Section 2

Transfer of Real Estate

Article 37 Transfer of real estate refers to acts that an obligee of real estate transfers his real estate to another person through sale, donation or other legal means.

Article 38 No following real estate shall be transferred:

(1) The land-use right has been obtained by means of granting, however, not meeting conditions set forth in Article 38 of this Law;

(2) The rights of real estate have been sealed up by order of the judicial organ or decision of the administrative organ pursuant to law or limited by other ways;

(3) The land-use right has been reclaimed in accordance with the law;

(4) For jointly-owned real estate, written consent of other co-owners has not been obtained;

(5) The ownership is under dispute;

(6) The real estate has not been registered in accordance with the law and the certificate of the ownership has not been obtained; or

(7) Other circumstances under which transfer is prohibited by the provisions of laws, administrative rules and regulations.

Article 39 Where the land-use right has been obtained by means of granting, transfer of the real estate shall meet the following conditions:

(1) Having paid all the fees for the granting of the land-use right as agreed upon in the granting contract and obtained the certificate of the land-use right; and

(2) Having invested for development as agreed upon in the granting contract and having fulfilled twenty-five percent or more of the total investment for development in the case of housing projects, or having constituted conditions of land-use for industrial purposes or other construction projects in the case of developing tracts of land.

Where real estate is transferred with the construction of houses completed, the certificate of the house ownership shall be acquired.

Article 40 Where the land-use right has been obtained by means of allocation, the transfer of the real estate shall, according to the regulations of the State Council, be reported for examination and approval to the people’s government that has the authority for approval. Upon approval of the transfer by the people’s government with the authority for approval, the transferee shall go through the formalities for the granting of the land-use right and pay the fees therefore according to the relevant regulations of the State.

Where the land-use right has been obtained by means of allocation and where, when the transfer of the real estate is reported for approval, the people’s government that has the authority for approval decides in accordance with the regulations of the State Council that the formalities for granting the land-use right need not be gone through, the transferor shall, pursuant to the regulations of the State Council, turn over to the State the proceeds obtained from land in the transfer of the real estate or dispose of such proceeds otherwise.

Article 41 For the transfer of real estate, a written transfer contract shall be concluded in which the means of obtaining the land-use right shall be stated.

Article 42 When real estate is transferred, the rights and obligations stated in the contract for granting the land-use right shall be transferred therewith.

Article 43 Where the land-use right has been obtained by means of granting and after the real estate has been transferred, the term for the use of the land-use right shall be the remaining years after subtracting the years of use by the former land user from the original term agreed upon in the contract for granting the land-use right.

Article 44 Where the land-use right has been obtained by means of granting and after the real estate has been transferred, the transferee modifies the land-use purpose agreed upon in the contract for granting the land-use right, the transferee must obtain consent from the transferor and the administrative department for urban planning under the people’s government of the relevant city or county, and conclude an agreement on the modification of the contract for granting the land-use right or enter into a new contract for granting the land-use right and readjust the fees for granting the land-use right accordingly.

Article 45 For the presale of commercial houses, the following conditions shall be met:

(1) Having paid all the fees for the granting of the land-use right and obtained the certificate of the land-use right;

(2) Having a permit for construction project planning;

(3) The funds put into the development construction having reached twenty-five percent or more of the total investment for the construction project, computed on the basis of the commercial houses provided for presale, and the schedule of construction and the date of completion for delivery having been set; and

(4) Having made registration for presale with the administrative department for house property under the people’s government at or above the county level and having obtained the certificate of permission for the presale of commercial houses.

Pre-sellers of commercial houses shall, in accordance with the relevant regulations of the State, submit the presale contracts to the departments of housing administration and departments of land administration under the people’s governments at or above the county level for registration and record.

The proceeds obtained from the presale of commercial houses must be used for the relevant construction projects.

Article 46 In the case of presale of commercial houses, matters concerning the transfer of unfinished presale commercial houses that the buyers have purchased shall be prescribed by the State Council.

Section 3

Mortgage of Real Estate

Article 47 Mortgage of real estate refers to acts that a mortgagor provides the mortgagee security for the payment of a debt with his legal real estate in the manner that the possession of his real estate is not transferred. Where a debtor fails to pay his debt, the mortgagee shall have the right in accordance with the law to enjoy the priority in compensation to be paid with funds obtained from auction of the real estate mortgaged.

Article 48 A mortgage may be created on the ownership of a house obtained according to law together with the land-use right to the house site.

A mortgage may be created on the land-use right obtained by means of granting.

Article 49 The mortgage of real estate shall be dealt with on the strength of the certificate of the land-use right and the certificate of ownership of the house.

Article 50 For the mortgage of real estate, the mortgagor and the mortgagee shall enter into a written mortgage contract.

Article 51 Where the land-use right on which a mortgage is created has been obtained by means of allocation, the mortgagee may enjoy the priority in compensation only after the amount equal to the fees for the granting of the land-use right has been paid from the funds obtained from auction of the real estate done in accordance with the law.

Article 52 After a contract for the mortgage of the real estate has been concluded, newly-built houses on the land shall not be regarded as the mortgaged asset. If the mortgaged real estate needs to be sold by auction, the newly-built houses on the land may be auctioned off according to law together with the mortgaged assets. However, the mortgagee shall not have the priority in compensation with respect to the funds obtained from auction of the newly-built houses.

Section 4

Lease of Houses

Article 53 Lease of houses refers to acts that an owner of a house in the capacity of a leaser leases his house to a leasee for use and the leasee pays rent for the house to the leaser.

Article 54 In the lease of a house, the leaser and the leasee shall conclude a written lease contract defining such matters as the term, purpose and price of the lease, liability for repair, as well as other rights and obligations of both parties, and shall register the lease with the department of housing administration for the record.

Article 55 Lease of residential houses shall be carried out in accordance with policies on lease formulated by the State and the people’s government of the city where the houses are located. Where houses are leased for activities of production and business operation, the rent and other terms for the lease shall be determined by both parties through consultation.

Article 56 Where an owner of a house, for profit-making purposes, leases the house built on the State-owned land, the land-use right for which has been obtained by means of allocation, he shall turn over to the State the proceeds derived from the land and contained in the rent. The specific measures shall be prescribed by the State Council.