China mulls property law to secure ownership
(China Daily)
Updated: 2004-10-23 10:19

The nation's constitutional pledge to protect private property will be translated into concrete legal terms if a draft law on real rights goes through next year.

The law, basic legislation on the protection of properties, will increase protection of the interests of individuals and corporations, according to Jiang Ping, a leading civil law professor and the former president of China University of Political Science and Law.

The national legislators spent a full day discussing the draft yesterday, a rare practice in legislative deliberation.

After passing key tests in the coming months, the draft law is expected to be voted on at the annual session of the National People's Congress (NPC), China's top legislative body, five months from now in March, 2005.

Real rights is an uncommon legal term for most people although what it talks about is closely bound up with the life of us all.

Real rights refer to rights on tangible property in general. For example, real estate rights. They can also be attached to movable property such as books, cellphones, ships and cars. The law on real rights, together with laws on intangible properties such as creditors' and intellectual property rights, constitute property law.

The draft law is designed to clarify ownership title and better protect owners, said a senior legislative official who declined to be identified.

"Who owns the property? What rights does the owner have? What kind of redress can the owner seek in case of infringement?" These are the three main questions the official said the draft law answered.

For example, you can keep your cup on your desk, sell it or even smash it, so long as you are the legal owner of the cup. Everyone else has the obligation not to hinder you from exercising these rights. However, if someone smashes it, he or she will be liable to pay the cup owner.

The unidentified official said the law on real rights, aiming to ensure that all can fully enjoy the exercise of their rights over their belongings, offers the basic rules for a civilized society.

"The most important function of the law on real rights is to clarify ownership and put down disputes over properties," said Yao Hong, director of the civil law division of the Legislative Affairs Commission under the NPC Standing Committee.

The latest amendment to the Constitution says the nation protects all legal private property from being encroached upon and the State protects the citizens private property according to law.

However, there has been no specific law that can fully support the constitutional stipulation before the draft law on real rights was created.

Wang Liming, a professor of civil law at Renmin University of China and one of the leading authors of the law, said it will stimulate investment by giving equal protection to private, State-owned and collectively-owned properties when it is passed.

The draft relates to rights of possession, and does not give any preference to any specific kind of property ownership.

The requirements of the market economy that China is striving to build demand that legal subjects do not differentiate due to manner of ownership, Wang said.

Stronger protection

"The better private property is protected, the greater the contribution the private sector will make to the national economy," said Bao Yujun, chairman of the Beijing-based Institution on the Promotion of Private Economy.

"The sense of security, in both economic and political terms, will still the qualms of investors in encouraging them to expand their businesses."

Only when the right of possession is guaranteed can investors have confidence in making investments, Wang said.

"As long as property is legally acquired, it should receive the same amount of protection no matter if it is publicly or privately owned," Wang said.

Some residents in Beijing tried to fight back against unfair and under-compensated demolition of their houses this spring, shortly after the amendment to the Constitution was adopted.

Wu Zhaoxiang, a judge with the Supreme People's Court and holder of a doctorate in civil law, said the poor practice reflected the absence of specific legislation to transform the people's constitutional rights into reality.

"The draft bill on real rights, if passed, will offer these residents a powerful legal weapon," Wu said.

He added that the draft law would also increase awareness among government officials of the importance of protecting private property.

Wang also said the proposed law will not only confirm and protect property rights, but also better protect consumers' rights especially in the purchase of real estate.

The basic market rules will make transactions more transparent and the dissemination of information more open, which is crucial to the protection of consumers' rights, Wang added.

For example, some home buyers find it difficult to find out whether the property they are buying has been mortgaged or not. As a result, some are cheated due to the lack of accessibility to sufficient information.

By introducing a property rights registration system, the law will give better protection to both investors and consumers, he said.

One major doctrine of the real rights legislation is to summon one's right over a specific property in public to make it legitimate. Otherwise it is difficult for the owner to claim any remedy when his or her rights have been infringed.

For moveable property, the owner can claim rights so long as he or she possesses the structure. But for real property such as homes, the real owner has to register to make the rights effective.

The precautional registration system in real estate transactions will shield consumers from unnecessary market risks and prevent duplication of sales, he added.

Courts in the capital handled some 3,948 cases involving disputes on real estate last year. Among those, disputes over the sale of marketable housing accounted for 67.7 per cent. Duplication of sales has become a major trick of some real estate developers to cheat home buyers.

Legal significance

Wang suggested the draft law make clear and unify stipulation on real estate registration to streamline current registration administration.

Nowadays there are a handful of government agencies that have the power to carry out real estate registration. Charges for registration vary in proportion to the real cost of properties.

Wang said a unified registration system will make transactions simpler and offer more convenience to consumers.

Though the draft law has not unified all registration agencies into one, it stipulates there should be a fixed registration fee instead of a charge based on property value.

The draft law also introduced the concept of differentiated owners of buildings to help clarify rights of every household in a high-rise residential building over their own space, corridors and the greenbelt and carparking of the compound.

This will help resolve increasing disputes between home owners and the realty management agencies as rights and obligations of both parties are clearer than before and their relationship is fixed by law.

The draft law says all homes in the residential compound belong to the property owners even if they are used by the realty management agency.

Without previous agreement, the clubs, carparks and greenbelt belong to the property owners as well, unless the construction company can prove that they enjoy ownership.

Under the draft law, residential building can not be altered for other use unless it is agreed upon by all property owners.

That means residents of the ground floor will not be eligible to change their apartments into restaurants or beauty saloons unless their neighbours agree.

The draft law says every individual resident or a group of property owners have the right to sue for compensation when their real rights have been infringed upon.

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