China's New Property Law, Part I -- Introduction
At the recently completed San Francisco seminar on Chinese real estate, Steve highlighted the provisions in China's New Property Law relevant to foreign investors in China real estate. Rather than seek to recreate that talk with my inadequate notes, I will instead, through a series of posts, put forth a paper on China's New Property Law Steve wrote for the seminar.
This paper seeks to provide a summary overview of the new law, beyond just those provisions directly relevant to foreign investors in China real estate. However, because this new law is so sweeping and so important, it would be difficult to argue any of it is irrelevant to someone planning to invest in China real property.
Because the material is so dense and legalistic, I will be presenting it in parts. Today's post is simply an introduction to the new Property Law and a short explanation of its purpose and overall scope. Tomorrow, we will get into some of its specifics.
I. INTRODUCTION
On March 16, 2007, the National People's Congress of the PRC adopted the New Property Law (wuquan fa , literally: "Law of the Rights in Things"). For the first time in the legal history of the PRC, this law provides for basic ownership rights in immovables (real property) and movables (personal property). Since individual property rights are the foundation of any market economy, the promulgation of a full Property Law is significant. For businesses and persons engaged in real property investment in China, the law is of fundamental importance. In providing for absolute ownership rights for private individuals and businesses, the Property Law marks a major change in the rights of both Chinese citizens and foreign investors. This law is set to go into effect on October 1, 2007.
The Property Law is quite difficult to understand. There are three reasons for this.
The first and most significant reason is that the Property Law is based on civil law models, primarily Chapter 3 of the German Civil Code. The Law also draws heavily on the Swiss and Japanese Civil Codes. Its fundamental principles differ significantly from the U.S. and British common law based real property system. In addition, the civil method of exposition is quite unfamiliar to most civil law practitioners. The structure and method tends only to make sense to those familiar with the German and Japanese codes.
Second, understanding of the Property Law is further complicated because it incorporates many provisions intended to deal with unique Chinese characteristics that would never be mentioned in a pure, German civil law type code, including those provisions meant to address the Chinese government's monopoly on land ownership and those dealing with prohibitions on illegal land transfers and theft of government property.
Third, the Property Law was a hotly debated law, opposed by many elements of Chinese society. It is therefore intentionally vague on many important issues. This vagueness was the price paid to allow any form of Property Law to be adopted. The drafters frankly admit that if all the critical issues concerning property rights in China had been resolved in the Property Law, the law would never have been adopted. These issues are explicitly left for later resolution.
The Law is divided into Five Parts, 19 Divisions and 247 Sections. I will introduce the law division by division and explain the most significant features. The Property Law covers both immovables (real property) and movables (personal property), but I will limit my discussion only to the Divisions of the Law concerning real property.
http://www.chinalawblog.com/cgi-bin/mt/mt-t.cgi/1928
» China's New Property Law Just Became Effective China Law Blog
Though somewhat anti-climatic by this point, but really a huge deal, China's new property law took effect yesterday. For our full scale review of the new law and its implications, I suggest you check out the four part series we did back in May: Part I,... []
» China's New Property Law, Part III -- Rules Of Real Property Ownership China Law Blog
This is Part III of our posts based on Steve Dickinson's paper on China's New Property Law. This post deals with China's real property ownership rules, as set forth in Part II of the law itself. Part IV of this series will come tomorrow and... []
» China's Five News China Law Blog
Tom Orlik has a great article out in a recent edition of The Economist Intelligence Unit's Business China [$10 to purchase]. The article, entitled, "Legal Obligations," nicely summarizes China's key recent law changes that will affect foreign businesse... []
Comments
Looking forward to this. Thanks.
Posted by: zhwj | May 15, 2007 7:11 PM
I'm more familiar with civil law, so I found a good bit of the Property Law to be comprehensible, but the vagueness did give me a bit of a start. (In hindsight, I should not have been surprised.) Looking forward to the rest of the paper.
Posted by: Therese | May 15, 2007 9:02 PM
It is absolutely interestig to learn how common law scholars see the 'Socialistic Property Code with Chinese Characteristic'.
Looking forward..looking forward...
Posted by: Mao Yuan | May 16, 2007 12:20 AM
zhwj --
You are welcome.
Posted by: China Law Blog | May 17, 2007 12:23 AM
Therese --
Thanks for checking in. Hope you like the rest of these.
Posted by: China Law Blog | May 17, 2007 12:23 AM
Mao Yuan --
Glad you are enjoying this. Not sure how "socialistic" it is though.
Posted by: China Law Blog | May 17, 2007 12:24 AM
Well, I'm Russian, but this cannot be translated as "Property Law". Something like "Real right (s?) Law". "Wuquan" doesnot mean "property". Property (souyouquan) is a kind of "Wuquan". Term "Wuquan" also includes jura in re aliena (servitude, pledge). The nearest term in English I found is "Real right".
I think, Chinese law system is near to the continental family of law (which also includes Russian), so our law-terms are more similar. In the anglo-saxon family you have different principles of law.
Posted by: Shkie | May 18, 2007 12:58 AM
Shkie --
You are right that Chinese law is closer to European law than to Anglo-Saxon law. Everybody is calling this new law the New Property Law so we are sticking with that convention. But, as you can see within the post, we define it as the "Law of the Rights in Things."
Posted by: China Law Blog | May 21, 2007 1:25 PM
What property law?
There are no such thing!!!!
I am fighting for the last 3 years to get my legal papers on the apartment I bought in Chengdu. Don't be a fool and believe reports from the uper powers. All help and answers only lead to a corrupted system and lies.
Angry foreigner
Posted by: Rudi | May 25, 2007 5:22 PM
Rudi --
Just because you had a terrible experience does not mean there are no laws in China. Believe me, I can find you plenty of people with terrible experiences with the laws here in the U.S., but I still think our system here works incredibly well. China is not "there" yet, that is for sure, but to say there are no laws in China is just flat out wrong. Have you retained a lawyer in Chengdu to assist you?
Posted by: China Law Blog | May 28, 2007 3:29 PM
I'm currently on my 4th lawyer together with my embassy in Beijing.
The most strange thing is that after a month or so the lawyer would all of a sudden pull out from the case with no explanation.
My embassy suspect government official corruption involvement in this case. I am not the only one on the bad end of the rope, there are 200 people in the apartment building fighting and facing the same disaster.
The construction company have some sort of power to withhold the residents legal papers from them, as for the buildings original partner have not paid them for the construction work that were completed 5 years ago. He and his partners have offered the construction company the whole 2nd floor of the building for compensation, as he and his partners are so called bankrupt. Another strange point is that the China Construction Bank gave him and his partners the full amount of money to construct this building in the first place.
I have paid cash for this apartment and when trying to complain on my own to the Chengdu government, they laugh in my face and told me I have been cheated.
Do you understand my anger??
Posted by: Rudi | May 30, 2007 7:26 PM
The reason for me to make the comment that there are no laws in China come after the case mentioned in the Herald Tribune,
(the blind legal activist Chen Guangcheng)
http://www.iht.com/articles/2007/05/29/opinion/edminzer.php
After 8 years in China it did not take me long to understand that only the major cities (Beijing,Shanghai,Hangzhou,Guangzhou ext) now also including Chongqing are of interest to the government as of there progress and wealth. My wife originate from Chongqing and I can insure you there were no support from the government in the past, it is only after the three gorges dam project that Chongqing got all of a sudden excluded from the Sichuan province and are now under the Beijing municipality control. After many attempts to get help from Beijing with the housing problem, many official offices told me that Chengdu are not under the Beijing municipality's control, and therefore cannot help me.
All other provincial governments and officials still do as they witch excluded from the Beijing government.
I been advised by many local friends to avoid getting in any officials way, for I might be expelled from China.
Posted by: Rudi | May 31, 2007 6:52 PM
Rudi --
I have no doubt that all sorts of injustices go on in China, daily. But solely from the perspective of a BUSINESS lawyer, I am seeing considerable changes for the better.
Posted by: China Law Blog | June 2, 2007 8:10 PM
is not tha bad is true, i own two proprety in China( Hainan) Sanya and Wanning, the so call Paper yo talking about is your Apt licence...but first you should have had a contract which is done in 5 copies( for foreigners) 4 copies for Chinese citizen,and this goes to the "local governement" the only thing is guy's is you are all talking of owning, not to disapoint you but you only own the right to use it for 35-40-50 or 70 year's maximum, then is back to the governemnt wich are entitle to sell the land again and therfore your proprety as well as your licence will have expired;
regarding my case i don't really hava a problem with it, i have connection with local authority in Sanya and Shanghai, my wife is Shanghaines and so is my daughter;
is all about "Guanxy" in china.
Posted by: Fred | September 2, 2008 12:06 PM