed and approved by the
owners'' congress, the relevant formalities shall be handled by the
owners according to law.
Article 51 No owner or realty management enterprise may, without
authorization, occupy or dig any road or site within the realty
management area and thus damage the common interests of the owners.
Where an owner does need to temporarily occupy or dig any road or
site by reason of realty maintenance or public interests, he/she
shall obtain the consent of the owners'' committee and the realty
management enterprise; where a realty management enterprise does
need to temporarily occupy or dig any road or site, it shall obtain
the consent of the owners'' committee.
The owner or realty management enterprise shall, within the time
limit agreed upon, resume the original state of the road or site
that was temporarily occupied or dug.
Article 52 The entities providing water, electric power, gas, heat,
communication, and cable television, etc. shall assume the
responsibility to repair and maintain the relevant lines, facilities
and equipment within the realty management area.
Where any entity specified in the preceding paragraph needs to
temporarily occupy or dig any road or site by reason of repair or
maintenance, it shall resume the original state in good time.
Article 53 An owner shall inform the realty management enterprise in
advance if it needs to decorate or fit up the house.
The realty management enterprise shall inform the owner of the
prohibited acts and the matters of attention in the decoration and
fitment of houses.
Article 54 An owner of any residential realty, non-residence realty
within a residential district, or non-residence realty connected to
single residential building in the structure, shall pay the special
maintenance fund pursuant to the relevant provisions of the state.
The special maintenance fund shall belong to the owner, and be
specially used in the maintenance, renewal and reconstruction of the
common parts and common facilities upon expiration of the guaranteed
period of the realty, and may not be used for any other purpose.
Measures for the collection, use and management of the special
maintenance fund shall be formulated by the administrative
department of construction under the State Council, in conjunction
with the department of finance under the State Council.
Article 55 An owner using the common parts and common facilities and
equipment of the realty to carry out business operations shall,
after obtaining the consent of the relevant owners, the owners''
congress, and the realty management enterprise, go through the
relevant formalities pursuant to the provisions. The proceeds
obtained by that owner shall be mainly used to supplement the
special maintenance fund, or be used according to the decision of
the owners'' congress.
Article 56 Where the realty has any hidden risk that endangers the
public interests or the legitimate rights and interests of others,
the responsible party shall make timely repair and maintenance, and
the relevant owners shall render assistance.
Where the responsible party fails to perform the obligation of
repair and maintenance, with consent of the owners'' congress, the
repair and maintenance may be carried out by the realty management
enterprise, with the responsible party bearing the expenses.
Chapter VI Legal Liabilities
Article 57 Where any construction entity of residential realty, in
violation of the Regulations, fails to select the realty management
enterprise through bid tendering or selects the realty management
enterprise through agreement without approval, the administrative
department of real estate of the local people''s government at the
county level or above shall order that entity to get right within a
prescribed time limit, give it a warning, and may impose on it a
fine of less than 100,000 Yuan concurrently.
Article 58 Where any construction entity, in violation of the
Regulations, dispose of the ownership of or use right to the common
parts or common facilities that belong to the owners, the
administrative department of real estate of the local people''s
government at the county level or above shall impose on that entity
a fine ranging from 50,000 Yuan to 200,000 Yuan; and the entity
shall be held liable for compensation according to law where any
loss has been caused to the owners.
Article 59 Where any party fails to handover the relevant materials
in violation of the Regulations, the administrative department of
real estate of the local people''s government at the county level or
above shall order that party to get right within a prescribed time
limit; where the relevant materials have not been handed over within
the said time limit, a notice of criticism shall be circulated to
the construction entity or realty management enterprise, and a fine
ranging from 10,000 Yuan to 100,000 Yuan may be imposed.
Article 60 If any party, in violation of the Regulations, engages in
realty management without obtaining the qualification certificate,
the administrative department of real estate of the local people''s
government at the county level or above shall confiscate the illegal
gains, and impose on that party a fine ranging from 50,000 Yuan to
200,000 Yuan; and the party shall be held liable for compensation if
any loss has been caused to the owners.
Any party obtaining the qualification certificate through deceitful
means shall be punished pursuant to Paragraph 1 of this Article, and
the qualification certificate shall be countermanded by the
department that issued the certificate.
Article 61 Where any realty management enterprise, in violation of
the Regulations, selects any personnel without the professional
qualification certificate for realty management to undertake realty
management, the administrative department of real estate of the
local people''s government at the county level or above shall order
the enterprise to stop the illegal act and impose on it a fine
ranging from 50,000 Yuan to 200,000 Yuan; and the enterprise shall
be held liable for compensation if any loss has been caused to the
owners.
Article 62 Where any realty management enterprise, in violation of
the Regulations, entrust to others all the realty management within
the realty management area, the administrative department of real
estate of the local people''s government at the county level or
above shall order that enterprise to get right within a prescribed
time limit, and impose on it a fine ranging from 30% to 50% of the
price of the entrustment contract; and the enterprise''s
qualification certificate shall be countermanded by the department
that issued the certificate if the circumstances are serious.
The proceeds derived from the entrustment shall be used in the
repair and maintenance of the common parts and common facilities of
the realty with the realty management area, and the residual part
shall be used according to the decision of the owners'' congress;
the offender shall be held liable for compensation according to law
if any loss has been caused to the owners.
Article 63 Where any party, in violation of the Regulations,
embezzles any of the special maintenance fund, the administrative
department of real estate of the local people''s government at the
county level or above shall recover the embezzled special
maintenance fund, give the offender a warning and confiscate the
illegal gains, and may impose on the offender a fine of less than 2
times of the embezzled amount; where any realty management
enterprise embezzles the special maintenance fund and the
circumstances are serious, the department that issued the
qualification certificate shall revoke the certificate of that
enterprise; where a crime has been constituted, the directly
responsible personnel in charge and other directly responsible
personnel shall be investigated for criminal liabilities according
to law.
Article 64 Where any construction entity, in violation of the
Regulations, fails to provide necessary houses for realty management
use within the realty management area pursuant to the provisions,
the administrative department of real estate of the local people''s
government at the county level or above shall order that entity to
get right within a prescribed time limit, give it a warning and
confiscate the illegal gains, and shall impose on it a fine ranging
from 100,000 Yuan to 500,000 Yuan concurrently.
Article 65 Where any realty management enterprise, in violation of
the Regulations, changes the purpose of use of the house for realty
management use without consent of the owners'' congress, the
administrative department of real estate of the local people''s
government at the county level or above shall order that enterprise
to get right within a prescribed time limit, give it a warning, and
impose on it a fine ranging from 10,000 Yuan to 100,000 Yuan; where
there are any proceeds, such proceeds shall be used in the repair
and maintenance of the common parts and common facilities of the
realty within the realty management area, and the residual part
shall be used according to the decision of the owners'' congress.
Article 66 Where any party, in violation of the Regulations, commits
any of the following acts, the administrative department of real
estate of the local people''s government at the county level or
above shall order that party to get right within a prescribed time
limit, give it a warning, and impose on it a fine pursuant to
Paragraph 2 of this Article; the derived proceeds shall be used in
the repair and maintenance of the common parts and common facilities
of the realty within the realty management area, and the residual
part shall be used according to the decision of the owners''
congress:
1) Changing without authorization the purpose of use of the public
buildings and common facilities built within the realty management
area according to the planning;
2) Occupying or digging without authorization any road or site
within the realty management area and impairing the common interests
of the owners;
3) Using without authorization the common parts or common facilities
of the realty to carry out business operations.
An individual that has committed any of the acts specified in the preceding paragraph shall be imposed on a fine ranging from 1,000 Yuan to 10,000 Yuan; an entity that has committed any of the acts specified in the preceding paragraph shall be imposed on a fine ranging from 50,000 Yuan to 200,000 Yuan.

Article 67 Where any owner, in violation of the realty service contract, fails to pay the realty service fees, the owners'' committee shall urge that owner to pay the fees within a prescribed time limit; where that owner fails to pay the fees within the said time limit, the realty management enterprise may file a lawsuit in the people's court.

Article 68 Where any owner engages in any activities violating laws and regulations in the name of the owners'' congress or the owners'' committee and constitutes a crime, it shall be investigated for criminal liabilities; where a crime hasn't been constituted, the offender shall be given public security punishment according to law.

Article 69 Where any functionary of the administrative department of construction under the State Council, or the administrative department of real estate of the local people's government at the county level or above, or any other relevant administrative department, in violation of the Regulations, takes advantage of the
post to accept money and goods or other benefits from others, or fails to perform the supervision and administration duties according to law, or fails to investigate and punish the illegal acts that have been found out, and constitutes a crime, the criminal liabilities shall be investigated for; and administrative sanctions
shall be given where a crime hasn't been constituted.

Chapter VII Supplementary Provisions

Article 70 The Regulations shall come into force on September 1, 2003.

Bright Jon    Attorney-at-law   Fax: +86-512-53516040  email@colaw.cn
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