Real Right Law of the People's Republic of China
Contents
Part I General Rules
Chapter I Basic Principles
Chapter II Creation, Alternation, Alienation and Termination of Real Right
Section 1 Reality Registration
Section 2 Chattel Delivery
Section 3 Other Rules
Chapter III Protection of Real Right
Part II Ownership
Chapter IV General Rules
Chapter V State Ownership, Collective Ownership and Private Ownership
Chapter VI Owners' Partitioned Ownership of Building Areas
Chapter VII Neighboring Relationship
Chapter VIII Common Ownership
Chapter IX Special Rules on Acquiring Ownership
Part III Usufructuary Rights
Chapter X General Rules
Chapter XI Right to the Contracted Management of Land
Chapter XII Right to Use Construction Land
Chapter XIII Right to Use House Sites
Chapter XIV Easement
Part IV Real Rights for Security
Chapter XV General Rules
Chapter XVI Mortgage Right
Section 1 General Mortgage Right
Section 2 Mortgage Right at Maximum Amount
Chapter XVII Pledge Right
Section 1 Chattel Pledge
Section 2 Right Pledge
Chapter XVIII Lien
Part V Possession
Chapter XIX Possession
Supplementary Rules
Part I General Rules
Chapter I Basic Principles
Article 1 In accordance with the Constitution Law, the present Law is enacted with a view to maintaining the basic economic system of the state, protecting the socialist market economic order, clearly defining the attribution of the res, bringing into play the utilities of the res and safeguarding the real right of the right holder.
Article 2 The civil relationships incurred from the attribution and utilization of the res shall be governed by the present Law.
The term "res" as mentioned in the present Law means realties and chattels. Where it is prescribed in any provision that certain right shall be taken as an object of real right, such provision shall be applicable.
The term "real right" as mentioned in the present Law means the exclusive right of direct control over a specific res enjoyed by the holder in accordance with law, including ownership, usufractuary right and real rights for security.
Article 3 In the primary phase of socialism, the state adheres to the basic economic system with the public ownership playing a dominant role and diverse forms of ownership developing side by side.
The public economy shall be consolidated and developed by the state, and the development of the nonpublic economy shall be encouraged, supported and guided.
The socialist market economy system shall be practiced by the state as well as the equal legal status and development rights of all market subjects shall be protected.
Article 4 The real right of the state, collective, individual or any other right holder shall be protected by law, and may not be damaged by any entity or individual.
Article 5 The varieties and contents of real rights shall be prescribed by law.
Article 6 The creation, alteration, alienation or termination of the real right of a realty shall be subject to registration in accordance with law. The creation or alienation of the real right of a chattel shall be delivered in accordance with law.
Article 7 One shall, when acquiring or exercising a real right, comply with the law, respect social morals and may not infringe upon the public interests or the lawful rights and interests of any other person.
Article 8 In case there exists any other special provision in respect of real right in any other law, such special provision shall prevail.
Chapter II Creation, Alteration, Alienation and Termination of Real Right
Section 1 Reality Registration
Article 9 Until it is registered in accordance with law, the creation, alteration, alienation or termination of the real right of a realty shall come into effect; unless it is otherwise prescribed by any law, it shall have no effect if it is not registered in accordance with law.
As regards the ownership of the natural resources owned by the state in accordance with law, the registration is not required.
Article 10 The registration of a realty shall be handled by the registration organ at the locality of the realty.
A uniform registration system over realties shall be practiced by the state. The scope, organ and measures of uniform registration shall be specified by the related laws and administrative regulations.
Article 11 In light of the different registration items, an applicant shall, when applying for the registration of a realty, provide the ownership certificate of the realty and such necessary materials as the location and area of the realty.
Article 12 A registration organ shall perform the duties as follows:
(1) to examine the ownership certificate and other necessary materials as provided by the applicant;
(2) to inquire the applicant about the registration items concerned;
(3) to register the related items in accordance with the facts and in a timely manner; and
(4) other duties as provided for in any law or administrative regulation.
In case the related situation of the realty under application for registration needs further proving, the registration organ may request the applicant to provide supplementary materials and conduct on-the-spot inspection where necessary.
Article 13 No registration organ may commit any of the behaviors as follows:
(1) to ask for an evaluation of a realty;
(2) to repeatedly register registration in the name of annual inspection; or
(3) other behaviors conducted beyond its scope of registration duties.
Article 14 As regards the creation, alteration, alienation or termination of the real right of a realty, it shall go into effect since the date when it is recorded in the realty register in case the registration thereof is required by law.
Article 15 As regards a contract entered into by the related parties concerned on the creation, alteration, alienation or termination of the real right of a realty, it shall go into effect upon the conclusion of the contract, unless it is otherwise prescribed by any law; and the validity of the contract is not affected, whether the real right has been registered or not.
Article 16 The realty register shall be the basis for deciding the ownership and contents of a realty and shall be under the management of the registration organ.
Article 17 The realty ownership certificate shall be the evidence for the holder's ownership of a realty. The items recorded in the realty ownership certificate shall accord with those recorded in the realty register; unless it is proved that there is anything wrong in the realty register, the one recorded therein shall prevail in the case of any inconsistence.
Article 18 Any right holder or interested party may file an application for consulting or copying the registration materials, and the registration organ may not reject.
Article 19 In case any right holder or interested party holds that there is anything wrong in any item recorded in the realty register, it/he may apply for a correction of the registration. The registration organ shall revise the registration accordingly, in case the holder recorded in the realty register agrees to revise the registration in written form or there is evidence to prove that the registration is wrong.
The interested party may apply for dissidence registration, in case the holder recorded in the realty register does not agree to the alteration. Where the registration organ grants the dissidence registration but the applicant fails to lodge an action within 15 days as of the date of dissidence registration, the dissidence registration shall lose its effect. In case the dissidence registration is improper and bring into damages to the right holder, the holder may require the applicant to compensate for damages.
Article 20 In case the related parties entered into a purchase agreement on a premise or the real right of any other realty, they may apply for advance notice registration to the registration organ so as to ensure the realization of the real right in the future. Without the consent of the holder in the advance notice registration, any disposal of the realty, after the advance notice registration, may not produce effect of real right.
In case the obligee's right is terminated after the advance notice registration is made, or the application for the registration of the realty is not filed within 3 months as of the date when it can be registered, the advance notice registration shall lose its effect.
Article 21 In case any related party provides false materials for applying for registration and causes damages to any other person, it/he shall assume the liability for compensation.
In case any registration organ causes damages to any other person by virtue of any mistake in registration, it shall assume the liability for compensation. The registration organ may, after making the compensation, recover the amount from the person who causes the registration mistake.
Article 22 Realty registration fees shall be charged on each piece, and may not be charged on the basis of the size, volume or certain proportion of the realty's value. The concrete charging rates shall be formulated by the related departments in the State Council in collaboration with the competent pricing department.
Section 2 Chattel Delivery
Article 23 Unless it is otherwise prescribed by any law, the creation or alienation of the real right of a chattel shall come into effect upon delivery.
Article 24 The creation, alteration, alienation or termination of the real right of any vessel, aircraft or motor vehicle and so on may not challenge any bona fide third party if it is not registered.
Article 25 In case the right holder has legally possessed the chattel prior to the establishment or alienation of a chattel's real right, the real right shall come into effect upon the effectiveness of the legal act.
Article 26 In case a third party has legally possessed the chattel prior to the establishment or alienation of a chattel's real right, the person assuming the obligation of delivery may, instead of delivery, alien the right to request the third party to return the original object.
Article 27 In case both parties agree to let the alienator continuously possess the chattel when the real right of a chattel is alienated, the real right shall go into effect upon the effectiveness of the agreement.
Section 3 Other Rules
Article 28 In case the creation, alteration, alienation or termination of a real right is resulted from a legal document of the people's court or arbitration committee or a requisition decision of the people's government, etc, the real right shall come into effect upon the effectiveness of the legal document or the requisition decision of the people's government.
Article 29 In case real right is acquired through inheritance or bequest, it shall go into effect as of the beginning time of the inheritance or bequest.
Article 30 In case a real right is created or terminated as a result of such factual behaviors as the legal construction or premise demolition, it shall come into effect upon the accomplishment of the factual behavior.
Article 31 As regards a real right of realty enjoyed according to the provisions of Articles 28 through 30 of the present Law, any disposal thereof may not produce effect of real right until it is registered as required by law.
Chapter III Protection of Real Right
Article 32 Where a real right is damaged, the right holder may settle the problem by means of conciliation, mediation or arbitration, etc.
Article 33 Where any dispute over the ownership or content of real right arises, the interested parties may require the confirmation of the right.
Article 34 Where a realty or chattel is under an unauthorized possession, the right holder may require the returning of the original object.
Article 35 In case a real right is under obstruction or may be obstructed, the right holder may require the removing of the impediment or the termination of the danger.
Article 36 In case a realty or chattel is damaged, the right holder may require the repairing, remaking, changing or the restoration of the original state.
Article 37 In case the infringement upon a real right causes losses to the right holder, the right holder may require the compensation for the losses or the assuming of any other civil liability.
Article 38 The ways for protecting real right as prescribed in the present Law may apply either independently or jointly in light of the specific situation of an injury of real right.
In addition to assuming civil liabilities, any entity or individual infringing upon a real right shall assume the administrative liabilities where it/he violates any provision on administrative regulation; in case any crime is established, it/he shall assume the criminal liabilities.
Part II Ownership
Chapter IV General Rules
Article 39 The owner of a realty or chattel is entitled to possess, utilize, seek profits from and dispose of the realty or chattel in accordance with law.
Article 40 The owner of a realty or chattel is entitled to establish a usufructuary right or real right for security over the realty or chattel. The holder of usufructuary right or the holder of real right for security may, when exercising the right, not injure the owner's rights and interests.
Article 41 As regards a realty or chattel that is exclusively owned by the state as prescribed by law, its ownership may not be acquired by any entity or individual.
Article 42 In order to meet the demands of public interests, it is allowed to requisition lands owned collectively, premises owned by entities and individuals or other realties according to the statutory power limit and procedures.
When requisitioning land owned collectively, it is required to, in accordance with law and in full amount, pay land compensation fees, placement subsidies, compensations for the above-ground fixtures of the lands and seedlings and other fees, arrange for social security fees for the farmers with land requisitioned, guarantee their livelihood and protect their lawful rights and interests.
When requisitioning the premises owned by entities and individuals or other realties, it is required to compensate for demolishment and relocation in accordance with law and protect the lawful rights and interests of the owners of the requisitioned realties; when requisitioning the individuals' residential houses, it is required to guarantee the housing conditions of the owners of the requisitioned houses.
The compensation fees for requisition and other fees may not be embezzled, misappropriated, privately shared, detained or delayed in the payment of by any entity or individual.
Article 43 Special protections are provided by the state for farm lands, the conversion of farm lands into construction lands is strictly restricted and the aggregate quantity of construction lands is under control. No one may requisition any land owned collectively with violation of the statutory power limit and procedures.
Article 44 For meeting needs of emergent dangers or disasters, it is allowed for one to use the realties or chattels owned by entities and individuals according to the statutory power limit and procedures. Such realties or chattels shall, after the emergent use, be returned to the owners. In case any realty or chattel owned by any entity or individual is used or damaged or lost after being used, corresponding compensation shall be made.
Chapter V State Ownership, Collective Ownership and Private Ownership
Article 45 As regards the properties that shall be owned by the state as provided for by law, they shall be in the ownership of the state, that is, owned by all the people.
The State Council shall exercise the ownership of state-owned properties on behalf of the state; in case there is any otherwise provision in any law, such provision shall prevail.
Article 46 Mineral deposits, waters and sea areas shall be in the ownership of the state.
Article 47 Urban lands shall be in the ownership of the state. As regards lands in the rural areas and suburban areas that shall be owned by the state as prescribed by law, they shall be in the ownership of the state.
Article 48 Such natural resources as forests, mountains, grasslands, waste lands and tidal flats shall be in the ownership of the state, except for those that shall be in the ownership of collective as provided for by law.
Article 49 As regards the wildlife resources that shall be owned by the state as provisioned by law, they shall be in the ownership of the state.
Article 50 Radio frequency spectrum resources shall be in the ownership of the state.
Article 51 As regards the cultural relics that shall be owned by the state as provisioned by law, they shall be in the ownership of the state.
Article 52 National defense assets shall be in the ownership of the state.
As regards such infrastructures as railways, highways, electric power facilities, telecommunication facilities, and petrol and gas pipelines that shall be owned by the state as provisioned by law, they shall be in the ownership of the state.
Article 53 State organs have the power, in accordance with the laws and the relevant provisions of the State Council, to possess, utilize and dispose of any realty or chattel directly controlled by them.
Article 54 The public institutions held by the state have the power to possess, utilize, as well as, according to the laws and the relevant provisions of the State Council, seek profits from and dispose of any realty or chattel directly controlled by them.
Article 55 As regards the enterprises set up with the funds invested in by the state, the State Council and the local people's governments shall perform and enjoy the contributor's duties as well as rights and interests on behalf of the state in accordance with the relevant laws and administrative regulations.
Article 56 The state-owned properties shall be protected by law, and no entity or individual may encroach, plunder, privately distribute, hold back or damage them.
Article 57 The institutions and working personnel thereof in charge of performing the duties of managing and supervising state-owned assets shall, according to law, strengthen the management and supervision of state-owned assets so as to promote the value maintenance and appreciation prevent the losses thereof; in case any entity or individual causes any loss of state-owned assets by misusing authority or neglecting duty, it/he shall assume legal liabilities in accordance with law.
In case any entity or individual, in the process of enterprise restructuring, merger, division or affiliated transactions, causes losses of state-owned assets by way of transferring at a low price, conspiring to distribute them secretly, providing guarantee with them without authorization or any other way with violation of the provisions on the management of state-owned assets, it/he shall assume legal liabilities in accordance with law.
Article 58 The collectively-owned realties and chattels shall contain:
(1) Lands, forests, mountains, grasslands, wastelands and tidal flats that shall be in the ownership of collective as provided for by law;
(2) Buildings, production facilities, farmland, and water conservancy facilities that are in the ownership of collective;
(3) Facilities for education, science, culture, sanitation and sports, etc that are in the ownership of collective;
(4) Other realties and chattels that are in the ownership of collective.
Article 59 The realties and chattels that are in the ownership of a farmers' collective shall be collectively owned by all the members of this collective.
The following issues shall be determined by the members of the collective according to the statutory procedures:
(1) land contracting plan and whether to contract out a land to an entity or individual not included in the collective;
(2) adjustment of the contracted lands among the right holders of the contracted management of land;
(3) methods for using and distributing such fees as land compensation fees;
(4) the alteration of ownership or any other related issue of an enterprise set up with the funds invested in by the collective; and
(5) other issues as provided for by any law.
Article 60 As regards any collectively-owned land, forest, mountain, grassland, wasteland or tidal flat, the ownership thereof shall be exercised according to the provisions as follows:
(1) In case it is owned by a farmers' collective of a village, a collective economic organization or the villagers' committee of the village shall exercise the ownership on behalf of the collective;
(2) In case it is owned by two farmers' collectives or more, all the collective economic organizations or villagers' groups of the village shall exercise the ownership on behalf of the collective; and
(3) In case it is owned by a farmers' collective of a town, a collective economic organization of the town shall exercise the ownership on behalf of the collective.
Article 61 As regards any realty or chattel owned by an urban collective, this urban collective has the rights to possess, use, seek profits from and dispose of it according to the related laws and administrative regulations.
Article 62 The collective economic organization, villager's committee or villagers' group shall, in accordance with the relevant laws, administrative regulations, articles of association and village regulations and villagers' pledges, publicize the situation of the properties owned by a collective to the members of the collective.
Article 63 Collectively-owned properties shall be protected by law, and any entity or individual may not encroach, plunder, privately distribute, hold back or destroy them.
Where the legitimate rights and interests of any member of the collective are infringed upon by any decision made by a collective economic organization, villagers' committee or the principle thereof, such member may require the people's court to cancel the decision.
Article 64 An individual has the right to own his legal income, premise, household goods, production instruments, raw materials as well as other realties and chattels.
Article 65 The legal savings, investments and the proceeds therefrom of an individual shall be protected by law.
An individual's right of inheritance as well as other legal rights and interests shall be protected by the state in accordance with law.
Article 66 An individual's legal properties shall be protected by law, any entity or individual may not encroach, plunder or destroy them.
Article 67 The state, any collective or individual may invest to set up a limited liability company, a company limited by shares or any other form of enterprise. In case the state, a collective or an individual invest the realties or chattels it owns in an enterprise, the contributor shall, in accordance with the agreement or on the basis of his proportion of investment, enjoy rights such as obtaining asset returns, making important decisions and selecting operators and managers and perform their duties.
Article 68 In accordance with the laws, administrative regulations and its articles of association, An enterprise legal person is entitled to possess, utilize, seek profits from and dispose of any realty or chattel it owns.
As regards the rights over the realties and chattels owned by a legal person other than an enterprise legal person, the provisions of the related laws, administrative regulations and its articles of associations shall apply.
Article 69 The realties and chattels owned by social organizations in accordance with law shall be protected by law.
Chapter VI Owners' Partitioned Ownership of Building Areas
Article 70 As regards such exclusive parts within the buildings as the residential houses or the houses used for business purposes, an owner shall enjoy the ownership thereof, while as regards the common parts other than the exclusive parts, the owner shall have common ownership and the common management right thereof.
Article 71 An owner is entitled to possess utilize, seek profits from and dispose of the exclusive parts of the building. Any owner may not endanger the safety of the building or infringe upon the lawful rights and interests of any other owner when exercising his or its rights.
Article 72 An owner enjoys the rights and assumes the obligations over the common parts other than the exclusive parts of the building, and may not reject performing the obligations under the pretext of abandoning rights.
In case an owner alienates his residential house or the house used for business purposes within the building, the common ownership and the common management right enjoyed by him/her over the common parts shall be alienated at the same time.
Article 73 The roads within the building zone, except for the public roads of cities and towns, shall be commonly owned by the owners. The green lands within the building area, except for the public green lands of cities and towns or those which are definitely ascribed to individuals, shall be commonly owned by all the owners. The other public places, common facilities and houses used for realty services within the building zone shall be commonly owned by all the owners.
Article 74 The parking places and garages within the building area planned for parking cars shall be used to meet the needs of the owners above all else.
The ownership of the parking places and garages shall be agreed upon by the related parties in the manners of selling, complementary using or leasing, etc.
The parking places, which occupy the roads or other fields commonly owned by all owners, shall be in the common ownership of all the owners.
Article 75 The owners may set up an owners' assembly and vote for an owners' committee.
For the establishment of the owners' assembly and the vote of the owners' committee, the related departments under the local people's governments shall provide guidance and assistance.
Article 76 The following matters shall be commonly determined by all owners:
(1) to formulate and revise the rules of procedure for the owners' assembly;
(2) to formulate and revise the stipulations on managing the building and affiliated facilities thereof;
(3) to vote for the owners' committee or alter the members thereof;
(4) to hire or fire the realty service enterprise or any other manager;
(5) to raise or use the funds for maintaining the building and affiliated facilities thereof;
(6) to rebuild the building or any of its affiliated facilities;
(7) other important matters on the common ownership and the common management right.
For making a decision on matters prescribed in Item (5) or (6) of the preceding paragraph, the consent of the 2/3 or more of the total owners with exclusive parts accounting for 2/3 or more of the total area of the building shall be obtained. For making a decision on any other issue prescribed in the preceding paragraph, the consent of half of the total owners with exclusive parts accounting for half of the total area of the building shall be obtained.
Article 77 Any owner may not alter a residential house into a house used for business purposes with violation of any law, regulation or management stipulation. An owner shall, when changing a residential house into a house used for business purposes, obtain the consent of the interested owners, in addition to complying with the laws, regulations and management stipulations.
Article 78 Decisions made by the owners' assembly or the owners' committee are binding to each owner.
In case the legitimate rights and interests of any owner has been injured by any decision made by the owners' assembly or the owners' committee, the injured owner may require the people's court to cancel the decision.
Article 79 The funds for maintaining a building and affiliated facilities thereof shall be commonly owned by the owners of the building. The funds may, upon the codetermination of the owners, be used for maintaining such common parts as elevators and water tanks. The circumstance about the raise and use of the maintenance funds shall be released to the owners.
Article 80 As regards such matters as the expenses allocation and the proceeds distribution of a building or any of its affiliated facilities, in case there exists any stipulation for these, such stipulation shall apply; in the case of no stipulation or unclear stipulation, these matters shall be determined in accordance with the proportion of each owner's exclusive parts to the total area of the building.
Article 81 The owners of a building may manage the building and affiliated facilities thereof by themselves or they may entrust a realty service enterprise or any other manager to conduct the management.
As regards the realty service enterprise or any other manager hired by the construction entity, the owners are entitled to alter it in accordance with law.
Article 82 The realty service enterprise or any other manager shall, upon the strength of the owners' entrustment, manage the building and affiliated facilities thereof within the building area and accept the owners' supervision.
Article 83 The owners shall comply with the laws, regulations and management stipulations.
As regards any act infringing upon the lawful rights and interests of other persons, such as discarding wastes at will, discharging atmospheric pollutants and noise, breeding animals with violation of the related regulations, illegally building shelters, occupying passages or rejecting paying realty management fees, etc, the owners' assembly and the owners' committee have the right, in accordance with the relevant laws, regulations and management stipulations, to request the actor to stop the infringing act, terminate the danger, remove the impediments and make compensation for the losses. Where any owner's legitimate rights and interests are infringed upon, he/she may lodge an action to the people's court in accordance with law.
Chapter VII Neighboring Relationship
Article 84 A neighboring right holder of a realty shall, in accordance with the principles of facilitating production and livelihood, solidarity and mutual aid, as well as fairness and equity, handle the neighboring relationship in a correct manner.
Article 85 In case there exists any legal provision on the disposal of neighboring relationship, such provision shall apply; in the case of no such provision,, the neighboring relationship shall be disposed of in light of the local customs.
Article 86 The holder of a realty shall provide necessary convenience for the neighboring right holders in terms of the use of water and drainage.
As regards the utilization of natural running water, the neighboring right holders of a realty shall rationally distribute it. The natural current direction shall be respected when draining natural running water.
Article 87 Necessary conveniences shall be provided by the right holder of a realty where a neighboring right holder has to use his land by virtue of passage or for any other reason.
Article 88 In case the right holder of a realty has to use a neighboring land or building by virtue of the construction or repairing of a building, or the laying of wires, cables, water pipes, heating pipelines or fuel gas pipelines, etc, necessary convenience shall be provided by the right holder of such land or building.
Article 89 When constructing a building, no entity or individual may block the ventilation, lighting or sunshine of any neighboring building with violation of the relevant engineering construction standards of the state.
Article 90 No holder of realty may discard solid wastes or discharge such harmful substances as atmospheric pollutants, water pollutants, noise, light and magnetic radiation with violation of the related provisions of the state.
Article 91 The right holder of the realty may not, when excavating a land, constructing a building, laying a pipeline or installing an equipment, endanger the safety of any neighboring realty.
Article 92 Where the right holder of a realty has to use a neighboring realty by virtue of using water, drainage, passage or laying pipelines, etc, he shall make more efforts to avoid causing any damage to the right holder of the neighboring realty; He shall make corresponding compensations in case any damage is caused.
Chapter VIII Common Ownership
Article 93 A realty or chattel may be commonly owned by two or more entities or individuals. Common ownership contains several co-ownership and joint ownership.
Article 94 As regards a commonly owned realty or chattel, a several co-owner shall, on the basis of his proportion, enjoy the ownership of the realty or chattel.
Article 95 As regards a commonly owned realty or chattel, a joint owner shall, on a common basis, enjoy the ownership of the realty or chattel.
Article 96 The co-owners shall manage the commonly owned realty or chattel in accordance with stipulation; in the case of no or unclear stipulation,, all co-owners have the right and obligation of management.
Article 97 As regards the disposal or heavy repair of a commonly owned realty or chattel, unless it is stipulated otherwise by the co-owners, the consent of the several co-owners holding 2/3 shares or all joint owners shall be obtained.
Article 98 As regards the management expenses or any other liabilities of a commonly owned res, in case there exists any stipulation on these, such stipulation shall apply; in the case of no or unclear stipulation, the expenses shall be assumed by the several co-owners in accordance with their respective shares or commonly assumed by all joint owners.
Article 99 Where the co-owners of a commonly owned realty or chattel has stipulated that it is not allowed to partition the realty or chattel so as to maintain the relationship of common ownership, such stipulation shall apply; but where any co-owner has certain significant reasons for partitioning the realty or chattel, he may request the partition; in the case of no or unclear stipulation, a several co-owner may request the partition at any time, and a joint owner may request the partition where the basis for the common ownership disappears or he has certain significant reasons. In case any damage is caused by the partition causes to any other person, the corresponding compensation shall be made.
Article 100 The co-owners of a commonly owned realty or chattel may decide on through negotiation the way of partition. The real object shall be partitioned in case no agreement is achieved and the realty or chattel may be partitioned without impacting its value; the partition shall be executed by distributing the purchase price obtained from converting its value into money, the auction or selling off the realty or chattel in case it is difficult to partition it or its value would be affected because of the partition.
Where the realty or chattel, which is obtained from the partition of a commonly owned realty or chattel by a co-owner, has any flaw, the other co-owners shall assume the losses together.
Article 101 A several co-owner may alienate his share of the commonly owned realty or chattel. And the other several co-owners have the preemptive right for purchase on an equal footing.
Article 102 As regards an obligee's right or a debt generated from a commonly owned realty or chattel, unless it is otherwise prescribed by any law or the third party is aware of the fact that the co-owner does not have the relationship of joint and several creditor's right or debt, a co-owner shall enjoy joint and several creditor's right or undertake joint and several debt in terms of external relationship. In terms of the internal relationship among the co-owners, unless it is otherwise stipulated by the co-owners, a co-owner shall enjoy the creditor's right or undertake the debt on the basis of his own share, while joint owners shall enjoy the creditor's right or undertake the debt on a common basis. In case any several co-owner overpays his share of the debt, he/she has the right to recover the overpaid amount from the other co-owners.
Article 103 In case the co-owners does not stipulate whether the commonly owned realty or chattel is under several co-ownership or joint ownership, or if the stipulation is unclear, unless there is a family relationship among the co-owners, it shall be considered as a several co-ownership.
Article 104 A several co-owner's share of a commonly owned realty or chattel shall be decided on according to his contribution amount in the case of no or unclear stipulation; each several co-owner shall enjoy an equal share where it is impossible to determine the contribution amount.
Article 105 In case two or more entities or individuals commonly own the usufractuary right or real right for security of a realty or chattel, the provisions in this Chapter shall be applicable by reference.
Chapter IX Special Provisions on Acquiring Ownership
Article 106 In case a person unauthorized to dispose a realty or chattel alienates the realty or chattel to an assignee, the owner is entitled to recover the realty or chattel. The assignee shall obtain the ownership of the realty or chattel if meeting all of the following conditions, unless it is otherwise prescribed by law:
(1) to accept the realty or chattel in good faith;
(2) to purchase the realty or chattel at a reasonable price; and
(3) in case registration is required by law, the alienated realty or chattel shall have been registered, while in case registration is not required, the delivery thereof shall have been accomplished.
In case, according to the preceding paragraph, an assignee obtains the ownership of a realty or chattel, the original owner may require the person unauthorized to dispose of the realty or chattel to compensate for his losses.
In case a related party obtains any other form of real right in good faith, the preceding two paragraphs shall apply by reference.
Article 107 The owner or any other holder has the right to recover a lost property. In case the lost property is possessed by any other person through alienation, the owner has the right to require the person unauthorized to dispose of the property to compensate for damages, or, ask the assignee to return the original property within 2 years as of the date when he knows who is the assignee. But in case the assignee purchases the lost property through auction or from a qualified operator, the holder shall, when requiring the returning of the original property, pay the assignee the amount that the assignee has paid for purchasing the property. After paying the amount, the owner has the right to recover the amount from the person unauthorized to dispose of the property.
Article 108 After a bona fide assignee obtains a realty, the original rights on the realty shall be terminated, unless the bona fide assignee has already been or ought to be aware of the right when the transfer is made.
Article 109 A lost-and-found object shall be returned to the right holder. The person finding such object shall inform the right holder to claim the object or hand it over to such related departments as the public security department in time.
Article 110 After receiving a lost-and-found object, the related department shall notify the right holder to claim the object in a timely manner in case it knows who is the right holder; it shall publish an announcement on the claiming of the lost property in a timely manner in case it does not know.
Article 111 The person who finds the object shall properly keep it before it is handed over to the related department, and the related department also shall do so before it is claimed by the right holder. Where the object is injured or lost deliberately or for gross negligence, the personnel concerned shall assume the civil liabilities.
Article 112 The right holder of the object, when obtaining a lost-and-found object, shall pay the person who finds the object or the related department such necessary expenses as the cost for safekeeping the object.
Where a right holder promises to offering a reward for finding the object, he shall, when claiming the object, perform the obligation of granting the reward.
Where the person who finds the object misappropriates the lost object, he/she shall be deprived of the right to ask for paying the expenses he/she has paid for safekeeping the object or require the holder to perform the obligation as promised.
Article 113 In case a lost-and-found object fails to be claimed within 6 months as of the date when the claiming announcement is published, it shall be owned by the state.
Article 114 As regards the finding of a drifter or the discovery of an object buried underground or a hidden property, the relevant provisions on the finding of a lost-and-found property shall apply by analogy. Where there is any other provision in such laws as the law concerning the protection of cultural relics, such provisions shall prevail.
Article 115 Unless it is otherwise stipulated by the parties concerned, the accessory res shall be alienated together with the alienation of the principal res.
Article 116 Natural fruits shall be enjoyed by the owner; it shall be obtained by the holder of usufructuary right where there are both owner and holder of usufructuary right. In case there are otherwise stipulations between by the parties concerned, such stipulation shall apply.
Statutory fruits shall be obtained by the parties concerned in accordance with stipulations if any; in the case of no or unclear stipulations, it shall be obtained in light of the practices of trading.
Part III Usufructuary Right
Chapter X General Rules
Article 117 As regards the realty or chattel owned by someone else, a usufructuary right holder is entitled to possess, use and seek proceeds from it in accordance with law.
Article 118 As regards the natural resources that are owned by the state or that are owned by the state but used by the collective as well as those that are owned by the collective as prescribed by law, an entity or individual may possess, use and seek proceeds from them.
Article 119 Unless it is otherwise prescribed by any law, the state practices the system of paid use of natural resources.
Article 120 When exercising right, a usufructuary right holder shall comply with the provisions on protecting, reasonably exploring and utilizing resources as provided for in the laws. When the usufructuary right holder exercises rights, the owner may not intervene in.
Article 121 Where the usufructuary right is terminated or its exercise is affected for reasons of expropriation or requisition, the usufructuary right holder has the right to obtain corresponding compensations in accordance with Articles 42 and 44 of the present Law.
Article 122 The lawfully obtained right to use sea areas shall be under the protection of law.
Article 123 The mineral prospecting right, the mining right, the water intake right and the right to use water areas or tidal flats for breeding or fishery shall be under the protection of law.
Chapter XI Right to the Contracted Management of Land
Article 124 Such a dual operation system, under which centralized operation and decentralized operation are combined on the basis of household contracted management, shall be practiced by any rural economic organization.
As regards the cultivated land, wood land, grassland, and other land for agricultural uses that are owned by farmers' collectives as well as those that are owned by the state and used by farmers' collectives, the system of land contracted management shall be adopted.
Article 125 The holder of the right to the contracted management of land has the right to possess, utilize and seek proceeds from the cultivated land, wood land and grassland, etc. under the contracted management thereof, and is entitled to such agricultural production activities as the planting, forestry, stockbreeding, etc.
Article 126 The contractual term of cultivated land shall be 30 years. The contractual term of grassland shall be 30 up to 50 years. The contractual term of wood land shall be 30 up to 70 years. The contractual term of special forest land may, upon approval of the forestry administrative department under the State Council, be extended.
After the contractual term as referred to in the preceding paragraph expires, the holder of the right to the contracted management of land may, according to the relevant provisions of the state, contract continuously.
Article 127 The right to the contracted management of land shall be established since the contract thereon goes into effect.
The local people's government at the country level or above shall issue a certificate of the right to the contracted management of land, a forestry right certificate or a grassland-use right certificate to the holder, register it in the brochure so as to confirm such rights.
Article 128 The holder of the right to the contracted management of land has the right, in accordance with the provisions in the law on the contracting of rural land, to circulate his/her such right. The circulated term may not be more than the remnant term of the original contract. Any contracted land may not be used for non-agricultural constructions without approval.
Article 129 In case the right to the contracted management of land is circulated by means of exchange or transfer, where the parties concerned require for the registration of such circulation, an application for the alteration registration thereof shall be filed to the local people's government at the county level or above. Without such registration, neither party may challenge any third party with good faith.
Article 130 The contract-letting party may not readjust the contracted land within the duration of a contract.
In case it is necessary to readjust the cultivated land or grassland as contracted by virtue of such especial events as natural calamities that have materially injured the contracted land, a readjustment may, in accordance with the legal provisions in the law on the contracting of rural land and other related laws, be carried out.
Article 131 The contract-letting party may not take back the contracted land within the term of the contract. In case there exists any otherwise provision in the law on the contracting of rural land or any other law, such provision shall prevail.
Article 132 In case a contracted land is expropriated, the holder of the right to the contracted management of such land has the right to obtain corresponding compensations in accordance with Paragraph 2 of Article 42 in the present Law.
Article 133 As regards the barren land or other rural land that is contracted through bid invitation, auction, or open negotiation, etc, the right to the contracted management thereof may, according to the law on the contracting of rural land and other laws as well the related regulations of the State Council, be circulated by means of alienation, lease, equity contribution, or mortgage, etc.
Article 134 In case the contracted management is conducted over any state-owned rural land, the related provisions in the present Law shall apply by analogy.
Chapter XII Right to Use Construction Land
Article 135 The holder of the right to use construction land has the right to possess, use and seek proceeds from the land owned by the state, and shall be entitled to the construction of buildings, fixtures and their auxiliary facilities by making use of such land.
Article 136 The right to use construction land may be created separately on the surface of or above or under the land. The newly-established one may not injure the usufructuary right that has already been established.
Article 137 The right to use construction land may be created through transfer or allotment, etc.
As regards the land used for purposes of industry, business, entertainment or commercial dwelling houses, etc. as well as the land with two or more intended users, the alienation thereof shall adopt such means as auction, bid invitation or any other public bidding method.
It is severely restrained to create the right to use construction land through allotment. For adopting such means, the provisions on land uses in the laws and administrative regulations shall be observed.
Article 138 In case the right to use construction land is created through auction, bid invitation, or agreement, etc., the related parties shall conclude a written contract on the transfer of such right.
In general, a contract on transfer of the right to use construction land shall contain the items as follows:
(1) name and domicile of the parties concerned;
(2) location and acreage, etc. of the land;
(3) space to be covered by buildings, fixtures and affiliated facilities thereof;
(4) use purposes;
(5) use term;
(6) payment methods for allotment fees and other fees; and
(7) dispute settlement method.
Article 139 For establishing the right to use construction land, an application for registering such right shall be submitted to the registration organ. The right to use construction land shall be established as of the accomplishment of such registration. A certificate on the right to use construction land shall be issued by the registration organ to the holder of the right to use construction land.
Article 140 The holder of the right to use construction land shall reasonably use the land and may not alter the use purpose. In case the purpose of land use needs to be altered, the approval of the relevant administrative department shall be obtained.
Article 141 The holder of the right to use construction land shall, according to the legal provisions and the contract, pay transfer fees and other fees.
Article 142 As regards the buildings, fixtures and their affiliated facilities built by the holder of the right to use construction land, the holder shall enjoy the ownership thereof, unless it is otherwise proved by any contrary evidence.
Article 143 Unless it is otherwise prescribed by any law, the holder of the right to use construction land has the right to alienate, exchange, use as equity contributions, endow or mortgage the right to use construction land.
Article 144 For alienating, exchanging, using as equity contribution, endowing, or mortgaging the right to use construction land, the parties shall enter into a corresponding written contract. The parties concerned may make stipulations on the contractual term, but which may not exceed the remnant term as stipulated in the contract on transfer of the right to use construction land.
Article 145 For alienating, exchanging, using as equity contribution, endowing, or mortgaging the right to use construction land, an application for alteration registration shall be submitted to the registration organ.
Article 146 When alienating, exchanging, using as equity contribution, endowing, or mortgaging the right to use construction land, the buildings, fixtures and affiliated facilities thereof on such land shall be disposed of at the same time.
Article 147 When alienating, exchanging, using as equity contribution, endowing, or mortgaging the buildings, fixtures and affiliated facilities thereof, the right to use construction land covered by the aforesaid buildings, fixtures and affiliated facilities thereof shall be disposed of at the same time.
Article 148 Before the term of the right to use construction land expires, where it is necessary to take back the land in advance by virtue of public interests, compensations shall, according to Article 42 of this Law, be given to the houses and other realties on such land, and corresponding land transfer fees shall be returned back.
Article 149 When the term of the right to use construction land for dwelling houses expires, it shall be renewed automatically.
As regards the term of the right to use construction land not for dwelling houses, the renewing shall be subject to legal provisions. In case there exists any stipulation on the ownership of houses and other realties on the aforesaid land, such stipulation shall prevail; in the case of no or unclear such stipulation, the ownership shall be determined in accordance with the provisions in the laws and administrative regulations.
Article 150 Where the right to use construction land is terminated, the transferor shall go through deregistration formalities in time, and the certificate on the right to use construction land shall be taken back by the registration organ.
Article 151 Where a piece of collectively-owned land is used as construction land, it shall be handled in accordance with the law on land administration and other related laws.
Chapter XIII Right to Use House Sites
Article 152 The holder of the right to use house sites has the right to possess and use land owned by a collective, and to construct residential houses and affiliated facilities thereof by utilizing such land.
Article 153 For acquiring, exercising and alienating the right to use house sites, the law on land administration, other related laws and the related provisions of the state shall apply.
Article 154 The right to use house site shall be terminated where a house site is terminated by virtue of any natural disaster, etc.. A villager losing a house site shall be allotted a house site again.
Article 155 The alteration or cancellation registration shall be made in time in the case of the alienation or termination of a registered right to use house sites.
Chapter XIV Easement
Article 156 An easement holder shall, according to the contract, be entitled to utilize the realty of someone else so as to enhance the efficiency of his own realty.
The term "realty of someone else" as referred to in the preceding Paragraph shall be the servient tenement, and "one's own realty" shall be the dominant tenement.
Article 157 For establishing an easement, the parties concerned shall enter into an written easement contract.
In general, an easement contract shall contain the items as follows:
(1) name and domicile of the related parties;
(2) locations of servient tenement and dominant tenement;
(3) purposes of use and methods;
(4) use term;
(5) fees and payment method; and
(6) dispute settlement method.
Article 158 The easement shall be established since the easement contract comes into effect. Where the related parties considers that the registration thereof is necessary, they may apply to the registration organ for easement registration; otherwise, they may not challenge any third party with good faith.
Article 159 The holder of servient tenement shall allow an easement holder to use his/its land in accordance with the contract, and may not hamper the latter from exercising the right.
Article 160 An easement holder shall, according to the purposes and methods as stipulated in the contract, use the servient tenement, and make efforts to reduce the real right restrictions on the holder of the servient tenement.
Article 161 The easement term shall be stipulated by the related parties, however, it can not be longer than the remnant term of such usufructuary rights as the right to the contracted management of land, the right to use construction land, etc.
Article 162 As regards the easement enjoyed or assumed by the owner of the land, where the right to the contracted management of land or the right to use house site is created, holders of such rights may continuously enjoy or assume such established easement.
Article 163 Where any such usufructuary right as the right to the contracted management of land, the right to use house site, etc on the land has already been established, the land owner may, without consent of the aforesaid usufructuary right holder, not establish any easement.
Article 164 The easement may not be transferred alone. Unless it is otherwise stipulated by the contract, where any such usufructuary right as the right to the contracted management of land, the right to use construction land, the right to use house site, etc is alienated, the easement shall be alienated at the same time.
Article 165 The easement may not be mortgaged alone. Where the right to the contracted management of land or the right to use construction land, etc. is mortgaged, when such mortgage is realized, the easement shall be alienated simultaneously.
Article 166 When the dominant tenement as well as the right to the contracted management of land, the right to use construction land or the right to use house site thereon are partially alienated, the transferee shall enjoy the easement simultaneously in case the easement is involved in the alienated part.
Article 167 When the servient tenement as well as the right to the contracted management of land, the right to use construction land thereon are partially alienated, the easement shall be binding on the alienatee if the easement is involved in alienated part.
Article 168 The holder of the servient tenement has the right to rescind the easement contract in case an easement holder is under any of the following circumstances, and the easement shall be terminated:
(1) to go against the legal provisions or the contract, or misuse the easement; or
(2) as regards the paid use of servient tenement, upon expiration of the stipulated time limit for payment, to fail to pay fees within a reasonable period for two times after being urged to do so.
Article 169 For changing, alienating or eliminating the registered easement, the alteration or cancellation registration shall be go through in a timely manner.
Part IV Real Rights for Security
Chapter XV General Rules
Article 170 Where the obligor fails to pay its due debts or any circumstance for realizing real rights for security as stipulated by the parties concerned happens, the holder of real rights for security shall enjoy preferred payments from the property for security, except that it is otherwise provided for by any law.
Article 171 According to the present Law or any other law, an obligee may, in such civil activities as loans or sales, establish the real rights for security in case the security is required for ensuring the realization of its/his credits.
Where a third party provides security to the obligee for an obligor, countersecurity from the obligor may be required. The countersecurity shall be pursuant to the present Law and other related laws.
Article 172 For establishing real rights for security, a security contract shall be entered into in accordance with the present Law and the other related laws. A security contract shall be a subordinate one to the principal contract. Unless it is otherwise prescribed by any law, the security contract shall be invalid when the principal contract is nullified.
After a security contract is confirmed to be nullified, the obligor, the security provider and the obligee that has faults shall, in light of their respective faults, undertake corresponding civil liabilities.
Article 173 The security range shall cover principal obligee's rights and their interests, default fines, damages as well as expenses for keeping the property for security and for realizing the real rights for security. In case there are otherwise stipulations between the related parties, such stipulations shall prevail.
Article 174 In case, during the security term, the property for security is damaged, lost or expropriated, the security holder may seek preferred payments from the insurance money, damages or indemnities, etc. incurred therefrom. If the term for performing the obligee's rights as secured has not expired, such insurance money, damages or indemnities, etc. may be submitted to a competent authority for keeping.
Article 175 As regards any security provided by a third party, where the obligee, without obtaining the written consent of the third party, allows the obligor to transfer all or part of its obligations, the security provider does not have to undertake corresponding security liabilities any more.
Article 176 As regards a secured credit involving both physical and personal security, where the obligor fails to pay its due debts or any circumstance as stipulated by the parties concerned for realizing the property for security happens, the obligee shall realize the obligee's rights as stipulated; in the case of no or unclear such stipulation, and where the obligor provides his/its own property for the security, the obligee's rights shall be realized firstly by the security in property; and if the security by property is provided by a third party, the obligee may, by the physical security or through requiring the guarantor to assume the guaranty liability, realize the obligee's rights. The third party has the right,, after undertaking the security liability, to recover payments from the obligor.
Article 177 Real rights for security may be terminated under any of the following circumstances:
(1) The principal obligee's rights are terminated;
(2) The real rights for security have been realized;
(3) The obligee waives the real rights for security; or
(4) Any other circumstance under which the real rights for security will be terminated as provided for by any law.
Article 178 Where any provision in the Security Law conflicts with that of the present Law, the latter shall prevail.
Chapter XVI Mortgage Right
Section 1 General Mortgage Right
Article 179 In order to ensure the payment of debts, an obligor or a third party mortgages his/its properties to the obligee without transferring the possession of such properties, and when the obligor fails to pay due debts or any circumstance as stipulated by the parties concerned for realizing the mortgage right happens, the obligee has the right to seek preferred payments from such properties.
The "obligor" or "third party" as referred to in the preceding paragraph shall be the mortgagor, the "obligee" shall be the mortgagee, while the "properties for security" shall be the mortgaged properties.
Article 180 As regards the following properties that the obligor or the third party has the right to dispose of, mortgage may be established thereon :
(1) buildings and other objects fixed to land;
(2) the right to use construction land;
(3) the right to contracted management of such land as barren land, etc. that is acquired through bid invitation, auction and public consultation, etc.;
(4) manufacturing facilities, raw materials, semi-manufactured goods and finished products;
(5) buildings, vessels and aircraft under construction;
(6) means of communications and transportation; and
(7) other properties not prohibited from being mortgaged by any law or administrative regulation.
All the properties listed in the previous paragraph may be mortgaged together by a mortgagor.
Article 181 An enterprise, individual industrial and commercial household or agricultural production operator may, upon the written agreement between the parties concerned, mortgage the existing manufacturing facilities, raw materials, semi-manufactured goods and finished products or those to be owned in future, and when the obligor fails to pay its/his due debts or any circumstance as stipulated by the parties concerned for realizing the right to mortgage arises, the obligee has the right to seek preferred payments from the chattels existing at the time of the realization of the right to mortgage.
Article 182 For mortgaging building, the right to use construction land within the area of this building shall be mortgaged together. When mortgaging the right to use construction land, all the buildings on such land shall be mortgaged together.
Where a mortgagor fails to mortgage the properties in accordance with the provisions in the preceding paragraph, the properties not mortgaged shall be treated as having been mortgaged together.
Article 183 As regards the right to use construction land of a township or village enterprise, mortgages may not be alone established thereon. Where the plant of a township and village enterprise is mortgaged, the right to use construction land within the area of such plant shall be mortgaged together.
Article 184 Any of the following properties may not be mortgaged:
(1) ownership of land;
(2) the right to use such collectively-owned land as cultivated land, house sites, land and hilly land allotted for private use, etc, except for those mortgagable as prescribed by any law;
(3) educational, medical, healthy and other public welfare facilities of such institutions and social groups with the aim of benefiting the public as schools, kindergartens, hospitals, etc;
(4) properties with unclear or controversial ownership or use rights;
(5) properties legally confiscated, seized or controlled; or
(6) other properties that cannot be mortgaged as prescribed by any law or administrative regulation.
Article 185 For establishing a mortgage right, the parties concerned shall enter into a written mortgage contract.
In general, a mortgage contract shall contain the items as follows:
(1) the variety and sum of the secured obligee's rights;
(2) the time limit to pay debts by the obligor;
(3) the name, amount, quality, situation, location, attribution of ownership or use right of the mortgaged property; and
(4) the security scope.
Article 186 The mortgagee and the mortgagor may, prior to the expiration of the time limit for paying debts, not stipulate that the ownership of the mortgaged property will attributed to the obligee when the obligor fails to pay its due debts.
Article 187 In case properties as provided for in Items (1), (2) and (3) of Paragraph 1 of Article 180 in the present Law or a building under construction in Item (5) are mortgaged, the mortgage registration shall be gone through, and such mortgage right shall be established as of the date of registration.
Article 188 In case properties as provided for in Items (4) or (6) of Paragraph 1 of Article 180 of the present Law or a vessel or aircraft under construction as provided for in Item (5) are mortgaged, the mortgage right shall be established since the mortgage contract comes into effect; without the registration, the mortgage right may not challenge any third party with good faith.
Article 189 As regards the mortgage of the chattels prescribed in Article 181 of the present Law provided by an enterprise, individual industrial and commercial household or agricultural production operator, registration shall be handled by the administrative department for industry and commerce at the locality of the mortgagor. The mortgage right shall be established since the mortgage contract comes into effect; without the registration, such mortgage right may not challenge any third party with good faith.
The mortgage as provided for in Article 181 of the present Law may not challenge the buyer which has paid a reasonable price and obtained the mortgaged property in normal business operations.
Article 190 Where the mortgaged property has been leased prior to the conclusion of the mortgage contract, the original leasehold relations may not be impacted by the mortgage right. Where it is leased after the establishment of the mortgage right, the leasehold relation may be challenge the registered mortgage right.
Article 191 Where a mortgagor alienates, upon consent of the mortgagee, the mortgaged property during the mortgage term, the money generated from such alienation shall be used to pay off debts to the mortgagee in advance or be submitted to a competent authority for keeping. The value exceeding the obligee's rights shall be attributed to the mortgagor, and the gap shall be paid off by the obligor.
Without the mortgagee's consent, a mortgagor may not alienate the mortgaged property during the mortgage term,, unless the transferee pays off the debts on behalf of the mortgagor so as to terminate the mortgage right.
Article 192 The mortgage right may not be alienated alone, or be used as a security for other obligee's rights by departing from the obligee's rights. Unless it is otherwise prescribed by any law or is otherwise stipulated by the parties concerned, when the obligee's rights are alienated, the mortgage right thereof shall be alienated concurrently.
Article 193 Where any act of the mortgagor may sufficiently cause the reduction of the value of the mortgaged property, the mortgagee has the right to require the mortgagor to cease such act. Where the value of the mortgaged property has been lowered, the mortgagee has the right to require the mortgagor to recover the value, or provide a security equal to the reduced value. Where the mortgagor neither recovers the value nor provides any security, the mortgagee has the right to require the obligor to pay off the debts in advance.
Article 194 A mortgagee may abandon the mortgage right or the sequence thereof. A mortgagee and a mortgagor may, through negotiations, alter the sequence of the mortgage right or the amount of secured obligee's rights, etc., however, such alteration may not produce unfavorable influences on any other mortgagee without the written consent thereof.
Where an obligor creates the mortgage by its/his own properties, and the mortgagee abandons the mortgage right or the sequence thereof or alter such mortgage right, other security providers shall, within the scope for which the said mortgagee has lost the right to seek preferred payments, be exempted from the security liability, unless any of other security providers promises to provide the security all the same.
Article 195 When the obligor fails to pay its/his due debts or any circumstance as stipulated by the parties concerned for realizing the right to mortgage arises, the mortgagee may, upon negotiation with the mortgagor, convert the mortgaged property into money or seek preferred payments from the money generated from the auction or sale of the mortgaged property. Where the said agreement has injured the interests of any other obligee, the obligee may, within one year after he/it has known or should know the cause for cancellation, require the people's court to cancel such agreement.
Where no agreement on the means of realizing the mortgage right is achieved between the mortgagee and the mortgagor, the mortgagee may require the people's court to auction or sell off the mortgaged property.
When converting into money or selling off the mortgaged property, its marker price shall be referred to.
Article 196 As regards the mortgage created in accordance with Article 181 of the present Law, the mortgaged property shall be determined when any of the following circumstances arises:
(1) Upon expiration of the time limit for paying debts, the obligee's rights have not been realized;
(2) The mortgagor has been declared bankrupt or has been canceled;
(3) Other circumstances as stipulated by the parties concerned for realizing the mortgage right; or
(4) Any other circumstance seriously impacting the realization of obligee's rights.
Article 197 When the obligor fails to pay its/his due debts or any circumstance as stipulated by the parties concerned for realizing the mortgage right arises, and the mortgaged property is thus seized by the people's court in accordance with law, the mortgagee has the right to collect natural or statutory fruits of the mortgaged property as of the date of seizure, unless the mortgagee has failed to inform the subject liable to pay off statutory fruits.
As regards the "fruits" as referred to in the preceding paragraph, they shall be firstly used for paying the collection expenses thereof.
Article 198 The value exceeding the obligee's rights shall be attributed to the mortgagor, and the gap shall be paid off by the obligor, after the mortgaged property has been converted into money, auctioned or sold off.
Article 199 In case a same property is mortgaged to two or more obligees concurrently, the money generated from the auction or sale of the mortgaged property shall be used for paying debts in light of the prescriptions as follows:
(1) In case all the mortgage rights to have been registered, the payments shall be made according to the registration sequence; and where the sequence is the same, the payments shall be made on the basis of the proportion of obligee's rights;
(2) The registered mortgage right shall be cleared off prior to the unregistered one; and
(3) In case no mortgage right has been registered, the payments shall be made on basis of the proportion of obligee's rights.
Article 200 The buildings newly constructed on the land after the mortgage of the right to use construction land may not belong to the mortgaged properties. Such newly-constructed buildings can be disposed of together with the disposal of the aforesaid right to use construction land so as to realize the mortgage right, however, the mortgagee has no right to seek preferred payments from the money generated from the disposal of these newly-constructed buildings.
Article 201 As regards the mortgage of the right to the contracted management of land as provided for in Item (3) of Paragraph 1 of Article 180 of the present Law or the right to use construction land occupied by the plant or any other building of a township or village enterprise as prescribed in Article 183 of the present Law, after such mortgage right is realized, without completing the statutory procedures, the nature of land ownership or land use may not be altered.
Article 202 A mortgagee shall, within the limitation of action for the principal obligee's rights, exercise the mortgage right, otherwise, such mortgage right will not be protected by the people's court.
Section 1I Mortgage Right at Maximum Amount
Article 203 For ensuring the payment of debts, an obligor or third party may provide mortgage security to the obligee for the obligee's rights that will continuously happen within a certain term, and when the obligor fails to pay its/his due debts or any circumstance as stipulated by the parties concerned for realizing the mortgage right happens, the mortgagee has the right to seek preferred payments from the security properties within the maximum amount of obligee's rights.
The obligee's rights existing prior to the establishment of the mortgage right at maximum amount may, upon the consent of the parties concerned, be incorporated into the scope of obligee's rights under the mortgage security at maximum amount.
Article 204 Unless it is otherwise stipulated by the parties concerned, in case part of obligee's rights are transferred prior to the establishment of the mortgage security at maximum amount, the mortgage right at maximum amount may not be transferred.
Article 205 Prior to the determination of the obligee's rights under the mortgage security at maximum amount, the mortgagee and the mortgagor may, upon agreement, alter the term for the determination of the obligee's rights, the scope of obligee's rights or the maximum amount of obligee's rights, however, such alteration may not cause any unfavorable influence to any other mortgagee.
Article 206 The mortgagee's obligee's rights shall be determined, if any of the following circumstances occurs,:
(1) The stipulated term for the determination of the obligee's rights expires;
(2) In case there is no stipulation on such term or the related stipulations are not explicit, and where the mortgagee or the mortgagor requires determine the obligee's rights after two years as of the date for the establishment of the mortgage right at maximum amount;
(3) no new obligee's right may happen;
(4) The mortgaged property is sealed up or seized;
(5) The obligor or the mortgagor is declared bankrupt or is revoked; or
(6) Any other circumstance as prescribed by any other law for determining the obligee's rights arises.
Article 207 The mortgage right at maximum amount shall be governed by, in addition to the provisions in this Section, the provisions on general mortgage right as provided for in Section 1 of this Chapter.
Chapter XVII Pledge Right
Section 1 Chattel Pledge
Article 208 For the security of the payment of debts，an obligor or a third party may pledge his (its) chattels to the obligee for occupation, and when the obligor fails to pay due debts or any circumstance for realizing the pledge right as stipulated by the parties happens, the obligee has the right to seek preferred payments from the pledged chattels.
The "debtor" or "third party" as referred to in the preceding paragraph shall be the pledger, the "obligee" shall be the pledgee, and the "chattels" as delivered shall be the pledged property.
Article 209 The chattels，which are forbidden from being pledged by any law or administrative regulation， may not be pledged.
Article 210 For establishing the pledge right, the parties concerned shall enter into a contract on pledge right in written form.
In general， a contract on pledge right shall contain the following items:
(1) the variety and amount of the principal obligee's rights;
(2) the time limit for the obligor to pay off debts;
(3) the name, amount, quality and condition of the pledge;
(4) the scope of security; and
(5) the time for the deliver of pledged properties.
Article 211 The pledgee and the pledger may not, prior to the time limit for paying debts expires， stipulate that the ownership of pledged properties be attributed to the obligee when the obligor fails to pay due debts.
Article 212 The pledge right shall be established after the pledgee has delivered the pledged properties.
Article 213 Unless it is otherwise stipulated in the contract, a pledgee has the right to obtain the fruits of the pledged properties.
The "fruits" as referred to in the preceding paragraph shall be firstly used for paying the expenses for collecting the fruits.
Article 214 Where a pledgee, without consent of the pledger, illegally uses or disposes of the pledged properties within the duration of the pledge right, and thus damages are caused to the pledger, he/it shall make compensations.
Article 215 A pledgee shall be obliged to properly keep pledged properties; and where pledged properties are damaged or lost by virtue of improper keeping, the pledgee shall make compensations.
Where pledged properties may be damaged or lost by act of the pledgee, the pledger may ask for the pledgee to submit them to a competent authority for keeping or require pay debts in advance and take back them.
Article 216 Where any cause not attributable to t the pledge' fault may result in the destruction of the pledged properties or an obvious decrease of the value of the pledge, and which is sufficient to damage the pledgee's rights, the pledgee has the right to require the pledger to provide corresponding security. Where the pledger refuses to do so, the pledgee may auction or sell off the pledged properties, and may, by negotiating with the pledger, seek preferred payments for the obligee's rights in advance with the money generated from such auction or sell-off, or submit the said money to a competent authority for keeping.
Article 217 Where a pledgee transfers, without consent of the pledger, the pledge within the duration of the pledge right, and thus destroy or loss are caused to the pledged properties, he/it shall make compensations to the pledger.
Article 218 A pledgee may abandon the pledge right. Where an obligor provide the pledge right by his/its own properties, and the pledgee abandons the pledge right, unless any of other security providers promises to provide the security all the same, other security providers' security liability will be exempted within the scope for which the pledgee has lost the right to seek preferred payments.
Article 219 Where the obligor has paid off the debts or the pledger has fulfilled the secured obligee's rights in advance, the pledgee shall return the pledged properties.
Where an obligor fails to pay off its due debts or any circumstance for realizing the pledge right as stipulated by the parties concerned happens, the pledgee may, by negotiating with the pledger, convert the pledge into money or seek preferred payments from the money generated from the auction or sell-off of the pledged properties.
When converting the pledged properties into money or selling off them, their market price shall be referred to.
Article 220 A pledger may, upon expiration of the time limit for paying debts, request the pledgee to exercise the pledge right in a timely manner; if the pledgee fails to do so, the pledger may ask for the people's court to auction or sell off the pledged properties.
Where a pledger has requested the pledgee to exercise the pledge right in a timely manner, but the pledgee is lazy to do so and thus damages are caused, the pledgee shall make compensations.
Article 221 After pledged properties are converted into money, auctioned or sold off, the value exceeding the obligee's rights shall be attributed to the pledger, and the gap shall be paid off by the obligor.
Article 222 The pledger and the pledgee may, upon negotiation, set up the pledge right of maximum amount.
The pledge right of maximum amount shall be governed by, in addition to the related provisions in this Section, the provisions on mortgage right at maximum amount prescribed in Section 1I of Chapter 16 of the present Law by reference.
Section 1I Right Pledge
Article 223 Pledge may be established on any of the following rights which an obligor or third party has the right to dispose of:
(1) money orders, checks, and cashier's checks;
(2) bonds and deposit receipts;
(3) warehouse receipts and lading bills;
(4) transferable fund units and stock rights;
(5) such transferable property rights in intellectual property as exclusive trademark rights, patent rights, copyrights, etc;
(6) account receivables; or
(7) other property rights that can be pledged as prescribed by any law or administrative regulation.
Article 224 The parties concerned shall conclude a written contract for the pledge of a money order, check, cashier's check, securities, deposit receipt, warehouse receipt or bill of lading. The pledge right shall be established after the deliver of the title certificate of the pledge to the pledgee. In case there is no title certificate, the pledge right shall be established after the related department has handled the registration of the pledge.
Article 225 The pledgee may make redemption or pick up the goods, and may, by negotiating with the pledger, seek preferred payments in advance with the redeemed money or the picked up goods, or submit the said money or goods to a competent authority for keeping，in case the date of redemption or delivery of the money order, check, cashier's check, bonds, deposit receipt, warehouse receipt or lading bill of is prior to the deadline of principal obligee's rights.
Article 226 The parties concerned shall enter into a written contract for the pledge of fund units or stock rights. As regards the pledge of fund units or the stock rights that are registered in the securities depository and clearing institution, the pledge right shall be established after the securities depository and clearing institution has handled the registration of the pledge. As regards the pledge of other stock rights, the pledge right shall be established after the administrations for industry and commerce has handled the registration of the pledge.
After the fund units or stock rights have been pledged, unless it is otherwise agreed to by the pledger and the pledgee upon negotiations， they may not be alienated. As regards the money incurred from the transfer of fund units or stock rights， the pledger shall fulfill the obligee's rights to the pledgee in advance with it, or submit it to a competent authority for keeping.
Article 227 As regards the pledge such property rights in the intellectual property as registered trademark rights, patent rights, copyrights，etc, the parties concerned shall enter into a written contract, and the pledge right shall be established after the related competent authority has handled the registration of the pledge.
After the property rights in the intellectual property have been pledged, unless it is otherwise agreed to between the pledger and the pledgee upon negotiations， the pledger may not alienate the pledge or permit anyone else to use it. As regards the money incurred from the alienation of the pledged intellectual property or the permission of anyone else to use it， the pledger shall use it to fulfill the obligee's rights in advance, or submit it to a competent authority for keeping.
Article 228 As regards the pledge of receivables, the parties concerned shall enter into a written contract, and the pledge right shall be established after the related credit rating institution has handled the registration of the pledge.
After the receivables have been pledged, unless it is otherwise agreed on by the pledger and the pledgee upon negotiations， the pledger may not alienate the pledged receivables. As regards money incurred form the alienation of accounts receivable， the pledger shall use it to fulfill the obligee's rights in advance, or submit it to a competent authority for keeping.
Article 229 The pledge of rights shall be governed by， in addition to the provisions prescribed in this Section， the provisions in Section 1 of this Chapter on the pledge of chattels.
Chapter XVIII Lien
Article 230 Where an obligor fails to pay off its due debts, the obligee may take lien of the chattels that are owned by the obligor and lawfully occupied by the obligee, and has the right to seek preferred payments from such chattels.
The "obligee" as referred to in the preceding Paragraph shall be the lienor, and the occupied chattels shall be the property under lien.
Article 231 The chattels taken as lien by the obligee and the obligee's rights shall fall into a same legal relationship, except for the lien between enterprises.
Article 232 As regards chattels of which no lien may be taken as prescribed by law or stipulated by the parties concerned, lien may not be taken of them.
Article 233 Where a property under lien is a divisible object, its value shall be equal to the amount of debts.
Article 234 A lienor shall assume the obligation to properly keep the property under lien, and shall make compensations in case the property under lien is damaged or lost by virtue of improper safekeeping.
Article 235 A lienor has the right to obtain the fruits generated from the property under lien.
The "fruits" as referred to in the preceding paragraph shall be firstly used for the payments of the expenses for collecting the fruits.
Article 236 A lienor shall, after the property is taken as lien, stipulate with the obligor the term for the fulfillment of the obligee's rights; and in the case of no or unclear stipulation, two months or more shall be given to the obligor for fulfilling the obligee's rights, except for such chattels that are not easy to be kept as fresh goods, perishable goods, etc.. Where the obligor fails to fulfill within the time limit, the lienor may convert the property under lien into money by negotiating with the obligor, or seek preferred payments from the money generated from the auction or sell-off the property under lien.
When the property under lien is converted into money or sold off, its market price should be referred to.
Article 237 An obligor may, upon expiration of the time limit for fulfilling the obligee's rights, require the lienor to exercise the lien; and where the lienor fails to do so, the obligor may ask for the people's court to auction or sell off the property under lien.
Article 238 The obligor shall after the property under lien is converted into money, auctioned or sold off, enjoy the ownership of the value exceeding the obligee's rights or make up shall be attributed to the gap.
Article 239 The lienor has the right to seek preferred payments in case the right to mortgage or the right of pledge has been established on a chattel before it is taken as lien.
Article 240 The lien shall perish in case a lienor losses the possession of the property under lien or accepts other security separately provided by the obligor.
Part V Possession
Chapter XIX Possession
Article 241 In case the possession occurs on the basis of a contractual relationship, the related stipulations in the contract shall be applicable to the use, proceedings and default liability of the realty or chattel concerned; and the relevant legal provisions shall apply if there is no such stipulation in the contract or the stipulations are not clear.
Article 242 Where a possessor causes infringes to the realty or chattel under his (its) possession when using them, it/he shall make compensations if being malicious.
Article 243 Where a realty or chattel is possessed by a possessor, the holder may ask for the return of original object and fruits thereof, but necessary expenses for the maintenance of the realty or chattel paid by the bona fide possessor shall be paid thereto.
Article 244 Where a realty or chattel under possession is damaged or lost, the possessor shall return the insurance money, damages or indemnities for the said destruction or loss to the holder if the holder requires compensations; and a malicious possessor shall make compensations in case the impairment to the holder has not been sufficiently made up.
Article 245 Where a realty or chattel under possession is encroached on, the possessor has the right to require the return of the original object; where any act impairs the possession, the possessor has the right to request the termination of impairment or danger; and where any damage is caused by virtue of encroachment or interference, the possessor has the right to require compensations.
The claim of a possessor for returning the original object shall perish, if the possessor fails to exercise it within one year as of the date of encroachment.
Supplementary Rules
Article 246 A local regulation may, before any law or administrative regulation prescribes the scope, organ and measures for uniform registration of realties, provide for related matters in accordance with the related provisions in the present Law.
Article 247 The present Law shall enter into force as of October 1, 2007. |
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