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2021 | OriginalPaper | Chapter

Legal Framework for Real Estate Investment in China

Author : Qian Ma

Published in: Understanding China’s Real Estate Markets

Publisher: Springer International Publishing

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Abstract

While the past few years witnessed muted foreign investor activity in Chinese real estate due to governmental restrictions and fierce competition from domestic capital, a change is now underway. China’s enormous population and differing residential requirements clearly distinguish it from other countries. Before investors jump into the fray of the Chinese market, it is important to know the unique rules and regulations regarding the acquisition of Chinese property. In this chapter, the reader will learn about the legal framework for investors and the differences that characterize the Chinese real estate market. This chapter is based on the recent relaxation of restrictions on foreign investment in the Chinese real estate market.

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previous chapter Hong Kong: A Review of Its Land System, Real Estate Market, and Related Matters

next chapter Real Estate Valuation in China

Constitution of the People’s Republic of China.

Article 13 of the Constitution: The state protects the right of citizens to own lawfully earned income, savings, houses and other lawful property. The state protects the right of citizens to inherit private property by law.

Property Law of the People’s Republic of China, adopted at the Fifth of the Tenth National People’s Congress of the Peoples Republic of China on March 16, 2007.

Article 39 of the Property Law: The owner shall have the right to possess, use, seek profits from and dispose of the real or movable property in accordance with the laws.

Article 70 of the Property Law: 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 117 of the Property Law: A usufructuary right holder shall, according to law, have the right to possess, use and benefit from the immovables or movables owned by another.

Article 120 of the Property Law: In exercising his rights, the usufructuary right holder 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 usufructuary right holder.

Article 156 of the Property Law: 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.

Article 9 of the Property Law: 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.

Article 187 of the Property Law: 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 10 of the Property Law: Registration of the immovables shall be handled by the registration authority at the place where they are located.

Article 228 of the Property Law: 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.

Article 149 of the Property Law: The term of the right to use land for construction for dwelling houses shall be automatically renewed upon expiration.

The term of the right to use land for construction not for dwelling houses shall be renewed according to legal provisions. Where there are stipulations about the ownership of houses and other real properties on the aforesaid land, such stipulations shall prevail; if there is no such stipulation or the stipulations are not explicit, the ownership shall be determined according to the provisions in the laws and administrative regulations.

Article 41 of Interim Regulations of the People’s Republic of China Concerning the Assignment and Transfer of the Right to the Use of the State-owned Land in the Urban Areas: Upon expiration of the term of use, the land user may apply for its renewal. Where such a renewal is necessary, a new contract shall be signed in accordance with the provisions in Chapter II of these regulations, and the land user shall pay the fee for the assignment of the right to the use of the land and undertake registration.

Article 6 of the Property Law: 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 10 of the Property Law: 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 in respect of the immovables. The scope of unified registration, the registration authority and the measures for registration shall be stipulated by law and administrative regulations.

Article 3 of Provisional Regulations for the Proportion of Registered Capital to Total Amount of Investment of Joint Ventures Using Chinese and Foreign Investment: If the total investment of a Sino-foreign joint venture is between USD 10 million and USD 30 million (including USD 30 million), its registered capital shall account for at least 2/5 of the total investment.

If the total investment of a Sino-foreign joint venture is more than USD 30 million, its registered capital shall account for at least 1/3 of the total investment.

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Title: Legal Framework for Real Estate Investment in China
Author: Qian Ma
Publisher: Springer International Publishing
Book: Understanding China’s Real Estate Markets
Print ISBN: 978-3-030-71747-6

Electronic ISBN: 978-3-030-71748-3

Copyright Year: 2021
DOI: https://doi.org/10.1007/978-3-030-71748-3_7

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