Chinese Real Estate Law

by Randolph, Patrick A.

• ISBN13: 9789041194329
• ISBN10: 9041194320
• Format: Hardcover
• Copyright: 2001-02-01
• Publisher: Wolters Kluwer

Summary

The nineteen-nineties have seen a massive rebirth of the real estate industry in China. Although ownership of Chinese land is in theory restricted To The State and to agricultural collectives, In practice the concept of the 'right to use' land has evolved into a system of real estate law with many parallels in the West, including such familiar elements as mortgages, leases, zoning, liens and taxation. The difference lies in procedural requirements, and it is in this practical area that prospective foreign investors in Chinese real estate will most appreciate this informative and very useful book. Taking into account the Land Use Purpose Control System that went into effect in China on January 1, 1999, The authors of this book fully explain such important components of real estate development and use as the following: planning requirements; qualifying to obtain a land use right; fee requirements; registration procedures; taxes affecting real estate; bankruptcy provisions affecting real estate; landlord/tenant rights and duties in commercial leasing. They provide clear guidance through the complex web of administration and regulation at every government level, including the important role of the agricultural collectives in the expanding urban fringes. They analyze the areas of unsettled law--for example, tenant default remedies--that might create significant concern for Western investors, and offer recommendations that avoid pitfalls.

Table of Contents

A Brief History of Chinese Real Estate Law	1	(29)
Land Ownership	1	(10)
Early Concepts of Private Land Ownership	1	(5)
Land Ownership Policies of the Communist Government Before 1949	6	(1)
Land Ownership System under the Kuo Minh Tang Government on the Mainland before Liberation	7	(2)
The Nationalization of Ownership of Urban Land after the Establishment of PRC	9	(2)
Development of Chinese Real Estate Law	11	(18)
Real Estate Regulation 1949-1988	14	(1)
1949-1956	14	(1)
1956-1962 (The period for Socialist Transformation)	15	(2)
1966-1976 (The Cultural Revolution)	17	(1)
1978-1988	17	(1)
The Modern Era	18	(1)
The Granted Land Use Right	18	(1)
Commercial Development	19	(2)
Housing Development	21	(4)
Agricultural Land Preservation	25	(4)
Legal Background	29	(30)
The Impact of Civil Law Concepts	29	(4)
Principles of Civil Law	30	(1)
Judicial Interpretation	30	(2)
Principle of Fairness	32	(1)
The 1999 Contract Law	33	(9)
Similarities to Common Law	35	(2)
Special Distinctions from the Common Law of Contract	37	(1)
No Consideration Required	37	(1)
Unenforceable Promises	38	(1)
The Principle of Fairness	38	(1)
The Principle of Good Faith	39	(1)
Choice of Law	40	(1)
``Standard Terms''- Limits on Waiver of Responsibilities	40	(2)
The Distinction Between Credit Rights and Rights In Rem	42	(3)
Concepts of Co-Ownership	45	(4)
Condominium Ownership	47	(2)
Inheritance Laws	49	(2)
Spousal Rights	51	(1)
Dispute Resolution; the Judical System	52	(7)
Mediation (Conciliation)	52	(1)
Conciliation by the Court	53	(1)
Arbitration	54	(1)
Litigation	55	(2)
Litigation involving Real Estate Interests	57	(1)
Attorney's Fees	58	(1)
The Ownership of Land	59	(26)
State Land Ownership	60	(14)
The Scope of the State Land Ownership	60	(2)
Urban Land	62	(1)
Expansion of Urban Land into Agricultural Collective Areas	62	(2)
Countryside or suburban land which has been purchased, confiscated, requisitioned, collected, or nationalized by the State	64	(1)
Forest land, grassland, waste land, tidal flat areas, flood land and other land, which has not been ascertained by the State to be owned by Agricultural Collectives	65	(1)
Land Used for various state public works, public security and public safety purposes	65	(3)
Institutions Embodying State Land Ownership	68	(1)
Central Government	68	(1)
Local Government	69	(1)
Origins of the State Land Ownership	70	(1)
Confiscation	70	(1)
Buying Out (Policy of Redemption)	70	(1)
State Trusteeship	71	(1)
Nationalization	72	(1)
Requisition	73	(1)
Agricultural Collective Land Ownership	74	(11)
What is an Agricultural Collective?	74	(1)
Confirmation of Agricultural Collective Ownership by Continuous Use	75	(1)
Varieties of Agricultural Collective land	76	(1)
The Origins of the Agricultural Collective Land Ownership	77	(2)
Agricultural Collective Land Registration and Certification	79	(2)
Limitations on Agricultural Collective Land Ownership	81	(2)
State Requisitioning of Agricultural Collective Land	83	(1)
Conversion of Arable Land	83	(2)
Allocated Land Use Rights	85	(40)
Allocated Land Use Rights Defined	86	(1)
Allocated Land Use Rights on State-Owned Land	87	(16)
Distinctive Characteristics of Allocated Land Use Rights vs. Granted Land Use Rights	89	(2)
Term of Allocated Rights	91	(1)
Purpose	91	(1)
Nature of Interests Conferred	91	(1)
State's Right to Terminate	92	(1)
Creation of Allocated Rights	93	(1)
Circumstances in Which Allocated Rights are Still Created	93	(1)
Process for Creation of Allocated Rights Before 1999	94	(2)
Creation of Allocated Land Use Rights After 1998	96	(1)
Compensation to Former Occupants or Agricultural Collectives	96	(2)
Transferring, Leasing, and Mortgaging Allocated Land Use Rights	98	(2)
The Future of Allocated Land Use Rights on State-Owned Land	100	(3)
Collective Enterprise Allocated Land Use Rights	103	(1)
Military Allocated Land Use Rights	104	(1)
Allocated Land Use Rights of Educational Institutions, Scientific Research Institutes, Cultural Organizations and Health Institutions	105	(1)
Interim Rights	106	(1)
Homestead Rights	107	(3)
Foreign-investment Enterprise Allocated Land Use Rights	110	(6)
How Can a Foreign-investment Enterprise Obtain New Allocated Land Use Rights?	111	(1)
Land Use Rights Allocated by County or City Government	111	(2)
Land Use Rights Contributed by Chinese Venturers as their Investment to Joint Ventures	113	(1)
Characteristics of Foreign-investment Enterprises' Allocated Land Use Rights	114	(2)
Allocated Land Use Rights on Agricultural Collective-Owned Land	116	(9)
Land Used Under the Agricultural Contract Responsibility System	116	(1)
Homesteads on Agricultural Collective-owned Land	117	(1)
Rural Residents' Homestead on Agricultural Collective-owned Land	117	(2)
Urban Residents' Homestead on the Agricultural Collective-owned Land	119	(1)
The Future of the Rural Residents' Homestead System	120	(1)
Township Enterprise's Land Use Rights on Agricultural Collective-owned Land	120	(1)
Land Use Rights Contributed by Agricultural Collectives to Joint Venture Enterprises	121	(2)
Termination of Allocated Land Use Rights on Agricultural Collective-owned Land	123	(2)
Granted Land Use Rights	125	(34)
Characteristics of Granted Land Use Rights	126	(6)
Use Limitations	126	(1)
Changing the Use	127	(1)
Term of Granted Land Use Rights	127	(1)
Renewal	128	(1)
Termination	129	(1)
Forfeiture	130	(1)
Transferability of Granted Land Use Rights	131	(1)
Who can Own	132	(2)
Creation of Granted Land Use Rights	134	(23)
Authority to Grant	134	(1)
Agricultural Collectives	135	(1)
Bureaus of Land Administration	135	(1)
Approval System for Granted Land Use Rights Prior to 1999	135	(1)
System for Approval of Granting or Allocating Land Use Rights Subsequent to 1999 (The ``Land Use Purpose Control System'')	136	(2)
Planning Requirements	138	(2)
Qualifying to Obtain a Land Use Right	140	(1)
Types of Granting Contracts	141	(6)
Select of Grantee	147	(1)
The Auction Requirement	148	(1)
Bid Invitations	149	(1)
Private Negotiation	150	(2)
The Land Use Fee	152	(1)
Timing of the Payment	152	(1)
Basic Land Price	152	(4)
Infrastructure Contribution	156	(1)
Limit on Government Expenditure of Proceeds of Granted Land Use Rights	156	(1)
Remedies for Breach of Granting Contract	157	(2)
Enforcement of Price Obligation	157	(1)
Enforcement by Buyer	157	(2)
Registration and Conveyancing	159	(32)
Registration of Real Estate Interests	159	(14)
The Requirement for Registration	159	(3)
Registration Systems	162	(3)
Inspection of Registration Records	165	(2)
Land Registration	167	(1)
Registration of Mortgages on Land Use Rights	167	(1)
Registration of Rights in Buildings	168	(3)
Liability of the Registration Office for Erroneous Registration of Buildings	171	(1)
Registration of Leases	171	(2)
Property Descriptions and Surveys	173	(2)
Boundary Disputes	174	(1)
Real Estate Brokerage and Appraisal	175	(4)
Real Estate Intermediaries Generally	175	(2)
Appraisers	177	(2)
Can a Foreigner be a Real Estate Intermediary in China?	179	(1)
Transfer of Land Use Rights	179	(12)
Conversion of Allocated Rights for Transfer	180	(3)
Preconditions for the Transfer of Granted Land Use Rights and Housing	183	(1)
Preconditions for the Transfer of Granted Land Use Rights	183	(1)
Preconditions for Housing Presale	184	(1)
Preconditions for the Sale of Housing Purchased from Working Units and Economic, Appropriate Housing Purchased at Subsidized Prices	184	(1)
Contracting for Transfer	185	(1)
Basic Land Price	186	(1)
Rights Created Under Contract	186	(1)
Requirement for a Writing; Notarization	187	(1)
Earnest Money and Liquidated Damages Provisions	188	(1)
Seller's Responsibility for Condition	189	(1)
Risk of loss	189	(2)
Commercial Leasing	191	(34)
Basic Legal Concepts Affecting Lease Contracts	192	(2)
What Can be Leased?	194	(8)
Land Ownership Itself	194	(2)
Leasing of Land Use Rights	196	(4)
Leasing of Buildings	200	(1)
Buildings That Cannot be Leased	201	(1)
Who Can Be Tenants	202	(1)
Details of the Lease Agreement	203	(6)
Requirement of a Writing	203	(1)
Requirement of Registration	203	(1)
Registration of Lease of Buildings	204	(1)
Main Clauses of a Lease Contract	205	(2)
Lease Term	207	(1)
Rent	208	(1)
Implied Warranties of Landlord	209	(2)
Implied Duties of Tenant	211	(1)
Tenant's Rights to Transfer Interests in the Leased Premises	212	(2)
Refusal Right	214	(1)
Tenant's or His Family Members' Right to Continue the Lease Contract When the Landlord Transfers the Premise or the Landlord Dies	215	(1)
Remedies for Breach of Lease	215	(3)
Non-Mortgageability of Leasehold Estates	218	(1)
Economic Analysis of the Chinese Commercial Lease	219	(6)
Mortgage Law	225	(72)
Introduction	225	(2)
Mortgage Loans Generally	227	(7)
Underlying Statutes	234	(4)
The 1999 Contract Law	234	(1)
The 1995 Commercial Banking Law and the General Provisions on Lending	235	(1)
The 1995 Security Law	235	(1)
The 1996 Auction Law	236	(1)
Laws and Regulations on Land and Urban Real Estate	236	(2)
Who Can Make a Mortgage Loan?	238	(2)
What Can Be Mortgaged?	240	(10)
Land Use Rights	240	(2)
Multiple Parcels	242	(1)
Commonly Owned Property	242	(2)
Leaseholds	244	(2)
Presale Interests	246	(1)
Inprovements to Mortgaged Property	247	(1)
Restrictions on Mortgaging Certain Interests	248	(2)
The Mortgage Debt	250	(7)
General Terms	250	(1)
Loan Term	250	(1)
Interest	251	(1)
Prepayment	252	(1)
A Special Problem Regarding the Amount of Loans-Construction Loans	253	(1)
Future Advances	253	(1)
Registration and Priority	254	(3)
Transfer of Mortgagee's Rights	257	(1)
Transfer of Mortgagor's Rights	258	(6)
Basic Transfer Restriction	258	(1)
Problem With Contracting for Sale of Mortgaged Property	258	(1)
The Basic Problem	258	(1)
Partial Interpretive Solution	259	(1)
Substitute Security and the Issue of Defeasance	260	(2)
Drafting Around the Problem	262	(1)
Contrary Authority in the Urban Mortgage Measures	263	(1)
Impact of Transfer on Original Mortgagor	264	(1)
Leasing of Mortgaged Property	264	(1)
Condition of Property; Insurance	265	(2)
Physical Condition of Property	265	(1)
Insurance	266	(1)
Expanding a Mortgagee's Rights	267	(1)
Default and Acceleration	267	(4)
Possession After Default and Right to Rents	271	(3)
Can the Parties Avoid Legally Prescribed Mortgage Terms by Contract?	274	(3)
Foreclosure	277	(9)
Judicial Actions	277	(1)
Venue	277	(2)
Timing	279	(1)
Election of Remedies	279	(1)
Notice	280	(2)
Conduct of Auction	282	(1)
Distribution of Proceeds	282	(2)
Settlements in Lieu of Foreclosure	284	(1)
Rights and Duties of Foreclosure Sale Purchasers	285	(1)
Rights of Junior Parties	286	(2)
Subrogation	288	(1)
Deficiency Claims	289	(1)
Summary and Conclusions	290	(7)
Problems Resulting from Overfavoring Lenders	290	(2)
Problems Resulting from Overfavoring Lessees	292	(2)
Structural Issues	294	(1)
Enforcement	295	(2)
Liens and Other Creditor's Rights	297	(18)
Collecting Judgments	297	(2)
Security Interests	299	(4)
Guarantee	299	(1)
Pledges	300	(1)
Pledges on Moveable Property	300	(1)
Pledges on Negotiable Instruments, Securities or Intellectual Property Rights	301	(1)
Possessory Liens	302	(1)
Dian	303	(12)
Enterprise Bankruptcy Law	307	(1)
Claims of Creditors	307	(3)
Concerns About Enterprise Bankruptcy	310	(3)
Bankruptcy of Entities Other than State Owned Enterprises	313	(2)
Restrictions on Ownership and Regulations on Real Estate Development	315	(22)
Interests Reserved by the State	315	(1)
Neighborhood Rights	316	(6)
Pass Right	317	(1)
Water Rights	318	(1)
Utility Services	319	(1)
Nuisance	319	(1)
Responsibilities with respect to boundaries	320	(1)
Safety, Health and Environment	320	(1)
Trespass	321	(1)
Lateral and Subjacent Support	322	(1)
Servitudes	322	(3)
Easements	322	(1)
Covenants	323	(2)
Regulation of Land Use	325	(5)
Overview of Land Using Regulation	325	(1)
Basic Structure of Zoning System	326	(2)
Comprehensive Land Use Planning	328	(1)
Limitations on Private Participation in Land Use Decision Making	328	(1)
National Land Administration Information System	329	(1)
Regulations on Real Estate Development	330	(4)
Compliance with the Zoning Plan, Granting Contract, and Technical Standards of the Government	330	(1)
Establishing Real Estate Development Companies	331	(2)
Qualification Control on Real Estate Development Companies	333	(1)
Control on the Ratio of Registered Capital to the Total Investment	333	(1)
Policies Encouraging Real Estate Development for Residential Purposes	334	(1)
Business Regulation	334	(3)
Real Property Taxation	337	(26)
Land Use Charge on Domestic Holders of Allocated Land Use Rights and Land Use Fee on Foreign Investment-enterprises' Allocated Land Use Right	338	(6)
The Land Use Charge on Domestic Users	338	(3)
The Land Use Fee on Foreign-investment Enterprises' Allocated Land Use Rights	341	(3)
Cultivated Land Occupation Charge for Conversion to Non-Agricultural Purposes	344	(2)
Building Property Tax	346	(3)
Contract Tax	349	(2)
Stamp Tax	351	(1)
Fixed-Asset Investment Adjustment Tax	352	(3)
New Construction or Purchase	354	(1)
Transformation or Renovation	355	(1)
Business Tax	355	(1)
Value-Added Tax on Land	356	(4)
Rational for the VAT	356	(1)
Incidence of the VAT	357	(1)
Calculation of the VAT	357	(1)
Calculation of the Amount of Taxable Appreciation	357	(2)
Rates of Tax	359	(1)
Penalty for Evasion	359	(1)
Exemptions from VAT	359	(1)
Income Tax	360	(3)
Appendix I: Forms	363	(48)
Appendix II: Index of Titles of Legal Documents	411	(20)
Appendix III: Table of Titles of Statutes and Regulations	431	(12)
Index	443