Property
Law of the People’s Republic of China
NPC.gov.cn
Order
of the President of the People’s Republic of China
No. 62
The Property Law of the People’s Republic of China,
adopted at the Fifth Session of the Tenth National People’s Congress of the
People’s Republic of China on March 16, 2007, is hereby promulgated and shall
go into effect as of October 1, 2007.
Hu Jintao
President of the People’s Republic of China
March 16,2007
Property Law of the People’s Republic of China
(Adopted
at the Fifth Session of the Tenth National People’s Congress on March 16, 2007)
Contents
Part One General Provisions
Chapter I Basic
Principles
Chapter II
Creation, Alteration, Transfer and Extinction of the Property Right
Section
1 Registration of the Immovables
Section
2 Delivery of the Movables
Section
3 Other Provisions
Chapter III
Protection of the Property Right
Part Two Ownership
Chapter IV
General Stipulations
Chapter V Ownership of
the State, the Collective and the Individual Person
Chapter VI
Condominium Right of Property Owners
Chapter VII
Neighboring Relations
Chapter VIII
Co-ownership
Chapter XV
Special Provisions on Acquirement of Ownership
Part Three Usufructs
Chapter X
General Stipulations
Chapter XI The Right to Land Contractual Management
Chapter XII The Right to the Use of Land for Construction
Chapter XIII The Right to the Use of House Sites
Chapter XIV
Easements
Part Four Security Interest in Property
Chapter XV
General Stipulations
Chapter XVI
Interests Obtained from Mortgage
Section
1 General Interest Obtained from Mortgage
Section
2 Maximum Mortgage Interest
Chapter XVII
Interest Acquired Through Pledge
Section
1 Interest Acquired Through Pledge of Movables
Section
2 Interests Acquired Through Pledge of Rights
Chapter XVIII
Lien
Part Five Possession
Chapter XIX
Possession
Supplementary
Provisions
Part One
General Provisions
Chapter I
Basic Principles
Article 1
This Law is enacted in accordance with the Constitution for the purpose of
upholding the basic economic system of the State, maintaining the order of the
socialist market economy, defining the attribution of things, giving play to
the usefulness of things and protecting the property right of obligees.
Article 2 This
Law shall be applicable to civil relationships stemming from attribution and
use of things.
For the purposes of this Law, things include the immovables and the movables. Where laws stipulate that
rights are taken as objects of the property right, the provisions of such laws
shall prevail.
The property right mentioned in this Law means the
exclusive right enjoyed by the obligee to directly
dominate a given thing according to law, which consists of the right of
ownership, the usufruct and the security interest on property.
Article 3 In
the primary stage of socialism, the State upholds the basic economic system
under which public ownership is dominant and the economic sectors of diverse
forms of ownership develop side by side.
The State consolidates and develops the public
sectors of the economy, and encourages, supports and guides to the development
of the non-public sectors of the economy.
The State maintains a socialist market economy and
guarantees the equal legal status and the right to development of all the
mainstays of the market.
Article 4 The
property right of the State, the collectives, the individual persons and other obligees are protected by law, and no units or individuals
shall encroach on it.
Article 5
The categories and contents of the property right shall be stipulated by law.
Article 6 The
creation, alteration, transfer or extinction of the property right of the immovables shall be registered in accordance with the
provisions of law. The property right of the movables shall be created or
transferred upon delivery in accordance with the provisions of law.
Article 7 The
law shall be observed and social ethics shall be respected in acquiring or
exercising the property right and public interests and the lawful rights and
interests of another person shall not be jeopardized.
Article 8
Where other laws specially provide for the property right
otherwise, the provisions there shall prevail.
Chapter II
Creation, Alteration, Transfer and Extinction of the
Property Right
Section
1
Registration
of the Immovables
Article 9 The
creation, alteration, transfer or extinction of the property right shall become
valid upon registration according to law; otherwise it shall not become valid,
unless otherwise provided for by law.
Registration of ownership of all the natural
resources which are owned by the State in accordance with law may be dispensed
with.
Article 10
Registration of the immovables shall be handled by
the registration authority at the place where they are located.
The State practices a unified system of registration
with respect to the immovables. The scope of unified
registration, the registration authority and the measures for registration
shall be stipulated by law and administrative regulations.
Article 11 To
apply for registration, the party concerned shall, on the basis of the
different matters for registration, submit the certificate of the attribution
of right and the necessary materials on boundary and the area of the immovables, etc.
Article 12
The registration authority shall perform the following duties:
(1) to examine the
certificate of the attribution of right and the other necessary materials
submitted by the applicant;
(2) to inquire of the
applicant about the matters for registration;
(3) to register the
relevant matters truthfully and in a timely manner; and
(4) to perform the other
duties provided for by laws and administrative regulations.
Where further certification of the condition of the immovables, the registration of which is applied for, is
needed, the registration authority may require the applicant to supplement the
materials and may, when necessary, check them on the spot.
Article 13 The
registration authority shall not do any of the following:
(1) demanding evaluation of
the immovables;
(2) making repeated
registration in the name of annual inspection, etc.; or
(3) doing other things
beyond the limits of its duty for registration.
Article 14 Where
the creation, alteration, transfer and extinction of the property right of the immovables are required to be registered according to the
provisions of law, they shall become valid as of the time when they are entered
in the register of the immovables.
Article 15
The contract made between the parties concerned on the creation, alteration,
transfer or extinction of the property right of the immovables
shall become valid as of the time when the contract is concluded, unless
otherwise provided for by law or agreed upon in the contract; and where the
property right is not registered, it shall not affect the validity of the
contract.
Article 16 The
register of the immovables provides the basis for the
attribution and contents of the property right.
The register of the immovables
shall be kept by the registration authority.
Article 17 The
right attribution certificate of the immovables is
the proof that the obligee is entitled to the
property right of the said immovables. The items
recorded in the right attribution certificate of the immovables
shall be consistent with what is recorded in the register of the immovables; and in case of inconsistencies, what is
recorded in the register of the immovables shall be
taken as the standard unless there is evidence to prove that there are errors
in what is recorded in the register of the immovables.
Article 18
The obligee or the interested party may apply for
consulting and duplicating the registered information, and the registration
authority shall provide such materials accordingly.
Article 19 Where
the obligee or the interested party believes that
there are errors in what is recorded in the register of the immovables,
he may apply for correction. Where the obligee
recorded in the register of the immovables agrees in
written form to make corrections or there is evidence to prove that there are
definitely errors in the registration, the registration authority shall make
corrections accordingly.
Where the obligee recorded
in the register of the immovables disagrees on making
corrections, the interested party may apply for the registration of
disagreement. Where the registration authority registers the disagreement, the
applicant in question fails to file a lawsuit within 15 days from the date the
disagreement is registered, such a registration shall
become invalid. If damages are caused to the obligee
due to inappropriate registration of disagreement, the obligee
may request the applicant to make compensation.
Article 20
When the party concerned intends to sign an agreement on the purchase or sale
of a house or other property right of immovables, he
may, in accordance with what is agreed upon, apply to the registration
authority in advance for registration, in order to ensure the realization of
his property right in future. Where after the registration is made in advance,
such immovables are disposed of without the consent
of the obligee who is
recorded in the registration in advance, the property right of such immovables shall be invalid.
Where after the registration is made in advance, the
creditor’s rights extinguish or no application for registration of the immovables is made within three months from the date when
such registration can be made, the registration made in advance shall become
invalid.
Article 21
Where the party concerned submits false materials when applying for
registration, thus causing damages to another person, he shall be liable for
compensation.
Where damages are caused to another person due to
the errors made in registration, the registration authority shall be liable for
compensation. After making the compensation, the said authority may have
recourse to the person who makes the errors in registration.
Article 22
Charges for registration of the immovables shall be
collected piece by piece and shall not be collected on the basis of the areas
or sizes of the immovables or in proportion to the
purchase prices. The specific rates for the charges shall be prescribed by
relevant department under the State Council together with the department of
pricing.
Section
2
Delivery
of the Movables
Article 23 The
creation or transfer of the property right of the movables shall become valid
as of the time of their delivery, unless otherwise provided for by law.
Article 24
Before registration, the creation, alteration, transfer or extinction of the
property right of the vessels, aircraft, motor vehicles, etc. shall not be used
against a bona fide third party.
Article 25 Where
an obligee has already possessed the movables
according to law prior to the creation or transfer of the property right of
such movables, the property right shall become valid as of the time when such
legal act becomes effective.
Article 26 Where
a third party has taken possession of the movables according to law prior to
the creation or transfer of the property right of the said movables, the person
who is obligated to deliver the movables may do so, instead, through
transferring the right of requesting the third party to return the original
movables.
Article 27 Where
both parties agree that the transferor continues to possess the movables while
the property right of such movables is being transferred, the said property
right shall be valid as of the time when the said agreement becomes effective.
Section
3
Other
Provisions
Article 28 Where
the property right is created, altered or transferred or extinguishes in
accordance with the legal document of a people’s court or an arbitration
committee or a decision made by a people’s government on expropriation, etc.,
such creation, alteration, transfer and extinction shall become valid as of the
time when the said document or decision comes into effect.
Article 29 Where
the property right is obtained through inheritance or acceptance of legacy,
such property right shall become valid as of the time of inheritance or
acceptance of legacy.
Article 30 Where
the property right is created or extinguishes due to such factual acts as
lawful construction and demolition of houses, such property right shall become
valid as of the time when the factual acts are achieved.
Article 31 Where
a person enjoys the property right over the immovables
in accordance with the provisions of Articles 28 through 30 of this Law, and
registration is required according to the provisions of laws, when such
property right is disposed of, the property right shall be invalid if no
registration is made.
Chapter III
Protection of the Property Right
Article 32
Where the property right is encroached on, the obligee
may have the matter settled by means of conciliation, mediation, arbitration or
litigation.
Article 33 Where
a dispute arises over the attribution or contents of the property right, the
interested parties may request confirmation of their right.
Article 34
Where a person takes possession of the immovables or
movables without the right to do so, the obligee may
request return of the original immovables or movables.
Article 35 Where
the property right is impaired or is likely to be impaired, the obligee may request removal of such impairment or
elimination of the potential danger.
Article 36 Where
the immovables or movables are damaged or destroyed,
the obligee may request repairs, reconstruction or
remaking, replacement or restoration to their original state.
Article 37
Where the infringement of the property right causes damages to an obligee, the obligee may request
compensation for the damages and may also request the infringing party to
assume other civil liabilities.
Article 38 The
forms for protection of the property right as provided for in this Chapter may
be applied separately and may also be applied otherwise, depending on the
circumstances of infringement.
Apart from bearing civil liability for infringement
on the property right, a person who, in addition, violates the administrative
provisions shall bear administrative liability according to law; and if a crime
is constituted, he shall be investigated for criminal liability according to
law.
Part Two
Ownership
Chapter IV
General Stipulations
Article 39 Owners
of immovables or movables shall be entitled to
possess, use, benefit from and dispose of the immovables
or movables according to law.
Article 40 On
their own immovables or movables, owners shall have
the right to create usufruct and security interest. In exercising their rights,
the usufructuaries or guarantors shall not impair the
rights and interests of the owners.
Article 41 No
units or individuals shall be allowed to acquire ownership of the immovables and movables which are exclusively owned by the
State as are provided for by law.
Article 42 For
public interests, land owned by the collectives, and the houses and other immovables of units and individuals may be expropriated
within the limits of power and in compliance with the procedures provided for
by law.
Where land owned by the collective is expropriated,
such fees as compensations for the land expropriated, subsidies for resettlement
and compensations for the attachments and the young crops on land shall be paid
in full according to law, and the premiums for social insurance of the farmers
whose land is expropriated shall be arranged in order to guarantee their daily
lives and safeguard their lawful rights and interests.
Where houses and other immovables
of units or individuals are expropriated, compensations for their resettlement
shall be paid according to law, and their lawful
rights and interests shall be protected; and where the housings of individuals
are expropriated, their living conditions shall be guaranteed.
No units or individuals shall embezzle,
misappropriate, privately divide, withhold or default on payment of such fees
as the compensations for expropriation.
Article 43 The
State provides cultivated land with special protection through strictly
restricting the transformation of the farmland into land for construction and
keeping under control the total amount of land used for construction. No land
owned by the collectives shall be expropriated in violation of the limits of
power and in compliance with the procedures as provided for by law.
Article 44
In order to meet such urgent needs as rushing to rescue or providing disaster
relief, the immovables or movables of units or
individuals may be requisitioned within the limits of power and in compliance
with the procedures as provided for by law. After the use of the requisitioned immovables or movables, they shall be returned to the units
or individuals whose immovables or movables are
requisitioned. Where the immovables or movables of
units or individuals are requisitioned or if they are damaged or lost
thereafter, compensations shall be made therefor.
Chapter V
Ownership of the State, the Collective and the
Individual Person
Article 45
The property owned by the State as is provided for by law belongs to the State,
that is, the entire people.
The State Council shall exercise ownership of
State-owned property on behalf of the State; and where laws provide for
otherwise, the provisions there shall prevail.
Article 46 All
mineral resources, waters and sea areas belong to the State.
Article 47 Land
in the cities belongs to the State. Land in the rural and suburban areas which
belongs to the State as is provided for by law is owned by the State.
Article 48
Such natural resources as forests, mountains, grasslands, wasteland and tidal
flats belong to the State, except where they belong to the collectives as is
provided for by law.
Article 49
All resources of the wildlife that belong to the State, as is provided for by
law, are owned by the State.
Article 50 All
resources of radio-frequency spectrum belong to the State.
Article 51
All cultural relics that belong to the State, as is provided for by law, are
owned by the State.
Article 52 All
assets for national defense belong to the State.
All infrastructures such as railways, highways,
power facilities, telecommunications facilities and oil and gas pipelines that
belong to the State in accordance with the provisions of law are owned by the
State.
Article 53 Government
departments are entitled to possess and use the immovables
and movables directly under their control and to dispose of them in accordance
with laws and the relevant regulations of the State Council.
Article 54 Institutions
sponsored by the State shall have the right to possess and use the immovables and movables directly under their control and to
benefit from and dispose of them in accordance with laws and the relevant
regulations of the State Council.
Article 55
With respect to enterprises invested by the State, the State Council or the
local people’s governments shall, in accordance with the provisions of laws and
administrative regulations, perform the duties of the investors on behalf of
the State and enjoy the rights and interests of the investors.
Article 56 The
property owned by the State shall be protected by law, and illegal possession,
looting, privately dividing, withholding or destruction of such property by any
units or individuals shall be prohibited.
Article 57 The
authority performing the duties of administration and supervision over
State-owned property and its staff members shall, according to law, exercise
vigorous administration and supervision over State-owned property, promote the
preservation and increase of the value of such property, and prevent its loss;
and where losses are caused to State-owned property due to their abuse of power
or dereliction of their duties, they shall bear legal liability according to
law.
Where, in violation of the provisions governing the
management of State-owned property, losses are caused to such property due to
transferring it at a low price, privately dividing it in conspiracy with other
persons, creating security on it without authorization or by other means in the
course of enterprise restructuring, merger or division, affiliated transaction,
etc., legal liability shall be borne according to law.
Article 58 The
immovables and movables owned by the collective
include the following:
(1) the land, forests,
mountains, grasslands, wasteland and tidal flats belong to the collective, as
is provided for by law;
(2) the buildings,
production equipment, water conservancy facilities of farmland that are owned
by the collective;
(3) the educational,
scientific, cultural, public health and sports facilities that are owned by the
collective; and
(4) other immovables and movables owned by the collective.
Article 59 The
immovables and movables collectively owned by the
farmers belong to the members of the collective.
The following matters shall be subject to decision
by the members of a given collective in accordance with the statutory
procedure:
(1) plans for contracting
of land, and subcontracting of land to other units or to individuals other than
those belonging to the collective;
(2) adjustment to be made
to the contracted land by the individual persons among themselves who have the
right to land contractual management;
(3) methods for the use and
distribution of such fees as compensations paid for land;
(4) such matters as change
in ownership of the enterprises invested by the collective; and
(5) other matters as
provided for by law.
Article 60
With respect to the land, forests, mountains, grasslands, wasteland, tidal
flats, etc. owned by the collective, the right of their ownership shall be
exercised in accordance with the following provisions:
(1) For those owned by the collective of farmers of
a village, the collective economic organization of the village or the
villagers’ committee shall exercise the right of ownership on behalf of the
collective;
(2) For those respectively owned by two or more
collectives of farmers within a village, the collective economic organizations
or villagers’ teams concerned within the village shall exercise the right of
ownership on behalf of the collectives; and
(3) For those owned by the collective of farmers of
a town or township, the collective economic organization of the town or
township shall exercise the right of ownership on behalf of the collective.
Article 61
With respect to the immovables and movables owned by
a collective of a town or township, the said collective shall, in accordance
with the provisions of laws and administrative regulations, have the right to
possess, use, benefit from and dispose of such immovables
and movables.
Article 62 The
collective economic organization or the villagers’ committee or team shall, in
accordance with laws and administrative regulations as well as the articles of
association, village rules and farmers’ agreements, make the position of the
collective property known to the members of the collective.
Article 63 The
property owned by the collective shall be protected by law, and illegal
possession, looting, privately sharing, and destruction of such property by any
units or individuals shall be prohibited.
Where a decision made by a collective economic organization, or villagers’ committee or by the leading
person of the organization or committee encroaches on the lawful rights and
interests of the members of the collective, the said members may apply to a
people’s court for reversing such decision.
Article 64 All
individual persons shall be entitled to enjoy ownership of such immovables and movables as their lawful incomes, houses,
articles for daily use, tools of production, and raw and semi-finished
materials.
Article 65 The
lawful savings and investments of individual persons and the gains derived
there from are protected by law.
The State protects, in accordance with the
provisions of law, the right of individual persons to inheritance and their
other lawful rights and interests.
Article 66 The
lawful property of individual persons is protected by law, and illegal
possession, looting and destruction of such property by any units or
individuals are prohibited.
Article 67 The
State, the collective or the individual person may, in accordance with law,
invest to establish companies with limited liability, companies limited by
shares or other enterprises. Where the immovables or
movables owned by the State, the collective or the individual person are
invested in enterprises, the investor shall have such rights as receiving
benefits derived from the assets, making major decisions and selecting
managers, and shall perform it/his duties, in accordance with what is agreed
upon or in proportion to the amount of investment.
Article 68 An
enterprise legal person has the right to possess, use, benefit from and dispose
of his immovables and movables in accordance with
laws and administrative regulations as well as the articles of association.
The rights enjoyed by legal persons other than
enterprise legal persons with respect to their immovables
and movables shall be governed by the provisions of relevant laws and
administrative regulations as well as the articles of association.
Article 69 The
immovables and movables owned by public organizations
according to law are protected by law.
Chapter VI
Condominium Right of Property Owners
Article 70 Property
owners shall enjoy ownership of the special parts within a building, such as
the residential units and the units for business purposes and shall enjoy the
right to share and jointly manage the common parts other than the special
parts.
Article 71
An owner shall enjoy the rights of possession, use, benefiting from and
disposition of the part exclusively owned by him within a building. In
exercising his rights, the owner shall not endanger the safety of the building
or infringe on the lawful rights and interests of other owners therein.
Article 72
An owner shall enjoy rights and fulfill obligations with respect to the common
parts of a building other than the special parts, and shall not refuse to
fulfill the obligations by forfeiting his rights.
When an owner transfers a residential unit or a unit
for business purposes owned by him within a building, his right to share and
jointly manage the common parts shall be transferred along.
Article 73 The
roads in the district of a building shall be jointly owned by all the owners,
with the exception of the public roads belonging to a city or township. The
greens within the district of a building shall be jointly owned by all the
owners, with the exception of the public greens belonging to a city or
township, and the greens belonging to individual persons, as is clearly
indicated. Other public spaces, public facilities and houses or rooms used for
property management within the district of a building shall be jointly owned by
all the owners.
Article 74
In the district of a building, the designed parking places and garages shall
first be used to meet the need of the owners.
In the district of a building, ownership of the
designed parking places and garages shall be decided on through agreement among
the parties concerned, by such means as selling, giving away as gifts, and
leasing.
The roads and other places commonly owned by all the
owners which are used for parking vehicles shall be jointly owned by all the
owners.
Article 75 The
owners may form an owners’ assembly and elect an owners’ committee.
The department concerned of the local people’s
government shall give guidance and assistance to the formation of an owners’
assembly and the election of an owners’ committee.
Article 76 The
following matters shall be decided on by all the owners:
(1) formation and revision
of the rules of procedure of the owners’ assembly;
(2) formation and revision
of the rules and agreement on managing the buildings and the attached
facilities;
(3) election of the owners’
committee or replacement of its members;
(4) employment or removal
of the property management service or other managers;
(5) raising and use of
funds for the maintenance of a building and its attached facilities;
(6) renovation and
reconstruction of a building and its attached facilities; and
(7) other major matters
relating to joint ownership and joint management rights.
For decision on the matters specified in
Subparagraphs (5) and (6) of the preceding paragraph, an agreement shall be
reached by the owners whose ownership of the exclusive parts within the
building in question accounts for two-thirds or more of the total construction
area of the building and who account for two-thirds or more of the total number
of the owners. For decision on the rest of the matters specified in the
preceding paragraph, an agreement shall be reached by the owners whose ownership
of the exclusive parts in the building accounts for more than half of the total
construction area of the building and who account for more than half of the
total number of the owners.
Article 77 No
owners may, in violation of the relevant laws, regulations or the management
rules and agreements, turn a residential unit into a unit for business
purposes. If an owner intends to do so, he shall, in addition to observing the
relevant laws, regulations and the management rules and agreements, obtain the
consent of the interested owners.
Article 78
The decisions of the owners’ assembly or the owners’ committee shall be binding
to all the owners.
If a decision made by the owners’ assembly or the
owners’ committee infringes on the lawful rights and interests of an owner, the
said owner may apply to a people’s court for voiding of the decision.
Article 79 The
funds for maintenance of a building and its attached facilities shall belong to
all the owners, which, upon their common decision, may be used for maintaining
and repairing the common parts such as the elevators and water tanks. The
raising and use of such funds shall be made public.
Article 80 The
apportioning of the expenses for a building and its attached facilities and the
distribution of benefits therefrom shall follow the agreement reached; if there
is no such agreement or the agreement is unclear, such apportioning and
distribution shall be determined on the basis of the ratio of the area of the
exclusive parts an owner owns to the total construction area of the building.
Article 81
Owners may manage the building and its affixtures by themselves, or entrust the
matter to a property management service or other managers.
The owners shall, according to law, have the right
to replace the property management service or other managers employed by the
developer.
Article 82 The
property management service or other managers shall manage the building and its
affixtures within the district of the building, as entrusted by the owners, and
shall be subject to supervision by the owners.
Article 83 Owners
shall observe the relevant laws and regulations and the management rules and
agreements.
With respect to a person who randomly discards
garbage, discharges pollutants, makes noises, keeps animals in violation of
regulations, erects structures against rules, occupies passages, refuses to pay
property management fees, etc., thus infringing on the lawful rights and
interests of another person, the owners’ assembly and the owners’ committee
shall, according to the relevant laws and regulations and the management rules
and agreements, have the right to require the person to discontinue such
infringement, eliminate the hazards, clear away the obstructions and compensate
the losses entailed. The owner whose lawful rights and interests are infringed
on may bring a lawsuit to the people’s court against such acts.
Chapter VII
Neighboring Relations
Article 84 Owners
of neighboring immovables shall properly deal with
their neighboring relations in adherence to the principles of conduciveness to
production, convenience for daily lives, unity and mutual help, and fairness
and rationality.
Article 85 Where
there are laws or regulations governing neighboring relations, the provisions
there shall prevail; otherwise, such relations shall be dealt with in
accordance with local customs.
Article 86 An
owner of immovables shall provide the necessary
convenience to a neighboring obligee in the use or
discharge of water.
The natural flowing waters shall be reasonably
distributed among the neighboring obligees of immovables. The direction of natural flow shall be set
store by where discharge of such water is concerned.
Article 87 Where
a neighboring obligee has to use for passage, etc.
the land of an obligee of immovables,
the latter shall provide the necessary convenience to the former.
Article 88 Where
an obligee of immovables,
for constructing or maintaining a building, or laying wires, cables, or
pipelines for water, heating or gas, has to use the neighboring land or
building, the owner of the said land or building shall provide the necessary
convenience accordingly.
Article 89 In
construction of a building, ventilation, light and sunshine of the neighboring
building shall not be blocked in violation of the relevant construction
standards of the State.
Article 90 An
obligee of immovables shall
not, in violation of State regulations, discard solid waste or discharge
hazardous substances, such as air and water pollutants, noises, and optical and
electromagnetic radiation.
Article 91
When digging, constructing a building, laying pipelines or installing
facilities, etc., an owner of immovables shall not
endanger the neighboring immovables.
Article 92 When
making use of the neighboring immovables for the
drawing or draining off of water, for passage or for laying
of pipelines, an owner of immovables shall do the
best to avoid causing damage to the owner of the neighboring land; if damage is
caused, he shall compensate for the damage.
Chapter VIII
Co-ownership
Article 93
Immovables or movables may be co-owned by two or more
units or individuals. Co-ownership consists of shared ownership and joint
ownership.
Article 94
Persons who share the ownership of immovables or
movables shall enjoy the ownership in proportion to the amount of their shares.
Article 95 Persons
who jointly own immovables or movables shall enjoy
the ownership jointly.
Article 96
Co-owners shall manage the immovables or movables
they own as agreed upon; if there is no agreement or the agreement is
indefinite in this respect, all the co-owners shall have the right and duty of
management.
Article 97
Disposing of or making major repairs to the co-owned immovables or movables shall be subject to agreement
reached by the co-owners who possess two-thirds or more of the total shares or
by all of the joint owners, except where the owners agree otherwise.
Article 98 The
fees for managing what is co-owned and other expenses shall be paid according
to agreement; if there is no such agreement or the agreement is indefinite in
this respect, they shall be paid by the persons who share the ownership in
proportion to the amounts of their respective shares, or jointly paid by the
joint owners.
Article 99 Where
the co-owners have agreed not to sever the immovables
or movables owned by them in order to maintain the co-ownership, such agreement
shall be complied with; however, if a co-owner has major reasons for severing
them, he may make a request for severance; where there is no such agreement or
the agreement is indefinite in this respect, a person who shares the ownership
may make a request for severance at any time, while a joint owner may do so if
the basis for joint ownership no longer exists or he has major reasons for
severance. Where the severance causes losses to the other co-owners, they shall
be compensated for the losses.
Article 100 The
co-owners may decide on the method for severance through consultation. If they
fail to reach an agreement, and the immovables or
movables owned by them can be severed and its value will not be reduced because
of such severance, the actual property shall be severed; if it is difficult to
sever the property or its value will be reduced because of such severance, the
severance shall be made after the property is converted into money, or auctioned,
or sold.
If the immovables or
movables of a co-owner obtains from the severance is flawed, the other
co-owners shall share the losses.
Article 101 A co-owner who shares
ownership of the immovables or movables
shall have the right to transfer his own share. The other co-owners shall have
the priority to purchase under equal conditions.
Article 102 In
external relations, the co-owners shall have joint and several claims arising
from the immovables or movables owned by them and
bear joint and several liability for the debts arising likewise, except where
laws provide otherwise or where a third party is aware that the co-owners are
not associated in the aftersaid manner; in internal
relations, unless otherwise agreed upon by the co-owners, the co-owners who
share the ownership shall enjoy the claims and bear liability for the debts in
proportion to the amounts of their respective shares, while the joint owners
shall jointly enjoy the claims and bear liability for the debts. Where a person
who shares ownership pays debts in excess of his share, he shall have the right
to recourse from the other co-owners.
Article 103 Where
the co-owners fail to reach an agreement either on shared or on joint ownership
of the immovables or movables, or the agreement
reached is indefinite in this respect, the ownership shall be deemed to be
shared ownership, unless the co-owners are of a family or have other relations.
Article 104 Where
the shares of immovables or movables are not agreed
upon among the persons who share the ownership, or the agreement reached is
indefinite in this respect, their shares shall be determined on the basis of
the amounts of their respective capital contributions; if it is difficult to
determine the amounts of capital contributions, the immovables
or movables shall be deemed to be shared equally among them.
Article 105 Where
two or more entities or individuals jointly enjoy usufructs or security
interest, the provisions in this Chapter shall be applied mutatis mutandis.
Chapter XV
Special Provisions on Acquirement of Ownership
Article 106 Where
a person transfers to a transferee immovables or
movables which he has no right to dispose of, the owner shall have the right to
recover them; except where otherwise provided for by law, the transferee shall
acquire ownership of the said immovables or movables
under one of the following circumstances:
(1) The transferee is in good faith when the said immovables or movables are transferred to him;
(2) The transfer is made at a reasonable price; or
(3) The said immovables or
movables have duely been registered as is required by
law, or have been delivered to the transferee where no registration is
required.
Where a transferee acquires the ownership of the immovables or movables in accordance with the provisions in
the preceding paragraph, the original owner shall have the right to request the
person who has no right of disposition to compensate for the losses.
Where a party acquires other property rights in good
faith, the preceding two paragraphs shall be applied mutatis mutandis.
Article 107 An
owner or any other obligee shall have the right to
recover a lost-and-found thing. Where the thing comes to be possessed by
another person through transfer, the obligee shall
have the right to request the person who has no right of disposition to
compensate for the losses or, within two years from the date he becomes, or
ought to become, aware of the transferee, request the transferee to return the
lost thing, however, if the lost thing is purchased by the transferee at
auction or from a qualified seller, the obligee
shall, when requesting the transferee to return the original thing, compensate
the transferee for the expenses the latter has paid for the thing. After the obligee compensates the transferee for the expenses, he
shall have the right to recover the payment he has made from the person who has
no right of disposition.
Article 108 After
a bona fide transferee acquires a piece of movables, the rights previously
attached to the said piece shall extinguish, unless where the bona fide
transferee is or ought to be aware of the attached rights at the time of
transfer of the piece.
Article 109
A person who finds a lost thing shall return it to the
obligee. The finder shall, in a timely manner, give a
notice to the obligee asking him to take it back, or
deliver it to the public security organ or relevant departments.
Article 110
Where the relevant department that receives a found thing knows who the obligee is, it shall, without delay, give a notice to the obligee to notify the obligee
asking him to take the thing back; otherwise, it shall publish a notice of the
finding of the lost thing without delay.
Article 111
Before a finder delivers a found thing to the relevant department and before
the lost thing is taken back from the department, both
the finder and the department shall safekeep the
thing. If, the thing in his or its safekeeping is damaged, destroyed or lost
intentionally or through gross negligence, he or it shall bear civil liability
therefor.
Article 112 When
an obligee goes to take back the thing he lost, he
shall pay to the finder or the relevant department the necessary expenses
entailed by safekeeping, etc.
Where an obligee offers a
reward for the finding of the thing he lost, he shall fulfill his obligation as
promised when taking the thing back.
Where a finder illegally takes into his own
possession a lost thing, he shall have no right to request the expenses paid
for the safekeeping of the thing, nor shall he have the right to request the obligee to fulfill the obligation as promised.
Article 113 A
lost thing shall belong to the State if no one goes to
claim it within six months from the date the notice of the finding of the thing
is published.
Article 114 The
provisions governing the finding of lost things shall be applied mutatis
mutandis to the finding of drift-stuff or buried or hidden things. Where the
laws such as the Law on Protection of Cultural Relics provide for otherwise,
the provisions there shall prevail.
Article 115
Where the principal part of a thing is transferred, the ancillaries shall be
transferred along with it, except where the parties concerned agree otherwise.
Article 116 The
natural fruits of a thing shall go to the owner; if there are both owner and usufructuary, the fruits shall go to the usufructuary. Where the parties concerned agree otherwise,
their agreement shall prevail.
The statutory fruits of a thing shall go to the
party as agreed upon if there is an agreement between the parties concerned; if
there is no such agreement or the agreement in this respect is indefinite, the
fruits shall be acquired according to the customs of transaction.
Part Three
Usufructs
Chapter X
General Stipulations
Article 117 A usufructuary
shall, according to law, have the right to possess, use and benefit from the immovables or movables owned by another.
Article 118 Units
or individuals may, according to law, possess, use and benefit from the natural
resources which are owned by the State, or owned by the State but used by the
collective, or owned by the collective as stipulated by law.
Article 119
The State shall apply a system of compensated use of natural resources, unless
otherwise stipulated by law.
Article 120 In
exercising his rights, the usufructuary shall observe
the provisions of law governing the protection and reasonable exploitation and
utilization of resources. The owner shall not interfere with the exercise of
rights by the usufrustuary.
Article 121 The
usufurstuary shall, in accordance with the provisions
of Articles 42 and 44 of this Law, get appropriate compensation when his
usufruct extinguishes or the exercise of his usufruct is limited due to
expropriation or requisition of the immovables or
movables.
Article 122 The
right to the use of sea areas that is obtained in accordance with law shall be
protected by law.
Article 123 The
rights to prospecting for mineral deposits, mining, water taking, and the
rights to the use of waters or tidal flats for aquaculture or fishing, which
are obtained in accordance with law, shall be protected by law.
Chapter XI
The Right to Land Contractual Management
Article 124 Rural
collective economic organizations apply the dual management system
characterized by the combination of centralized management with decentralized
management on the basis of management by households under a contract.
The contractual management system shall, in
accordance with law, be applied to the cultivated land, forestlands, grasslands
and other land used for agriculture, which are owned collectively by the farmers
or by the State but used collectively by the farmers.
Article 125
Contractors for the right to land management shall, in accordance with law,
have the right to possess, use, and benefit from the cultivated land,
forestlands, grasslands, etc. which are under their contractual management, and
shall have the right to engage in agricultural production, including crop
cultivation, forestry and animal husbandry.
Article 126 The
term of contract for cultivated land is 30 years. The term of contract for grasslands
ranges from 30 to 50 years. The term of contract for forestlands ranges from 30
to 70 years; and that for forestlands where special trees grow may be extended
upon approval by the competent administrative department for forestry under the
State Council.
At the expiration of the term of contract stipulated
in the preceding paragraph, the contract may be renewed by the contractor for
the right to land management in accordance with the relevant regulations of the
State.
Article 127 The
right to land contractual management shall be established as of the date the
contract for the right to land management becomes valid.
Local people’s governments at or above the county
level shall issue to the contractors for the right to land management
certificates of the right to land contractual management, certificates of the
right to use forestlands, or certificates of the right to use grasslands, and
shall have them registered to confirm their right to land contractual
management.
Article 128 Contractors
for the right to land management shall, in accordance with the provisions of
the Law on Land Contract in Rural Areas, have the right to circulate the right
to land contractual management by subcontracting, exchanging or transferring
the right or by other means. The term of circulation may not exceed the
remaining period of the term of a contract. Without approval as granted
according to law, no contracted land may be used for non-agricultural
development.
Article 129
When contractors for the right to land management exchange or transfer the said
right and the parties concerned request registration, they shall apply to the
local people’s governments at or above the county level for alteration of the
registration of the right to land contractual management. Where such
registration is lacking, it shall not be used against a bona fide third party.
Article 130
During the term of contract, the party giving out the contract may not readjust
the contracted land.
When the contracted cultivated land or grasslands
need to be readjusted appropriately under the special circumstances in which
the contracted land or grasslands are seriously damaged due to natural
disasters, the matter shall be handled in accordance with the provisions of the
Law on Land Contract in Rural Areas, etc.
Article 131
During the term of contract, the party giving out the contract may not take
back the contracted land. Where the Law on Land Contract in Rural Areas and
other laws provide otherwise, the provisions there shall apply.
Article 132 Where
the contracted land is expropriated, the contractors for the right to land
management shall be entitled to corresponding compensation in accordance with
the provisions of the second paragraph of Article 42 of this Law.
Article 133 Where
a person enters into a contract for the right to rural land such as barren land
through bidding, auction, open consultation or other means, his right to land
contractual management may, in accordance with such laws as the Law on Land
Contract in Rural Areas and the relevant regulations of the State Council, be
circulated through transfer, pooling of rights as shares, mortgage or other
means.
Article 134 Where
contractual management is applied to the land owned by the State which is used
for agricultural purposes, the relevant provisions of this Law shall be
followed mutatis mutandis.
Chapter XII
The Right to the Use of Land for Construction
Article 135 A
person who enjoys the right to the use of land for
construction shall, according to law, possess, use and benefit from the land
owned by the State, and shall have the right to use the land for erecting
buildings and structures and the facilities attached to them.
Article 136 The
right to the use of land for construction may be separately created on the
surface, above or under the ground. The newly created right to the use of land
for construction shall not infringe on the usufruct which has already been
created thereon.
Article 137 The
right to the use of land for construction may be created by assignment,
allocation or other means.
Where land is used for industrial, commercial,
tourist or entertaining purposes, as commodity residences, or for other
profit-making purposes, or there are two or more persons who are willing to use
the same piece of land, the right to the use of land for construction shall be
assigned through bid invitation, auction or other open bidding.
Creation of the right to the use of land for
construction through allocation shall strictly be controlled. Creation of the
right by such means shall be done in compliance with the provisions of laws and
administrative regulations governing the purposes of use of land.
Article 138
Where the right to the use of land for construction is created through bid
invitation, auction, agreement or by other means of
assignment, the parties shall enter into a contract for assigning the right to
the use of land for construction in written form.
A contract for assigning the right to the use of
land for construction generally contains the following particulars:
(1) names and addresses of
the parties;
(2) the boundary and the
area of the land;
(3) the space occupied by
the buildings and structures and the facilities attached to them;
(4) purposes of use of
land;
(5) the period of time for
use;
(6) payment for the
assigning and other fees, and the manners of payment; and
(7) means for settlement of
disputes.
Article 139 For
creating the right to the use of land for construction, an application for
registration of such right shall be made to the registration authority. The
right to the use of land for construction shall be deemed to be created as of
the time of registration. The registration authority shall issue to the person
who is granted the right to the use of land for construction the certificate of
the right to the use of land for construction.
Article 140
Persons who enjoy the right to the use of land for construction shall make
rational use of the land and shall not change the purposes of use of the land;
if the purposes of use need to be changed, the matter shall be subject to
approval by relevant administrative departments according to law.
Article 141
The persons who enjoy the right to the use of land for construction shall, in
accordance with the provisions of law and the stipulations in the contract, pay
the expenses for assignment and other fees.
Article 142 Ownership
of the buildings and structures and the facilities attached to them that the
person who enjoys the right to the use of land for construction has constructed
belongs to the said person, unless there is evidence to prove the contrary.
Article 143
A person who enjoys the right to the use of land for
construction shall have the right to transfer, exchange, offer as capital
contributions, give as a gift or mortgage such right, except where otherwise
provided for by law.
Article 144 Where
the right to the use of land for construction is transferred, exchanged,
offered as capital contributions, given as a gift or mortgaged, the parties
shall enter into a contract in written form accordingly. The period of time for
use shall be agreed upon by the parties, provided that the remaining period of
time for the right to the use of land for construction is not exceeded.
Article 145
Where the right to the use of land for construction is to be transferred,
exchanged, offered as capital contributions, or given as a gift, an application
for alteration of registration shall be made to the registration authority.
Article 146 Where
the right to the use of land for construction is transferred, exchanged,
offered as capital contributions, or given as a gift, the buildings and
structures and the facilities attached to them which are attached to the said
land shall be disposed of along with it.
Article 147 Where
buildings and structures and the facilities attached to them are transferred,
exchanged, offered as capital contributions, or given as a gift, the right to
the use of the land for construction to which the said buildings and structures
and facilities are attached shall be disposed of along with them.
Article 148
Where, before the expiration of the period of time for the right to the use of
land for construction, the land needs to be taken back for public interests,
compensations for the houses and other immovables on
the land shall be paid in accordance with the provisions of Article 42 of this
Law, and the fees paid for assignment shall appropriately be returned.
Article 149 When
the period of time for the right to the use of land for construction of
residences expires, it shall automatically be renewed.
Renewal of the period of time for the right to the
use of land for nonresidential construction shall be handled in accordance with
the provisions of law. Ownership of the houses and other immovables
on the said land shall be decided on according to the agreement reached; if
there is no agreement or the agreement on the matter is indefinite, it shall be
decided in accordance with the provisions of laws and administrative
regulations.
Article 150
When the right to the use of land for construction lapses, the assignor shall
have his registration cancelled in time. The registration authority shall take
back the certificate of the right to the use of land for construction.
Article 151 Where
land owned by the collective is to be used for construction purposes, the
matter shall be handled according to the provisions of the Land Administration
Law and of other laws
Chapter XIII
The Right to the Use of House Sites
Article 152 Persons
with the right to the use of house sites who, according to law, enjoy the right
to possess and use the land owned by the collective, shall have the right to
use the land for constructing residences and the facilities to be attached to
them according to law.
Article 153
Such laws as the Land Administration Law and the relevant State regulations
shall be applicable to the obtaining, exercising and transferring of the right
to the use of house sites.
Article 154
When house sites disappear due to natural disasters or other reasons, the right
to the use of the house sites extinguishes. New house sites shall be allocated
to the villagers who lose their house sites.
Article 155
When the registered right to the use of house sites is transferred or extinguishes, registration of the change or cancellation of
registration shall be handled in a timely manner.
Chapter XIV
Easement
Article 156
Easement holders shall, according to the stipulations in the contract, have the
right to use another person’s immovable property to get better results from his
own immovables.
Another person’s immovable property mentioned in the
preceding paragraph is the servient estate, and one’s
own immovables are the dominant estate.
Article 157
For creating an easement, the parties shall enter into a contract for easement
in written form.
The contract for easement generally includes the
following particulars:
(1) names or titles, and
domiciles of the parties;
(2) locations of the servient estate and the dominant estate;
(3) purposes and means of
use;
(4) the period of time for
use;
(5) fees and the manner of
payment; and
(6) means to be used for
settling disputes.
Article 158 An
easement is created as of the time when the easement contract becomes valid. If
the parties request registration, they may apply to the registration authority
for registration of easement. Where the registration is lacking, such right may
not be used against a bona fide third party.
Article 159 The
obligee of the servient
estate shall, according to what is stipulated in the contract, allow the
easement holder to use his land and shall not obstruct the latter from
exercising his right.
Article 160
The easement holder shall use the servient estate in
conformity with the purposes and means of use as agreed upon in the contract
and to lighten as much as possible the restrictions on the property right of
the obligee of the servient
estate.
Article 161 The
period of time for an easement shall be agreed upon by the parties, provided
that it does not exceed the remaining period for usufructs, such as the right
to land contractual management and the right to the use of the land for
construction.
Article 162
When the owner of a piece of land who enjoys, or is encumbered with an easement
creates a right on the right to land contractual management or the right to the
use of house sites, the contractor for the right to land contractual management
or the user of the house sites shall continue to enjoy or be encumbered with
the created easement.
Article 163 If
on a piece of land is already created the right to land contractual management,
the right to the use of the land for construction or the right to the use of
house sites, etc., the owner of the piece of land shall not create any easement
without the consent of the usufructuary.
Article 164 An
easement shall not be transferred separately. When the right to land contractual
management or the right to the use of land for construction is transferred, the
easement shall be transferred along with it, unless the contract stipulates
otherwise.
Article 165 An
easement shall not be mortgaged separately. If the right to land contractual
management or the right to the use of land for construction is mortgaged, the
easement shall be transferred along with it at the time when the mortgage
interest is enforced.
Article 166
When the dominant estate and part of the right to land contractual management
or of the right to the use of land for construction thereon are transferred, if
the part to be transferred involves easement, the transferee shall concurrently
enjoy the easement.
Article 167
When the servient estate and part of the right to
land contractual management or of the right to the use of land for construction
thereon are transferred, if the part to be transferred involves easements, the
easements shall be binding to the transferee.
Article 168 If
an easement holder is under any of the following circumstances, the obligee of the servient estate
shall have the right to terminate the easement contract, and the easement
extinguishes:
(1) abusing the easement in
violation of the provisions of law or the contract; or
(2) in the case of
compensated use of the servient estate, at the
expiration of the duration for payment as is agreed upon, failing to pay the
fees after two exigents are given within a reasonable
time limit.
Article 169
If a registered easement is altered, transferred or extinguishes, the
alteration shall be registered or cancelled in a timely manner.
Part Four
Security Interest in Property
Chapter XV
General Stipulations
Article 170 Unless
otherwise stipulated by law, the holder of security interests shall have the priority
in having his claim paid if a debtor defaults or if the conditions for
enforcement of the said interests, as agreed upon by the parties concerned,
arise.
Article 171 Where,
in the making of loans, in business transactions or other civil activities, a
creditor needs a guarantee to have his claim honored, a security interest may
be created in accordance with the provisions of 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 relevant provisions of this Law and other laws
shall be applicable to counter-guarantee.
Article 172
For creation of a security interest, a guarantee contract shall be concluded in
accordance with the provisions of this Law and other laws. A guarantee contract
is an ancillary contract of the principal claim-debt contract. When the
principal claim-debt contract is null and void, the guarantee contract shall be
null and void accordingly, unless otherwise provided for by law.
After it is confirmed that a guarantee contract is
nullified, the debtor, the guarantor and the creditor who are in fault shall,
on the merits of each case, bear civil liability respectively.
Article 173
The scope of security interest embraces the principal creditor’s right and the
interest therefrom, penalty, damages and expenses for safekeeping of the
property used as security and for enforcing security interest. Where the
parties concerned agree otherwise, their agreement shall prevail.
Article 174 In
case of damage or destruction, loss or requisition of the mortgaged property
during the period of guarantee, the holder of the security interest shall have
priority in having his claim paid with the insurance monies, compensations or indemnities.
The holder of security interest may also have the insurance monies,
compensation payment or indemnities deposited with a third party before the
time limit for payment of the guaranteed claim expires.
Article 175
Where a guarantee is provided by a third party, if the creditor permits the
debtor to transfer part or all of his debts without the consent of the third
party in written form, the guarantor shall not undertake the corresponding suretyship liability.
Article 176
Where both security and suretyship are provided to
guarantee for the same claim, the creditor shall have his claim paid as agreed
upon, if the debtor defaults or the conditions for enforcement of the interest,
as agreed upon by the parties concerned, arise; where there is no such
agreement or the agreement is indefinite in this respect, if the debtor himself
provides property as security, the creditor shall have his claim paid with such
property first; where a third party provides property as security, the creditor
may either have his claim paid with such property or request the guarantor to
undertake the suretyship. After the third party has
borne the suretyship, he shall have the right of
recourse against the debtor.
Article 177 The
security interest shall extinguish under one of
following circumstances:
(1) The principal claim extinguishes;
(2) The security interest is enforced;
(3) The creditor waives the security interest; or
(4)Other circumstances provided for by law under
which the security interest extinguishes.
Article 178
In case of any inconsistencies between the provisions of the Guarantee Law and
of this Law, those of this Law shall prevail.
Chapter
XVI
Interests Obtained from Mortgage
Section
1
General
Interest Obtained from Mortgage
Article 179 Where
a debtor or a third party, for guaranteeing the payment of debts, mortgages
property to a creditor instead of transferring of the possession of such
property, if the debtor defaults or the conditions for enforcement of the
interest, as agreed upon by the parties concerned, arise, the creditor shall
have priority in having his claim paid with the property.
The debtor or the third party specified in the
preceding paragraph is the mortgagor, the creditor specified there is the
mortgagee, and the property used as security is mortgaged property.
Article 180 The
following property which the debtor or the third party is entitled to dispose
of may be mortgaged:
(1) buildings and other
attachments on the ground;
(2) the right to the use of
land for construction;
(3) the contractual
management right to barren land, etc. obtained through bidding, auction, open
consultation or other means;
(4) production equipment,
raw and semi-finished materials, semi-finished products and finished products;
(5) buildings, vessels and
aircraft under construction;
(6) means of
transportation; and
(7) other property that is
not prohibited from being mortgaged by laws or administrative regulations.
A mortgagor may mortgage all the property specified
in the preceding paragraph at the same time.
Article 181
Subject to written agreement between the parties, enterprises, self-employed
industrial and commercial households and agricultural producers and
distributors may mortgage their existing and anticipated production equipment,
raw and semi-finished materials, semi-finished products and finished products,
and if the debtor defaults or the conditions for enforcement of the interest,
as agreed upon by the parties concerned, arise, the creditor shall have
priority in having his claim paid with the movables.
Article 182 Where
a building is mortgaged, the right to the use of the land for construction
within the area occupied by the building shall be mortgaged along with the
building. Where the right to the use of the land for construction is mortgaged,
the buildings on the land shall be mortgaged along with that right.
If the mortgagor fails to comply with what is
provided for in the preceding paragraph, the property not mortgaged shall be
deemed to be mortgaged along with what is mortgaged.
Article 183 The
right to the use of the land for construction enjoyed by a town (township) or
village enterprise may not be mortgaged separately. Where workshops and other
buildings of a town (township) or village enterprise are mortgaged, the right
to the use of the land for construction within the area occupied by the
workshops or other buildings shall be mortgaged along with the workshops and
other buildings.
Article 184
The following property may not be mortgaged:
(1) land ownership;
(2) the right to the use of the land owned by the
collective, such as cultivated land, house sites, private plots and private
hills, except where otherwise provided for by law;
(3) educational facilities,
medical and health facilities and other public welfare facilities of undertakings
for public welfare, such as schools, kindergartens and hospitals and public
organizations;
(4) property the ownership
or right to the use of which is indefinite or controversial;
(5) property sealed up, distrained or placed under custody in accordance with law;
and
(6) other property which
may not be mortgaged as prescribed by laws and administrative regulations.
Article 185
To create a mortgage interest, the parties concerned shall conclude a mortgage
contract in written form.
A mortgage contract generally includes the following
particulars:
(1) the kind and amount of
claims secured;
(2) the time limit for the
debtor to repay the debt;
(3) the name, quantity,
quality, conditions, location or attribution of the ownership or the right to
the use, of the mortgaged property; and
(4) the scope of security
interest.
Article 186 Before
maturity of the debts, the mortgagee may not enter into an agreement with the
mortgagor that the mortgaged property shall come under the ownership of the
creditor when the debtor defaults.
Article 187 Where
the property specified in Subparagraphs (1), (2) and (3), or the buildings
under construction specified in Subparagraph (5), under the first paragraph of
Article 180 of this Law are mortgaged, such mortgage shall be registered. The
mortgage interest is created as of the date of registration.
Article 188 Where
the property specified in Subparagraphs (4), (5) and (6), or the vessels and
aircraft under construction specified in Subparagraph (5), under the first
paragraph of Article 180 of this Law are mortgaged, the mortgage interest is
created at the time when the mortgage contract becomes valid; if the mortgage
interest is not registered, it shall not be used against a bona fide third
party.
Article 189
Where an enterprise, a self-employed industrial or commercial household, or an
agricultural producer or distributor mortgages movable property specified in
Article 181 of this Law, it shall register with the administration department
for industry and commerce at the place where the domicile of the mortgagor is
located. The mortgage interest shall be created at the time when the mortgage
contract becomes valid; if such interest is not registered, it shall not be
used against a bona fide third party.
Where a mortgage is made in accordance with the
provisions of Article 181 of this Law, it shall not be used against the buyer
who has paid reasonable price and obtained the mortgaged property in the
ordinary course of business operations.
Article
190 If a mortgagor leases the mortgaged
property before the mortgage contract is concluded, the previously established
leasing relation shall not be affected.
If a mortgagor leases the mortgaged property after the creation of the mortgage
interest, the leasing relation may not be used against the registered mortgage
interest.
Article 191
If a mortgagor transfers the 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 in advance be used to
settle the claim secured by the mortgagee or be deposited with a third party.
If the proceeds obtained from the transfer exceed the secured claim, the
balance shall go to the mortgagor; if the proceeds is
insufficient to cover the claim, the uncovered part shall be paid by the
debtor.
The mortgagor may not transfer the mortgaged
property without the consent of the mortgagee during the period of mortgage,
unless the transferee pays off the debts for the mortgagor and thus the
mortgage interest extinguishes.
Article 192 The
mortgage interest may not be separated from the claim to be transferred
independently, or to be used to secure another claim. If the claim is
transferred, the interest of mortgage shall be transferred along with it, unless
otherwise provided for by law or agreed upon by the parties.
Article 193 Where
a mortgagor acts in such a way as to cause depreciation of the mortgaged
property, the mortgagee shall have the right to demand that the mortgagor cease
and desist from such act. Where the value of the mortgaged property
depreciates, the mortgagee shall have the right to demand that the mortgagor
restore the original value of the mortgaged property or provide security
corresponding to the amount of the value reduced. Where a mortgagor fails to
restore the original value of the mortgaged property or provide corresponding
security, the mortgagee shall have the right to demand the debtor to settle the
claim in advance.
Article 194 A
mortgagee may waive his mortgage interest or his place
in the order of mortgage interest. A mortgagee and a mortgagor may, upon
agreement, change the place in the order of the mortgage interest, the amount
of secured claims, etc., provided that such a change, without the written
consent of other mortgagees, shall not have an adverse effect on other
mortgagees.
Where a debtor uses his own property for mortgage,
if a mortgagee waives his mortgage interest or his place in the order of the
mortgage interest or makes changes in respect of his mortgage interest, other
guarantors shall be exempted from the suretyship to
the extent that the mortgagee forfeits his rights and interests in terms of the
priority in being paid off, unless the said guarantors are still committed to
the suretyship.
Article 195 Where
the debtor defaults or the conditions for enforcement of the mortgage interest
thereof, as agreed upon by the parties concerned, arise, the mortgagee may
enter into an agreement with the mortgagor that he be given the priority in
being paid with the money into which the mortgaged property is converted or the
proceeds obtained from auction or sale of the property. If such agreement
undermines the interests of other creditors, they may apply to the people’s
court for cancellation of the agreement within one year from the date they come
to know or should have known the cause for cancellation.
If the mortgagee and mortgagor fail to reach an
agreement on the means of enforcing the mortgage interest, the mortgagee may
apply to the people’s court for auction or sale of the mortgaged property.
The mortgaged property shall be converted into money
or be sold off by referring to its market price.
Article 196 Where
a mortgage interest is created in accordance with the provisions of Article 181
of this Law, the mortgaged property shall be established when one of the
following circumstances arises:
(1) The debts are not paid when they fall due;
(2) The mortgagor is declared bankrupt or is
dissolved;
(3) The conditions for enforcement of the mortgage
interest, as agreed upon by the parties concerned, arise; or
(4) Other circumstances arise which may seriously
affect the enforcement of the claim.
Article 197 If
the mortgaged property is seized by a people’s court according to law because
the debtor defaults or the conditions for enforcement of the interest, as
agreed upon by the parties concerned, arise, the mortgagee shall, from the date
of the seizure, have the right to collect the natural or statutory fruits
accrued from the mortgaged property, except where the mortgagee fails to notify
the person who is obliged to pay the statutory fruits.
The fruits mentioned in the preceding paragraph
shall first be used to pay off the expenses for collecting such fruits.
Article 198
If the proceeds obtained from conversion into money or from auction or sale of
mortgaged property exceed the amount of a claim, the balance shall go to the
mortgagor; and if the proceeds are insufficient to cover the claim, the
uncovered part shall be paid by the debtor.
Article 199 Where
a piece of property is mortgaged to two or more creditors, the proceeds from
auction or sale of the mortgaged property shall be used for liquidation
according to the following provisions:
(1) Where the mortgage interest is registered, the
liquidation shall be made in the order of the registration of the mortgage
interest; if the order of registration is the same, liquidation of the claims
shall be made on a pro rata basis;
(2) The claim secured by a registered mortgage
interest shall be satisfied prior to the unregistered ones; and
(3) Liquidation of unregistered mortgage interests
shall be made on a pro rata basis in respect of the claims.
Article 200 After
the right to the use of land for construction is mortgaged,
the buildings erected thereafter are not mortgaged property. Where the said
land use right is used to satisfy the mortgage interest, the newly-erected
buildings on the land shall be disposed of together with the land use right;
however, the mortgagee shall have no priority in having his claim paid with the
proceeds from the said buildings.
Article 201 Where
the right to land contractual management is mortgaged, as specified in
Subparagraph (3) under the first paragraph of Article 180 of this Law, or the
right to the use of land for construction within the area occupied by the
workshops and other buildings of a town (township) or village enterprise is
mortgaged along with the workshops or other buildings, as specified in Article
183 of this Law, the nature of ownership and the purpose of use of the land may
not be altered without going through the statutory procedure after the
enforcement of the mortgage interests thereon.
Article 202
The mortgagee shall exercise his mortgage interest within the limitation
provided for action of the principal claim; if he fails to do so, the people’s
court shall not provide protection in this respect .
Section
2
Maximum
Mortgage Interest
Article 203 Where
a debtor or a third party provides security for the debts to be incurred
consecutively within a given period of time, if the debtor defaults or the
conditions for enforcement of the mortgage interest, as agreed upon by the
parties concerned, arise, the mortgagee shall have the priority in having his
claims paid with the security to the extent of the maximum amount of the claims.
A claim that exists before the creation of the
maximum mortgage interest may, with consent of the parties, be included in the
claims secured by the maximum amount of mortgage.
Article 204 Where,
before the claims secured by the maximum amount of mortgage are established,
part of the claims is transferred, the maximum amount of the mortgage interest
may not be transferred along, unless otherwise agreed upon by the parties.
Article 205
Before the claims secured by the maximum amount of mortgage are established,
the mortgagee and the mortgagor may alter the term, scope and maximum amount of
the claims through agreement, provided that such alteration shall not have any
adverse effect on the other mortgagees.
Article 206
The claim of the mortgagee is established under one of
the following circumstances:
(1) The agreed term for establishment of the claim
expires;
(2) In the absence of a definitely agreed term for
establishing the claim or the term agreed upon is indefinite, the mortgagee or
the mortgagor requests establishment of the claim after the lapse of two years
calculated from the date of creation of the maximum mortgage interest;
(3) No new claim is likely to be created;
(4) The mortgaged property is sealed up or distrained;
(5) The debtor or the mortgagor is declared bankrupt
or is dissolved; or
(6) Other circumstances provided by law under which
a claim is established.
Article 207 The
maximum mortgage interest shall be governed by the provisions of Section 1 of
this Chapter on general interests acquired through mortgage, apart from the
provisions of this Section.
Chapter XVII
Interest Acquired Through Pledge
Section
1
Interest
Acquired Through Pledge of Movables
Article 208 Where
to guarantee the repayment of debts, the debtor or a third party pledges his
movables to the creditor, if the debtor defaults or the conditions for
enforcement of the interest, as agreed upon by the parties concerned, arise,
the creditor shall be entitled to the priority in having his claim paid with
the pledged movables.
As mentioned in the preceding paragraph, the debtor
or the third party is the pledgor, the creditor is
the pledgee, and the movables delivered are the pledged property.
Article 209
Movables the transfer of which is prohibited by laws or administrative
regulations shall not be pledged.
Article 210 To
create the interest of a pledge, the parties concerned shall conclude a pledge
contract in written form.
A pledge contract generally includes the following
particulars:
(1) the kind and amount of
the claim secured;
(2) the time limit for the
debtor to repay his debts;
(3) the name, quantity,
quality and conditions of the pledged property;
(4) the scope of the
secured interest; and
(5) the time for delivery
of the pledged property.
Article 211
Before the maturity of the debts, the pledgee shall not conclude an agreement
with the pledgor that ownership of the pledged
property go to the pledgee if the debtor defaults.
Article 212
The interest of a pledge is established upon delivery of the pledged property
by the pledgor.
Article 213 The
pledgee shall have the right to collect the fruits accrued from the pledged
property, unless otherwise stipulated in the contract.
The fruits specified in the preceding paragraph
shall first be used to pay off the expenses for collecting the fruits.
Article 214
If, without the consent of the pledgor, the pledgee
uses or disposes of the pledged property during the existence of the pledge
interest, thus causing losses to the pledgor, he shall be liable for compensation.
Article 215
The pledgee has the duty to safekeep the pledged
property. If the pledged property is damaged, destroyed or lost due to improper
keeping, the pledgee shall be liable for compensation.
Where the action of the pledgee will likely cause
damage, destruction or loss of the pledged property, the pledgor
may request the pledgee to deposit the pledged property with a third party, or
to offer to clear his debts in advance and return the pledged property.
Article 216 Where
due to no fault of the pledgee, the pledged property is likely to be so damaged
or destroyed or its value to be depreciated so markedly as to undermine the
rights of the pledgee, the pledgee shall have the right to demand that the pledgor provide an appropriate security. If the pledgor refuses to do so, the pledgee may have the pledged
property auctioned or sold and may, through agreement with the pledgor, use the proceeds therefrom to repay the debts in
advance or deposit the proceeds with a third party.
Article 217
If, during the existence of the interest of a pledge, the pledgee repledges the pledged property to a third party without the
consent of the pledgor, thus causing damage,
destruction or loss of the property, the pledgee shall be liable for
compensation.
Article 218 The
pledgee may waive his interest to the pledge. Where the debtor pledges his own
property and the pledgee waives his interest to the pledge, the other
guarantors may be exempted from suretyship to the
extent that the pledgee forfeits his rights and interests in terms of the
priority in being paid off, unless the guarantors are still committed to the suretyship.
Article 219 Where
the debtor repays the debts or the pledgor pays off
in advance the debts he guaranteed, the pledgee shall return the pledged
property.
If the debtor defaults or the conditions for
enforcement of the interest, as agreed upon by the parties concerned, arise,
the pledgee may conclude an agreement with the pledgor
that the pledged property be converted into money, or he may enjoy the priority
in having his claim paid with the proceeds obtained from auction or sale of the
pledged property.
The pledged property shall be converted into money
or be sold off by referring to its market price.
Article 220 The
pledgor may request the pledgee to enforce his
interest to the pledge in a timely manner at the maturity of the debts. Where
the pledgee fails to do so, the pledgor may request
the people’s court to have the pledged property auctioned or sold.
Where the pledgor requests
the pledgee to enforce his interest to the pledge in a timely manner, the
pledgee slacks in doing so, thus causing losses, he shall be liable for
compensation.
Article 221
If, after the pledged property is converted into money or auctioned or sold,
the proceeds therefrom exceed the amount of the claim, the balance shall go to
the pledgor, and if they are insufficient to cover
the debts, the difference shall be paid by the debtor.
Article 222 The
pledgor and the pledgee may create the maximum pledge
interest by agreement.
Apart from the relevant provisions of this Section,
the provisions in Section 2 of Chapter 16 of this Law on maximum mortgage
interest shall be applicable mutantis mutandis.
Section
2
Interests
Acquired Through Pledge of Rights
Article 223 The
following rights that a debtor or a third party is entitled to dispose of may
be pledged:
(1) bills of exchange, cheques, promissory notes;
(2) bonds, certificates of
deposit;
(3) warehouse receipts,
bills of lading;
(4) portions of funds or
certificates of stocks which are transferable;
(5) proprietary rights
consisted in the intellectual property rights, such as the right to exclusive
use of registered trademarks, the patents and copyrights, which are
transferable;
(6) accounts receivable;
and
(7) other property rights
which may be pledged as provided for by 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 parties concerned shall conclude a contract in written form. The interest
to the pledge is created at the time when the certificate of right is delivered
to the pledgee; if there is no such certificate, the
interest is created at the time when the pledge is registered with the relevant
authority.
Article 225
Where the date of payment or of delivery of goods in respect of a pledged bill
of exchange, cheque, promissory note, bond,
certificate of deposit, warehouse receipt or bill of lading is matured prior to
the date of maturity of the principal claim, the pledgee may accept the payment
or the goods delivered and may conclude an agreement with the pledgor that the payment or the goods accepted be used to
pay the debts in advance or be deposited with a third party.
Article 226 Where
portions of funds or shares are pledged, the parties concerned shall conclude a
contract in written form. Where portions of funds or the shares that are
registered with the securities registration and settlement authority are
pledged, the interest to the pledge is established at the time when the pledge
is registered with the securities registration and settlement authority. Where
other kinds of shares are pledged, the interest to the pledge is established at
the time when the pledge is registered with the administration department for
industry and commerce.
The portions of funds or the shares that are pledged
may not be transferred, unless otherwise agreed upon by the pledgor
and the pledgee. The proceeds the pledgor obtained
from the transfer of the portions of funds or shares shall be used in advance
to pay the debts owed to the pledgee or be deposited with a third party.
Article 227 Where
the proprietary rights consisted in the intellectual property rights, such as
the right to exclusive use of registered trademarks, the patents and
copyrights, are pledged, the parties concerned shall conclude a contract in
written form. The interest to the pledge is perfected at the time when the
pledge is registered with the relevant authority.
If the proprietary rights consisted in the
intellectual property rights are pledged, the pledgor
may not transfer or permit another person to use such rights, unless otherwise
agreed upon by the pledgor and the pledgee through
consultation. The proceeds obtained by the pledgor through
transfer of such rights or through permitting another person to use such rights
shall be used in advance to pay the debts owed to the pledgee or be deposited
with a third party.
Article 228 Where
the accounts receivable are pledged, the parties concerned shall conclude a
contract in written form. The interest to the pledge is created at the time
when the pledge is registered with the credit information service.
The pledged accounts receivable may not be
transferred, unless otherwise agreed upon by the pledgor
and the pledgee through consultation. The proceeds obtained by the pledgor from the transfer of the accounts receivable shall
be used in advance to pay the debts owed to the pledge or be deposited with a
third party.
Article 229
The interests acquired through pledge of rights are governed, apart from by the
provisions of this Section, by those under Section 1 of this Chapter on
interests acquired through pledge.
Chapter XVIII
Lien
Article
230 If a debtor defaults, the creditor may
retain the debtor’s movables which have been legally possessed by the creditor
and shall have the priority in being paid with the said property.
The creditor mentioned in the preceding paragraph is
the lien holder, and the movables in his possession are the retained property.
Article 231 The
movables retained by the creditor fall in the same nexus of legal relationships
with the creditor’s claims, except in the case of a lien between enterprises.
Article 232 The
movables may not be retained as are so stipulated by law or by agreement
between the parties concerned.
Article 233
Where the retained property is dividable, the value of the retained property
shall be equivalent to the amount of the debts owed.
Article 234 The
lien holder shall have the duty to safekeep the
retained property. If the retained property is damaged, destroyed or lost due
to improper keeping, the lien holder shall be liable for compensation.
Article 235 The
lien holder shall have the right to collect the fruits accrued from the
retained property.
The fruits mentioned in the preceding paragraph
shall first be used to pay the expenses for collecting the fruits.
Article 236 The
lien holder and the debtor shall reach an agreement on the time limit for the
debtor to pay the debts after the property is retained. If there is no such
agreement or if the agreement is indefinite, the lien holder shall allow a time
limit of two months or longer for the debtor to pay the debts, except where the
movables are fresh, living or perishable things. If the debtor defaults at the
expiration of the specified time limit, the lien holder may upon agreement with
the debtor have the retained property converted into money, or may enjoy the
priority in having the debts paid with the proceeds from auction or sale of the
property.
The retained property shall be converted into money
or be sold off by referring to its market price.
Article 237 The
debtor may request the lien holder to enforce the right of lien after the
expiration of the time limit for payment of the debts. Where the lien holder
fails to enforce the right, the debtor may request the people’s court to have
the retained property auctioned or sold.
Article
238 If after the retained property is
converted into money, auctioned or sold, the proceeds therefrom exceed the
amount of the claim, the balance shall go to the debtor, and if they are
insufficient to cover the debts, the difference shall be paid by the debtor.
Article 239 Where
a lien is created on the same piece of the movables that has been mortgaged or pledged,
the lien holder shall enjoy the priority in having his debts paid.
Article 240 Where
the lien holder forfeits his possession of the retained property or accepts
other security provided by the debtor, the right of lien shall extinguish.
Part Five
Possession
Chapter
XIX
Possession
Article 241 In
the event of possession arising from contractual relationship, the use of the immovables or movables in question, the benefits therefrom
and breach of duty shall be subject to the terms of the contract. If there are
no such terms in the contract or such terms are indefinite, they shall be
governed by the provisions of relevant laws.
Article 242 Where
a possessor causes damage to the immovables or
movables in the use of it, the possessor, if he is a mala fidei
one, shall be liable for compensation.
Article 243 Where
the immovables or movables come to be possessed by
another person, the obligee may request the person to
return them and the fruits therefrom; however, the obligee
shall compensate the possessor, if he is a bona fide one, for his expenses
necessitated for maintaining the property.
Article 244 Where
the immovables or movables in the possession of
another person is damaged, or destroyed or lost and the obligee
requests compensation, the possessor shall return the insurance monies,
compensation payment, indemnities, etc. to the obligee.
If the losses of the obligee are not fully covered
thereby, the possessor, if he is a mala fidei one,
shall, in addition, compensate for the uncovered part.
Article 245
Where the immovables or movables in a person’s
possession are encroached upon, the person shall have the right to request the
return of the original property. In the event of trespass to the possession of
another, the possessor shall have the right to request elimination of such
trespass or hazard. If damage is caused by encroachment or the trespass, the
possessor shall have the right to request compensation.
The right of claim to the return of the original
property shall extinguish, if the possessor fails to exercise it within one
year from the date of the encroachment.
Supplementary Provisions
Article 246
Before the scope, authority and measures for unified registration of immovable
property are stipulated by laws or administrative regulations, they may be
stipulated by local regulations according to the relevant provisions of this
Law.
Article 247 This
Law shall go into effect as of October 1, 2007