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Re: Property Law of the People’s Republic of China

Posted: Thu Oct 08, 2015 7:48 pm
by inbeijing
Chapter XII Right to Use Land for Construction Purpose

Article 135The holder of the right to use land for construction shall be entitled to possess, use and seek proceeds from the land owned by the state, and be entitled to make use of the land for constructing buildings, fixtures and their auxiliary facilities.

Article 136The right to use land for construction may be established separately on the surface of or above or under the land. The newly-established right to use land for construction shall not damage the usufructuary right that has already been established.

Article 137The right to use land for construction may be established by means of transfer or allotment, etc.The land used for purposes of industry, business, entertainment or commercial dwelling houses, etc. or the land for which there are two or more intended users shall be transferred by means of auction, bid invitation or any other public bidding method.It is strictly prohibited to establish the right to use land for construction by means of allotment. The means of allotment shall be adopted according to the provisions on land uses in the laws and administrative regulations.

Article 138Where the right to use land for construction is established by means of auction, bid invitation, or agreement, etc., the parties concerned shall enter into a written contract on the transfer of the right to use land for construction.A contract on transfer of the right to use land for construction shall generally include the following clauses:(1) Name and domicile of the parties;(2) Location and acreage, etc. of the land;(3) Space occupied by buildings, fixtures and their affiliated facilities;(4) Purposes of use;(5) Term of use;(6) Payment methods for allotment fees and other fees; and(7) Dispute resolution method.

Article 139For the creation of the right to use land for construction, an application for the registration of the right to use land for construction shall be filed with the registration organ. The right to use land for construction shall be established upon registration. The registration organ shall issue a certification on the right to use land for construction to the holder of the right to use land for construction.

Article 140The holder of the right to use land for construction shall reasonably utilize the land, shall not change the purpose of land use, and shall be subject to the approval of the relevant administrative department if the purpose of land use needs to be changed.

Article 141The holder of the right to use land for construction shall pay transfer fees and other fees according to the legal provisions and the contract.

Article 142The ownership of the buildings, fixtures and their affiliated facilities built by the holder of the right to use land for construction shall belong to the holder of the right to use land for construction, unless it is otherwise proved by contrary evidence.

Article 143The holder of the right to use land for construction shall be entitled to transfer, exchange, use as equity contributions, endow or mortgage the right to use land for construction, unless it is otherwise prescribed by any law.

Article 144In case the right to use land for construction is transferred, exchanged, used as equity contributions, endowed or mortgaged, the parties shall conclude a corresponding contract in written form. The contractual term shall be stipulated by the parties concerned, but shall not exceed the remnant term as stipulated in the contract on transfer of the right to use land for construction.

Article 145In case the right to use land for construction is transferred, exchanged, used as equity contributions, or endowed, an application for alteration registration shall be filed with the registration organ.

Article 146In case the right to use land for construction is transferred, exchanged, used as equity contributions or endowed, the buildings, fixtures and their affiliated facilities on the land shall be disposed of concurrently.

Article 147In case the buildings, fixtures and their affiliated facilities are transferred, exchanged, used as equity contributions or endowed, the right to use land for construction occupied by the aforesaid buildings, fixtures and their affiliated facilities shall be disposed of concurrently.

Article 148Before the term of the right to use land for construction expires, if the land needs to be taken back in advance due to public interests, compensations shall be given to the houses and other real properties on the land according to Article 42 of this Law, and corresponding land transfer fees shall be refunded.

Article 149The 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 150In case the right to use land for construction is eliminated, the transferor shall go through deregistration procedures in a timely manner, and the registration organ shall take back the certificate on the right to use land for construction.

Article 151In case a piece of collectively-owned land is used as land for construction, it shall be handled according to the law on land administration and other relevant laws.

Chapter XIII Right to Use House Sites (or Right to Use Lands for Building Houses)

Article 152The holder of the right to use house sites shall be entitled to possess and use collectively-owned land, and to make use of the land for constructing residential houses and their affiliated facilities.

Article 153The acquisition, exercise and transfer of the right to use house sites shall be governed by the law on land administration, other relevant laws and the relevant provisions of the state.

Article 154In case a house site is eliminated due to any natural disaster, etc., the right to use house site shall be eliminated. A villager without a house site shall be allotted a house site again.

Article 155In case the registered right to use house sites is transferred or eliminated, the alteration or cancellation registration shall be made in a timely manner

Re: Property Law of the People’s Republic of China

Posted: Thu Oct 08, 2015 7:50 pm
by inbeijing
Chapter XIV Easement Rights

Article 156An easement holder shall be entitled to make use of the real property of someone else according to the contract so as to increase the efficiency of his own real property.The expression of “real property of someone else” as mentioned in the preceding Paragraph shall be the servient tenement, and the expression of “one’s own real property” shall be the dominant tenement.

Article 157For the creation of an easement, the parties concerned shall conclude an easement contract in written form.An easement contract shall generally include the following clauses:(1) Name and domicile of the parties concerned;(2) Locations of servient tenement and dominant tenement;(3) Purposes and methods of utilization;(4) Term of utilization;(5) Fees and payment method; and(6) Dispute resolution method.
Article 158The easement shall be established as of the effectiveness of an easement contract. In case the parties concerned think it necessary to have it registered, they can apply for easement registration with the registration organ; otherwise, they shall not challenge any bona fide third party.

Article 159The holder of servient tenement shall permit an easement holder to make use of his/its land according to the contract, and shall not hamper the latter’s exercise of the right.

Article 160An easement holder shall make use of the servient tenement according to the purposes and methods as stipulated in the contract, and try to reduce the real right restrictions on the holder of the servient tenement.

Article 161The term of easement shall be stipulated by the parties concerned, however, it can not exceed the remnant term of the right to the contracted management of land, the right to use land for construction or any other usufructuary right.

Article 162In case a land owner enjoys or assumes the easement, when the right to the contracted management of land or the right to use house site is established, the holder of the right to the contracted management of land or the right to use house site may continue enjoying or assuming the established easement.

Article 163In case the right to the contracted management of land, the right to use house site or any other usufructuary right on the land has already been created, the land owner shall not establish any easement without consent of the aforesaid usufructuary right holder.

Article 164The easement shall not be transferred alone. In case the right to the contracted management of land, the right to use land for construction, the right to use house site or any other usufructuary right is transferred, the easement shall be transferred concurrently, unless it is otherwise stipulated by the contract.

Article 165The easement shall not be mortgaged by itself. In case the right to the contracted management of land or the right to use land for construction, etc. is mortgaged, the easement shall be transferred concurrently when the mortgage is realized.

Article 166When the dominant tenement as well as the right to the contracted management of land, the right to use land for construction or the right to use house site thereon is partially transferred, and if the easement is involved in the transferred part, the transferee shall enjoy the easement at the same time.

Article 167When the servient tenement and the right to the contracted management of land, the right to use land for construction or the right to use house site thereon is partially transferred, and if the easement is involved in the part as transferred, the easement shall be binding on the transferee.

Article 168In case an easement holder is under any of the following circumstances, the holder of the servient tenement shall be entitled to rescind the easement relationship, and the easement shall be eliminated:(1) Violating the legal provisions or the contract, or abusively using the easement; or(2) Failing to pay fees for the paid use of servient tenement after being urged to do so within a reasonable period for two times upon expiration of the stipulated time limit for payment.

Article 169The alteration or cancellation registration shall be timely executed for the alteration, transfer or elimination of the registered easement.

Part Four Real Rights for Security (Secured Property Rights)
Chapter XV General Provisions


Article 170The holder of real rights for security shall enjoy priority to receive payments from the property for security in case the obligor fails to pay its due debts or the circumstance for the realization of real rights for security as stipulated by the parties concerned occurs, unless it is otherwise prescribed by any law.

Article 171An obligee (creditor) may, in such civil activities as loans or sales, establish the real rights for security according to this Law or any other law where the security is required for safeguarding the realization of its/his credits.To provide security to the obligee for an obligor (debtor), a third party may require the obligor to provide countersecurity. The countersecurity shall be governed by this Law and other relevant laws.

Article 172For the creation of real rights for security, a security contract shall be concluded according to this Law and other relevant laws. A security contract shall be subordinated to the principal contract. When the principal contract is nullified, the security contract shall be invalidated, unless it is otherwise prescribed by any law.After a security contract is nullified upon confirmation, the obligor, the security provider and the obligee that has faults shall assume relevant civil liabilities in light of their respective faults.

Article 173The security range of the real rights for security shall include principal obligee’s rights and their interests, default fines, damages and expenses for keeping the property for security and for realizing the real rights for security. Where there are separate stipulations between the parties concerned, such stipulations shall prevail.

Article 174In case the property for security is damaged, lost or expropriated during the term of security, the holder of the real rights for security may seek preferred compensations from the insurance money, damages or indemnities, etc. incurred there from, or may submit such insurance money, damages or indemnities, etc. to a competent authority if the term for performing the obligee’s rights as secured has not expired.

Article 175Where a third party provides any security, if the obligee allows the obligor to transfer all or part of its obligations without the written consent of the third party, the security provider does not have to assume corresponding security liabilities.

Article 176Where a secured credit involves both physical and personal security, if the obligor fails to pay its due debts or any circumstance for realizing the property for security as stipulated by the parties concerned occurs, the obligee shall realize the obligee’s rights according to the stipulations; where there is no such stipulation or the stipulations are not explicit, and the obligor provides his/its own property for the security, the obligee shall realize the obligee’s rights firstly by the security by property; and where a third party provides the security by property, the obligee may realize the obligee’s rights with the physical security or may require the guarantor to assume the guaranty liability. The third party for providing the security may, after assuming the security liability, is entitled to recourse payments against the obligor.

Article 177In any of the following circumstances, the real rights for security may be eliminated:(1) The principal obligee’s rights are eliminated;(2) The real rights for security have been realized;(3) The obligee abandons the real rights for security; or(4) Any other circumstance as prescribed by any law under which the real rights for security will be eliminated.

Article 178In case any provision in the Security Law conflicts with this Law, the latter shall prevail.

Re: Property Law of the People’s Republic of China

Posted: Thu Oct 08, 2015 7:51 pm
by inbeijing
Chapter XVI Right to Mortgage

Section 1 General Right to Mortgage


Article 179An obligor (debtor) or a third party may, for the security of the payment of debts, mortgage his properties to the obligee (creditor) without transferring the possession of such properties, and when the obligor fails to pay due debts or any circumstance for realizing the mortgage right as stipulated by the parties concerned occurs, the obligee shall be entitled to seek preferred payments from such properties.The ‘obligor’ or ‘third party’ as prescribed in the preceding paragraph shall be the mortgagor, the ‘obligee’ shall be the mortgagee, and the ‘properties for security’ shall be the properties under mortgage.

Article 180The following properties to which the obligor or the third party has the right to dispose of may be used for mortgage:(1) Buildings and other fixed objects on the ground;(2) The right to use land for construction;(3) The right to contracted management of barren land, etc. as obtained by means of bid invitation, auction and public consultation, etc.;(4) Manufacturing facilities, raw materials, semi-manufactured goods and products;(5) Buildings, vessels and aircraft that are under construction;(6) Means of communications and transportation;(7) The properties other than those that shall not be mortgaged according to any law or administrative regulation.A mortgagor may mortgage all the properties listed in the previous paragraph together.

Article 181Upon the written agreement between the parties concerned, an enterprise, individual industrial and commercial household or agricultural production operator may mortgage the manufacturing facilities, raw materials, semi-manufactured goods and products it has already owned or is going to own, and when the obligor fails to pay its/his due debts or any circumstance for realizing the right to mortgage as stipulated by the parties concerned occurs, the obligee shall be entitled to seek preferred payments from the movable properties that exist when the parties concerned stipulate to realize the right to mortgage.

Article 182In case a building is mortgaged, the right to use land for construction occupied by this building shall be mortgaged together. In case the right to use land for construction is mortgaged, all the buildings on this land shall be mortgaged together.In case a mortgagor fails to mortgage the properties according to the preceding paragraph, the properties that have not been mortgaged shall be regarded as having been mortgaged together.

Article 183The right to use land for construction of a township or village enterprise shall not be mortgaged by itself. In case the plant of a township and village enterprise is mortgaged, the right to use land for construction occupied by this plant shall be mortgaged together.

Article 184None of the following properties may be mortgaged:(1) Land ownership;(2) The right to use cultivated land, house sites, land set aside for farmers to cultivate for their private use, hilly land allotted for private use and other collectively-owned land, unless it is otherwise prescribed by any law;(3) Educational, medical, healthy and other public welfare facilities of schools, kindergartens, hospitals and other institutions and social groups with the aim of benefiting the public;(4) Properties whose ownership or use rights are unclear or controversial;(5) Properties that are legally confiscated, seized or controlled; or(6) Other properties that cannot be mortgaged according to any law or administrative regulation.

Article 185To create a right to mortgage, the parties concerned shall conclude a mortgage contract in written form.A mortgage contract shall generally include the following clauses:(1) The variety and amount of the obligee’s rights as secured;(2) The time limit for the obligor to pay debts;(3) The name, amount, quality, condition, location, attribution of ownership or use right of the property under mortgage; and(4) The range of security.

Article 186Before the time limit for paying debts expires, a mortgagee shall not stipulate with the mortgagor that the ownership of the property under mortgage will be transferred to the obligee when the obligor fails to pay its due debts.

Article 187As for the mortgage of a property as prescribed in Item (1), (2) or (3) of Paragraph 1 of Article 180 of this Law or a building under construction as prescribed in Item (5), mortgage registration shall be made. The right to mortgage shall be established as of the date of registration.

Article 188As for the mortgage of a property as prescribed in Item (4) or (6) of Paragraph 1 of Article 180 of this Law or a vessel or aircraft under construction as prescribed in Item (5), the right to mortgage shall come into effect as of the effectiveness of the mortgage contract; without the registration, the right to mortgage shall not challenge any bone fide third party.

Article 189In case an enterprise, individual industrial and commercial household or agricultural production operator mortgages any of the movable properties prescribed in Article 181 of this Law, it shall file registration with the administrative department for industry and commerce at the place where the mortgagor resides. The right to mortgage shall come into effect as of the effectiveness of the mortgage contract; without the registration, the right to mortgage shall not challenge any bone fide third party.The registration of the mortgage prescribed in Article 181 of this Law shall not challenge the buyer which has paid a reasonable price in normal business operations and has obtained the property under mortgage.

Article 190In case the property under mortgage has been leased before the conclusion of the mortgage contract, the original leasehold relations shall not be affected by the right to mortgage. In case the property under mortgage is leased after the right to mortgage has been established, the leasehold relation shall be affected by the registered right to mortgage.

Article 191In case a mortgagor transfers the property under mortgage during the mortgage term upon consent of the mortgagee, the mortgagor shall pay off its debts to the mortgagee with the money incurred from the transfer in advance or submit the said money to a competent authority for keeping. The value exceeding the obligee’s rights shall belong to the mortgagor, and the gap shall be paid off by the obligor.A mortgagor shall not transfer the property under mortgage during the mortgage term without the mortgagee’s consent, unless the transferee pays off the debts on its behalf so as to eliminate the right to mortgage.

Article 192The right to mortgage shall not be separated from the obligee’s rights or be transferred alone, or be used as a security for other obligee’s rights. When the obligee’s rights are transferred, the right to mortgage for the said obligee’s rights shall be transferred together, unless it is otherwise prescribed by any law or is otherwise stipulated by the parties concerned.

Article 193In case any act of the mortgagor may sufficiently result in lowering the value of the property under mortgage, the mortgagee shall be entitled to request the mortgagor to stop such act. In case the value of the property under mortgage has been affected, the mortgagee shall be entitled to request the mortgagor to restore the value of the property under mortgage, or provide a security equal to the decreased value. In case the mortgagor neither restores the value of the property under mortgage nor provides any security, the mortgagee shall be entitled to request the mortgagee to pay off the debts in advance.

Article 194A mortgagee may waive the right to mortgage or the sequence of the right to mortgage. A mortgagee and a mortgagor may change the sequence of the right of mortgage or the amount of obligee’s rights as secured, etc., through negotiations, however, the change of the right to mortgage without the written consent of other mortgagees shall not produce unfavorable influences on any other mortgagee.In case an obligor establishes the mortgage by his own properties, and the mortgagee waives the right to mortgage or the sequence of the right to mortgage or changes the right to mortgage, other security providers shall be exempted from the security liability within the scope for which the said mortgagee has lost the right to seek preferred payments, unless any of other security providers promises to provide the same security.

Article 195When the obligor fails to pay its/his due debts or any circumstance for realizing the right to mortgage as stipulated by the parties concerned occurs, the mortgagee may, by concluding an agreement with the mortgagor, convert the property under mortgage into money or seek preferred payments from the money incurred from the auction or sale of the property under mortgage. In case the said agreement has damaged the interests of any other obligee, the obligee may request the people’s court to cancel this agreement within one year after he/it has known or should know the cause for cancellation.In case the mortgagee and the mortgagor fail to conclude an agreement on the means of realizing the right to mortgage, the mortgagee may request the people’s court to auction or sell off the property under mortgage.The property under mortgage shall be converted into cash or be sold off by referring to its marker price.

Article 196With respect to the mortgage established according to Article 181 of this Law, the property under mortgage shall be determined when any of the following circumstances occurs:(1) The obligee’s rights have not been fulfilled upon expiration of the time limit for paying debts;(2) The mortgagor has been declared bankrupt or has been dissolved;(3) Any circumstance for realizing the right to mortgage as stipulated by the parties concerned occurs; or(4) Any other circumstance that will seriously affect the realization of obligee’s rights.

Article 197When the obligor fails to pay its/his due debts or any circumstance for realizing the right to mortgage as stipulated by the parties concerned occurs, and the property under mortgage is thus seized by the people’s court according to law, the mortgagee may, as of the date of seizure, be entitled to collect natural or statutory derivatives of the property under mortgage, unless the mortgagee has failed to notify the obligor to pay off statutory fruits.The “derivatives” as prescribed in the preceding paragraph shall be used for paying the expenses for the collection of fruits in the first place.

Article 198After the property under mortgage has been converted into money, auctioned or sold off, the value exceeding the obligee’s rights shall belong to the mortgagor, and the gap shall be paid off by the obligor.

Article 199If a same property is mortgaged to two or more obligees simultaneously, the money incurred from the auction or sale of the property under mortgage shall be used as payments in light of the following prescriptions:(1) If all the rights to mortgage have been registered, the payments shall be made in light of the sequence of registration; and if the sequence of registration is the same, the payments shall be made in light of the proportion of obligee’s rights;(2) The right to mortgage that has been registered shall be cleared off prior to the one that has not been registered; and(3) If no right to mortgage has been registered, the payments shall be made in light of the proportion of obligee’s rights.

Article 200After the right to use land for construction is mortgaged, the newly-constructed buildings on the land shall not belong to the properties under mortgage. When the aforesaid right to use land for construction needs to be disposed of for the realization of the right to mortgage, the newly-constructed buildings on the land can be disposed of together, however, the mortgagee shall not be entitled to seek preferred payments from the money incurred from the disposal of these newly-constructed buildings.

Article 201In case the right to the contracted management of land prescribed in Item (3) of Paragraph 1 of Article 180 of this Law is mortgaged, or the right to use land for construction occupied by the plant or any other building of a township or village enterprise is mortgaged according to Article 183 of this Law, after the right to mortgage is realized, no nature of land ownership or land use may be changed without completing the statutory procedures.

Article 202A mortgagee shall exercise the right to mortgage within the limitation of action for the principal obligee’s rights, otherwise, such right to mortgage will not be protected by the people’s court.
Section 1 Right to Mortgage at Maximum Amount

Article 203An obligor or third party may, for the security of payment of debts, provide security of mortgage to the obligee for the obligee’s rights that will continuously occur within a certain term, and when the obligor fails to pay its/his due debts or any circumstance for realizing the right to mortgage as stipulated by the parties concerned occurs, the mortgagee shall be entitled to seek preferred payments from the security properties within the maximum amount of obligee’s rights.The obligee’s rights that have existed before the right to mortgage at maximum amount is established may be incorporated into the scope of obligee’s rights under the security by mortgage at maximum amount.

Article 204In case part of obligee’s rights are transferred before the security by mortgage at maximum amount is established, the right to mortgage at maximum amount shall not be transferred, unless it is otherwise stipulated by the parties concerned.

Article 205Before the obligee’s rights under the security by mortgage at maximum amount are determined, the mortgagee and the mortgagor may change the term for determining the obligee’s rights, the scope of obligee’s rights or the maximum amount of obligee’s rights by agreement, however, such change shall not produce any unfavorable influence on any other mortgagee.

Article 206If any of the following circumstances occurs, the mortgagee’s obligee’s rights shall be determined:(1) The term for determining the obligee’s rights as stipulated expires;(2) There is no stipulation about the term for determining the obligee’s rights or the relevant stipulations are unclear, and the mortgagee or the mortgagor requests to determine the obligee’s rights after two years as of the date for establishing the right to mortgage at maximum amount;(3) No new obligee’s right may occur;(4) The property under mortgage is sealed up or seized;(5) The obligor or the mortgagor is announced as bankrupt or is revoked; or(6) Any other circumstance for determining the obligee’s rights as prescribed by any other law occurs.

Article 207The right to mortgage at maximum amount shall be applicable to the provisions on general right to mortgage as prescribed in Section 1 of this Chapter in addition to the provisions in this Section.

Re: Property Law of the People’s Republic of China

Posted: Thu Oct 08, 2015 7:52 pm
by inbeijing
Chapter XVII Right of Pledge

Section 1 Pledge of Movable Properties


Article 208An obligor or third party may, for the security of the payment of debts, pledge his (its) movable properties to the obligee for possession, and when the obligor fails to pay due debts or any circumstance for realizing the right of pledge as stipulated by the parties concerned occurs, the obligee shall be entitled to seek preferred payments from the said movable properties.The ‘debtor’ or ‘third party’ as prescribed in the preceding paragraph shall be the pledger, the ‘obligee’ shall be the pledgee, and the ‘movable properties’ as delivered shall be the pledge.

Article 209The movable properties prohibited to be pledged by any law or administrative regulation shall not be pledged.

Article 210For the creation of the right of pledge, the parties concerned shall conclude a contract on the right of pledge in written form.A contract on the right of pledge shall generally include the following clauses:(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 range of security; and(5) The time for the transfer of pledge.

Article 211Before the time limit for paying debts expires, the pledgee and the pledger shall not stipulate that the ownership of pledge be transferred to the obligee when the obligor fails to pay due debts.

Article 212The right of pledge shall be established after the pledgee has transferred the pledge.

Article 213A pledgee shall be entitled to obtain the derivatives of the pledge, unless it is otherwise stipulated in the contract.The “derivatives” as prescribed in the preceding paragraph shall be used for paying the expenses for the collection of the derivatives in the first place.

Article 214In case a pledgee, within the duration of the right of pledge, illegally uses or disposes of the pledge without consent of the pledger, and thus causes damages to the pledger, he/it shall be liable for compensations.

Article 215A pledgee shall be liable for properly keeping the pledge; and in case the pledge is destroyed or lost due to improper keeping, the pledgee shall be liable for compensations.In case any act of the pledgee may make the pledge damaged or lost, the pledger may require the pledgee to submit the pledge to a competent authority or require to the payment of debts in advance and take back the pledge.

Article 216In case any cause not attributable to the fault of the pledgee may result in the destruction of the pledge or an evident decrease of the value of the pledge, and which is sufficient to damage the rights of the pledgee, the pledgee shall be entitled to request the pledger to provide corresponding security. In case the pledger refuses to do so, the pledgee may auction or sell off the pledge, and may, by concluding an agreement with the pledger, seek preferred payments for the obligee’s rights in advance with the money incurred from the auction or sell-off of the pledge, or submit the said money to a competent authority.

Article 217In case a pledgee transfers the pledge within the duration of the right of pledge without consent of the pledger, and thus causes the destroy or loss of the pledge, he shall be liable for making compensations to the pledger.

Article 218A pledgee may waive the right of pledge. In case an obligor establishes the right of pledge by own properties, and the pledgee waives the right of pledge, other security providers will be exempted from the security liability within the scope for which the pledgee has lost the right to seek preferred payments, unless any of other security providers promises to provide the security all the same.

Article 219In case the obligor has paid off the debts or the pledger has fulfilled the obligee’s rights as secured in advance, the pledgee shall return the pledge.In case an obligor fails to pay off its due debts or any circumstance for realizing the right of pledge as stipulated by the parties concerned occurs, the pledgee may, by concluding an agreement with the pledger, convert the pledge into money or seek preferred payments from the money incurred from the auction or sell-off of the pledge.The pledge shall be converted into money or be sold off by referring to its market price.

Article 220A pledger may require the pledgee to timely exercise the right of pledge upon expiration of the time limit for paying debts; in case the pledgee fails to do so, the pledger may request the people’s court to auction or sell off the pledge.In case a pledger requires the pledgee to timely exercise the right of pledge, but the pledgee is lazy to exercise such right and thus causes the damages, the pledgee shall be liable for compensations.

Article 221After the pledge is converted into cash, auctioned or sold off, the value exceeding the obligee’s rights shall belong to the mortgagor, and the gap shall be paid off by the obligor.

Article 222The pledger and the pledgee may establish the right of pledge of maximum amount through negotiations.The right of pledge of maximum amount shall be governed by the relevant provisions prescribed in this Section, and also be governed by the provisions on the right to mortgage at maximum amount prescribed in Section 1 of Chapter 16 of this Law by analogy.

Section 1 Pledge of Rights

Article 223The following rights which an obligor or third party has the right to dispose of may be pledged:(1) Money orders, checks, and cashier’s checks;(2) Securities and deposit receipts;(3) Warehouse receipts and bills of lading;(4) Transferable fund units and stock rights;(5) Exclusive trademark rights, patent rights, copyrights or other property rights in intellectual property that can be transferred;(6) Account receivables; and(7) Other property rights that can be pledged according to any law or administrative regulation.

Article 224As for the pledge of a money order, check, cashier’s check, securities, deposit receipt, warehouse receipt or bill of lading, the parties concerned shall conclude a written contract. The right of pledge shall be established after the title certificate of the pledge has been transferred to the pledgee. If there is no title certificate, the right of pledge shall be established after the relevant department has registered the pledge.

Article 225If the date of redemption or delivery of the money order, check, cashier’s check, securities, deposit receipt, warehouse receipt or bill of lading before the deadline of principal obligee’s rights, the pledgee may make redemption or pick up the goods, and may, by concluding an agreement with the pledger, seek preferred payments in advance with the money redeemed or the goods picked up, or submit the said money or goods to a competent authority for keeping.

Article 226As for the pledge of fund units or stock rights, the parties concerned shall conclude a written contract. As for the pledge of fund units or the stock rights registered in the securities depository and clearing institution, the right of pledge shall be established after the securities depository and clearing institution has registered the pledge. As for the pledge of other stock rights, the right of pledge shall be established after the administrative department for industry and commerce has registered the pledge.After the fund units or stock rights have been pledged, they shall not be transferred, unless it is otherwise agreed to by the pledger and the pledgee upon negotiations. The pledger shall fulfill the obligee’s rights to the pledgee in advance with the money incurred from the transfer of fund units or stock rights, or submit the aforesaid money to a competent authority for keeping.

Article 227In the case of the pledge of registered trademark rights, patent rights, copyrights or other property rights in the intellectual property, the parties concerned shall conclude a written contract, and the right of pledge shall be established when the relevant competent authority has registered the pledge.After the property rights in the intellectual property have been pledged, the pledger shall not transfer the pledge or permit anyone else to use it, unless it is otherwise agreed to between the pledger and the pledgee after negotiations. The pledger shall use the money incurred from transferring the pledged intellectual property or permitting anyone else to use it to fulfill the obligee’s rights in advance, or submit the aforesaid money to a competent authority for keeping.

Article 228As for the pledge of receivables, the parties concerned shall conclude a written contract, and the right of pledge shall be established when the relevant credit rating institution has registered the pledge.After the receivables have been pledged, the pledger shall not transfer the pledge, unless it is otherwise agreed on by the pledger and the pledgee upon negotiations. The pledger shall use the money incurred form the transfer of accounts receivable to fulfill the obligee’s rights in advance, or submit the aforesaid money to a competent authority.

Article 229The pledge of rights shall be governed by the provisions on the pledge of movable properties prescribed in Section 1 of this Chapter in addition to the provisions prescribed in this Section.

Re: Property Law of the People’s Republic of China

Posted: Thu Oct 08, 2015 7:53 pm
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Chapter XVIII Lien

Article 230In case an obligor (debtor) fails to pay its due debts, the obligee (creditor) may take the lien of the obligor’s movable properties he has lawfully possessed, and be entitled to seek preferred payments from these movable properties.The ‘obligee’ prescribed in the preceding Paragraph shall be the lienor (lien holder), and the ‘movable properties’ as occupied shall be the property under lien.

Article 231The movable properties taken as lien by the obligee shall fall into a same legal relationship with the obligee’s rights, except for the lien between the enterprises.

Article 232No lien may be taken if any law prohibits to do so or the parties concerned stipulate not to do so.

Article 233In case a property under lien is a divisible object, the value of the property under lien shall be equal to the amount of debts.

Article 234A lienor shall be obliged to properly keep the property under lien, and shall be liable for compensations if the property under lien is damaged or lost due to improper keeping.

Article 235A lienor shall be entitled to obtain the fruits of the property under lien.The ‘fruits’ prescribed in the preceding paragraph shall be used for paying off the expenses for the collection of the fruits in the first place.

Article 236A lienor shall stipulate the term for fulfilling the obligee’s rights with the obligor after the property is taken as lien; and in case there is no such stipulation or such stipulations are unclear, the lienor shall give two months or more to the obligor for him (it) to fulfill the obligee’s rights, except for fresh goods, perishable goods or those movable properties that are not easy to be kept. In case the obligor fails to fulfill the obligee’s rights within the time limit, the lienor may, by concluding an agreement with the obligor, convert the property under lien into money, or seek preferred payments from the money incurred from the auction or sell-off the property under lien.The property under lien shall be converted into money or sold off by referring to its market price.

Article 237An obligor may request the lienor to exercise the lien upon expiration of the time limit for fulfilling the obligee’s rights; and in case the lienor fails to do so, the obligor may request the people’s court to auction or sell off the property under lien.

Article 238After the property under lien is converted into money, auctioned or sold off, the value exceeding the obligee’s rights shall belong to the obligor, and the gap shall be paid off by the obligor.

Article 239In case the right to mortgage or the right of pledge has been established on a movable property, and this movable property is taken as lien again, the lienor shall be entitled to seek preferred payments.

Article 240In case a lienor losses the possession of the property under lien or accepts other security separately provided by the obligor, the lien shall perish.

Part Five Possession
Chapter XIX Possession


Article 241With respect to the possession occurred on the basis of a contractual relationship, the use, proceedings and default liability of the relevant real property or movable property shall be governed by the stipulations in the contract; and in case there is no such stipulation in the contract or the stipulations are unclear, the relevant legal provisions shall be applied.

Article 242In case a possessor uses the real property or movable property under his (its) possession, and causes this real property or movable property to be damaged, a malicious possessor shall be liable for compensations.

Article 243In case a real property or movable property is possessed by a possessor, the holder may request the return of original object and its fruits, but shall pay necessary expenses to the bone fide possessor for the maintenance of this real property or movable property.

Article 244In case a real property or movable property under possession is damaged or lost, and the holder of this real property or movable property requests for compensations, the possessor shall return the insurance money, damages or indemnities obtained from the said destruction or loss to the holder; and in case the impairment to the holder has not been sufficiently made up, a malicious possessor shall be liable for compensations.

Article 245In case a real property or movable property under possession is encroached on, the possessor shall be entitled to demand the return of the original object (property); with respect to any act that may impair the possession, the possessor shall be entitled to require the elimination of impairment or danger; and in case any impairment is caused due to encroachment or interference, the possessor shall be entitled to ask for damages.The claim of a possessor for returning the original object shall be exercised within one year as of the date of encroachment, otherwise, such claim shall perish.

Supplementary Provisions

Article 246Before any law or administrative regulation prescribes the scope, organ and measures for uniform registration of real properties, a local regulation may prescribe relevant matters according to the relevant provisions in this Law.
Article 247This Law shall come into effect as of October 1, 2007.