Legal Scholar Wang Liming Reviews Nine Key Points in the Draft Property Law and Issues to Be Resolved

October 28, 2004

In an extensive interview published in several domestic Chinese sources, legal scholar Wang Liming, one of the principal drafters of the draft Property Law under deliberation by the NPC Standing Committee, discussed nine key points in the draft as well as issues that are still under debate.

-Rights of ownership associations. The draft law provides that associations of the individual owners of units in a building or development have a right to replace property management companies and that individual owners, not development companies, exercise joint ownership over common areas such as parking lots and corridors unless otherwise clearly provided by contract.

-Changes in property use. If an individual owner in a building or development or the development company wishes to convert all or part of the property from residential to commercial use, the conversion must be approved by the ownership association. If the decision of the ownership association infringes on the rights of individual owners, the individuals may file suit.

-Right to quiet enjoyment. Property owners have a right to sue if drainage, noise, or other activities of adjoining property owners interfere with the normal use or security of their property.

-Rights of investors. The draft law confirms that investors in corporate entities should have rights to profit and decision-making proportional to their investment, regardless of whether they are state, collective, or private investors.

-Mortgage prohibitions. The law specifies six types of property rights that may not be mortgaged, including property rights held by public schools, hospitals, and other public institutions, rights to collective land (unless excepted by law), unclear or disputed property rights, and property rights that have been frozen or otherwise restricted by the government.

-Right to transfer contracted land. Parties that hold contracted land use rights may transfer those rights for terms within their contract period. Under the draft, if an entire family with contacted land use rights moves to a small town, it should be permitted to keep its land use rights or transfer them. If an entire family with such rights moves to the city and changes its residence registration, its contracted rights to use arable land or grassland should revert to the original issuing party.

-Rights of occupants or possessors. The law sets out rights and obligations of individuals who occupy or possess property but who do not have formal ownership or use rights.

-Lost property. Owners claiming lost property should pay the finder or the relevant department a fee for holding the lost property.

-Homesteads for rural households. The draft law sets out circumstances under which members of a collective with homestead rights should pay fees for those rights.

Wang notes that there is still debate over whether the law should cover rights to intangible property. He also expresses a hope that the new law will resolve the legal conflict between indefinite ownership rights over buildings and structures and the limited nature of rights to use underlying land. (Under the PRC Constitution and relevant laws, all land in China is owned by the State or the collective. Private entities and individuals may only hold use rights to the land.) Wang concludes that ownership rights over structures should not be lost when rights to use the underlying land expire, and that building owners should have a legal right to extend the period of the land use contract for an additional fee.

In a separate interview with China Daily, Wang also explains that the draft law introduces a more robust property registration system to give greater protection to investors and consumers. Owners may claim rights in movable property if it is in their possession. Real property must be registered for ownership rights to be perfected.