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Law of the Peoples Republic of China on Urban Real Estate

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Law of the Peoples Republic of China on Urban Real Estate

Law of the People’s Republic of China on Urban Real Estate Administration(2007)

    (adopted by the 8th meeting of the Standing Committee of the 8th National People’s Congress on July 5, 1994 and amended according to the Decision on Amending the Law of the People’s Republic of China on Urban Real Estate Administration

     which was adopted at the 29th meeting of the standing committee of the 10th National People’s Congress of the People’s Republic of China on August 30th, 2007)

    CONTENTS

    CHAPTER I GENERAL PRINCIPLES

    CHAPTER II LAND FOR REAL ESTATE DEVELOPMENT

    PART 1 LEASING OF RIGHT OF LAND USE

    PART 2 ALLOCATION OF RIGHT TO USE LAND

    CHAPTER III REAL ESTATE DEVELOPMENT

    CHAPTER IV TRANSACTIONS OF REAL ESTATE

    PART 1 GENERAL PROVISIONS

    PART 2 TRANSFER OF REAL ESTATE

    PART 3 MORTGAGE OF REAL ESTATE

    PART 4 LEASING OF HOUSES

    PART 5 INTERMEDIATE SERVICE AGENCIES

    CHAPTER V REGISTRATION OF REAL ESTATE TITLE

    CHAPTER VI LEGAL LIABILITIES

    CHAPTER VII SUPPLEMENTARY PROVISIONS

    CHAPTER I GENERAL PRINCIPLES

    Article 1 This law is formulated for the purpose of safeguarding the real estate market order, protecting lawful rights and interests of real estate owners and promoting healthy development of the real estate industry through a strengthening of urban real estate administration.

    Article 2 Those who acquire the right to use the State-owned land within the designated urban area of the People’s Republic of China (hereinafter referred to as" State-owned land") for real estate development, engage in real estate development

     or transactions of real estate and exercise real estate administration shall abide by the law.

    The buildings referred to in this law shall mean houses and other structures on the land.

    The real estate development referred to in this law shall mean the activities of construction of infrastructures and buildings on the land that the right to use the State-owned land has been assigned in accordance with this law.

    The transactions of real estate referred to in this law shall mean transfer of real estate, mortgage of real estate and leasing of buildings.

    Article 3 The State practices system of using State-owned lands under due compensation and terms of using the land except the use of State- owned land allocated by the State according to this law.

    Article 4 The State shall, in accordance with the social and economic development

     level, supports construction of residential houses to gradually improve the living conditions of local residents.

    Article 5 Real estate owners shall abide by the laws and administrative decrees and pay tax according to the law. The lawful rights and interests of real estate owners are protected by the law against any infringement by institutes and individuals.

    Article 6 For public interests, the state can expropriate any entity or individual’s h

    ouse built on state-owned land, but the state shall give relocation compensations according to law and safeguard the legitimate rights and interests of the entity or

     individual. If an individual’s residential house is to be expropriated, the state sha

    ll guarantee the housing conditions of the individual. The specific measures shall be formulated by the State Council.

    Article 7 The administrative department in charge of construction and the land administration department of the State Council shall administer the work of real estate nationwide individually or cooperatively under their own powers. The organizational set-up and power of the reall estate administration and land administration departments of the local people’s governments above the county lev

    el shall be determined by the provincial, autonomous regional or municipal people’s governments.

    CHAPTER II LAND FOR REAL ESTATE DEVELOPMENT

    PART I LEASING OF RIGHT OF LAND USE

    Article 8 Leasing the right of land use means that the State leases the right of using the State-owned land to land users within a certain period and the land users shall pay the State fees for using the land.

    Article 9 For a collectively-owned land within a designated urban area, it must be

     requisitioned and turned into State-owned land in accordance with law first and then for leasing out to land users with due compensation.

    Article 10 The lease out of land for use must comply with the overall land use plan, the urban plan and the annual construction land use plan.

    Article 11 For leasing out the right of their land for real estate development, they

     people’s government above the country level must first of all draft plans of total

     areas of land to be leased out in a year in accordance with the control quotas assigned by the people’s government at or above the provincial level, and following the provisions of the State Council, report to the State Council or provincial-level people’s government for endorsement.

    Article 12 The right to use land shall be leased step by step in a planned manner

     by city or county people’s governments. A city or county people’s government and the urban planning, construction and real estate administration departments shall jointly draft a plan on the tracts of land to be leased out with their uses, term of use and other conditions, and following the provisions of the State Council, report to the empowered people’s government for approval and then hand down the plan to the land administration department of the city or county people’s government for execution.

    The power consigned to county people’s governments and the relevant departments of the municipality directly under Central Government for execution as referred

     to in the above paragraph shall be determined by the municipal people’s government.

    Article 13 The right of use land shall be leased through auction, bidding or negotiations between the related parties.

    The right to use the land for construction of commercial, tourist, recreational facilities or luxury housing must be leased out through auction or bidding, when conditions permit; when conditions do not permit and auction or bidding cannot be adopted, it may be leased through negotiations between the related parties. Prices for the use of the land leased out through negotiations between related parties shall not be lower than the bottom price stipulated by the State provisions. Article 14 The maximum term of land use shall be stipulated by the State Council.

    Article 15 A written contract for the lease shall be signed on the lease of the right to use land.

    The contract for the lease of the right to use land shall be signed by the land administration department of a city or county people’s government and land users.

    Article 16 Land users shall pay the lease fees of the right to use land in accordance with the contracts signed for the lease; when one fails to pay the fees for the use of the land in accordance with the related contract of the lease, the land a

    dministration department has the right to rescind the contract and ask for compensation for violation of the contract.

    Article 17 When land users pay the lease fees for the right of land use in accordance with the contract for the lease, the land administration department of a city

     or county people’s government must provide the land in accordance with the con

    tract for the lease; when the land is not provided in accordance with the contract

     for the lease, the land user has the right to cancel the contract with the fee handed over for the use to be returned by the land administration department and the land user may also ask for compensation for the violation of the contract. Article 18 Land users who need to change the use of the land prescribed by the contract must first of all get the consent from the land lessor and the urban planning department of the city or county people’s government, sign an agreement for revision of the contract for the lease of the right to use land or sign a new contract for the lease of the right to use land and readjust the lease fees of the right to use land accordingly.

    Article 19 Lease fees for the right of land use must be handed over to the financial department to be entered into the budget and used for the construction of urban infrastructures and land development. The hand- over procedure and the use of the lease fees for the right of land use shall be stipulated by the State Council.

    Article 20 The State shall not take back the right of land use that the land users

     have obtained in accordance with the law before the expiration of the agreed term prescribed in the contract; under special circumstances, the State may take back the land in advance out of public interest consideration in accordance with legal procedures and corresponding compensation shall be given to the related land user in accordance with the real term that the land had been used and the real conditions of the land development.

    Article 21 The right of land use shall terminate with extinction of the land. Article 22 Upon a continuous use of the land after expiration of the agreed term prescribed by the contract, the land user has to apply for extension at least one year before the expiration of the term. The application shall be approved except that the tract of land needs to be taken back out of public interest consideration. When extension is approved, it is necessary to re-sign a contract for the use of the land and pay fees accordingly for the use in accordance with the provisions. When the agreed term prescribed by the contract for use of the land expires and

     the land user has not applied for extension or the application for extension has not been approved in accordance with the provision of the above paragraph, the right to use the land shall be returned to the State gratis.

PART II ALLOCATION OF RIGHT TO USE LAND

    Article 23 The allocation of the right to use land shall mean the hand over of a tract of land by the people’s governments above the county level for use by a land user in accordance with the law for compensation, settlement, etc. or gratis. The right of land use obtained through allocation in accordance with this law, except those prescribed otherwise by the laws and administrative rules, has no time limit.

    Article 24 The right of land use for construction of the following projects, may be

     allocated by the people’s governments above the country level when necessary:

    (1) land used by State organs of for military purpose;

    (2) land used for construction of urban infrastructures and public utility; (3) land used for construction of the State-supported key energy, transport and water conservancy projects; and

    (4)land used for other purpose stipulated by the laws and administrative rules. CHAPTER III REAL ESTATE DEVELOPMENT

    Article 25 Real estate development should be made in strict accordance with the urban developing plan under an overall planning, rational layout, comprehensive development and balanced construction of all facilities to achieve an integration of economic, social land environmental effect.

    Article 26 Those who have obtained the right of land use through lease for real estate development must develop the land in accordance with the use and term as

     prescribed by the contract for the land use. When the development has not started one year later than the date for starting the development as prescribed by the contract, an idle land fee less than 20 percent of the lease fees for land use may be collected and when the development has not started two years later, the right to use the land may be taken back without any compensation, except that the delays are caused by force majeure, the activities of government or governmental departments, or the necessary preparatory work for starting the development. Article 27 The design and construction of a real estate development project must comply with the State relevant standards and norms.

    After its completion, a real estate development project must be inspected and accepted before it can be put into operation.

    Article 28 The right to use a land obtained in accordance with the law may be evaluated to be turned into shares for a joint equity of cooperative real estate venture in accordance with this law, the relevant laws and administrative decrees. Article 29 The State adopts preferential tax and other measures to encourage and

     support real estate development enterprises to develop and build residential buildings.

    Article 30 A real estate development enterprise shall mean an enterprise engaged

     in development and operation of real estate for the purpose of profit. The establishment of a real estate development enterprise shall have the following conditions:

    (1) Its own name and organization;

    (2) A fixed site for business operations;

    (3)The registered capital complying with provisions of the State Council; (4) Sufficient professionals and technicians; and

    (5) Other conditions prescribed by the law and administrative decrees. To establish a real estate development enterprise, a registration should be made with the Administration for Industry and Commerce. The Administration for Industry and Commerce shall handle registration procedures of those which comply with

     conditions as prescribed by this law and issue licenses to them; and refuse to handle registration procedures of those which do not comply with conditions prescribed by this law.

    Those which establish a limited liability company or limited stock company to engage in real estate development and operations shall also execute the relevant provisions of the Corporate Law.

    A real estate enterprise shall report for record to a department designated by the

     people’s government above county level where the registration department is located within one months after obtaining the license.

    Article 31 The ratio between the registered capital and the total investment of a real estate enterprise must comply with the relevant State provisions. When a real estate enterprise develops a real estate project in phases, the amount of investment in each phase shall suit the project scale of that phase and, in accordance with the provisions of the contract for the lease of the right to use land, funds shall be put into construction on schedule.

CHAPTER IV TRANSACTIONS OF REAL ESTATE

    PART 1 GENERAL PROVISIONS

    Article 32 When a real estate is transferred or mortgaged, the ownership of the building and the right to use the land occupied by the building are transferred or mortgaged at the same time.

    Article 33 The standard land prices, the nominal land prices and the appraised prices of various buildings shall be determined and published regularly. The specific methods shall be stipulated by the State Council.

    Article 34 The State institutes a real estate price evaluation system. The evaluation of price for a real estate follows the principles of being just, fair and public in accordance with the technological standards and evaluation procedures as stipulated by the State basing on the standard land price, nominal land price

     and the appraised prices of various buildings and referred to the local market prices.

    Article 35 The State institutes a report schedule for real estate transacted price. Owners of real estate right who transfer real estate shall report the real settlement price to the department designated by the local people’s government above the county level. None shall conceal a transfer or make untrue report. Article 36 When a real estate is transferred or mortgaged, the parties involved shall go through the title registration procedures in accordance with the provisions of Chapter V of this law.

    PART 2 TRANSFER OF REAL ESTATE

    Article 37 Transfer of real estate shall mean the move of the ownership of a real

     estate from the original owner to another person through sale, donation and other lawful means.

    Article 38 Real estate with following conditions shall not be transferred: (1) The acquirement of the right of land use through lease does not comply with conditions as prescribed in Article 39 of this law;

    (2) The title to the real estate has been sealed up or restricted in any form upon

     ruling or deciding of judicial authorities or administrative departments in accordance with the law;

    (3) The right of land use has been taken back in accordance with the law;

    (4) Without a written consent of other owners as under joint ownership; (5) There are disputes on the title;

    (6) Those which have not been registered and obtained title certificates in accordance with the law; and

    (7) Other condition that the transfer is forbidden according to the law or administrative rules.

    Article 39 The transfer of real estate with the right of land use shall comply with the following conditions:

    (1) All the fees in concern with the lease of the right of land use have been paid

     in accordance with provisions prescribed by the contract for the lease and the certificate of the right to use the land has been obtained; and

    (2) Investment and development have been done in accordance with the provisions prescribed by the contract for the lease; for housing construction projects, 25 percent of the total investment has gone through; for development of large tracts

     of land, land has been available for the construction of industrial or other projects.

    When a real estate is transferred with a finished building, title certificate for the building is also needed.

    Article 40 When transfer of a real estate with the right of land use being obtained through allocation, an application should be submitted to an empowered people’

    s government for approval, in accordance with the provisions of the State Council

     government. After the approval by a related people’s government, the transferee

     shall go through the procedures for transfer of the right of land use and pay lease fees for land use in accordance with the relevant State provisions. If the related people’s government refuses to carry out the procedures of the transfer of right of land use in accordance with the provisions of the State Council, the transferor shall, in accordance with the provisions of the State Council, hand over the income for transfer of the land arising form the transfer of real estate to the State or handle them otherwise.

    Article 41 A written contract must be signed in real estate transfer, and the contract shall carry the clause on the form of obtaining the right of land use. Article 42 When a real estate is transferred, the rights and obligations carried in the contract for the lease of the right of land use are transferred accordingly.

    Article 43 When transfer of a real estate with the right of land use obtained through lease, the term of the right to use the land is the remaining time of the term prescribed by the original contract after deducting the time that the land has been actually used by the original land user.

    Article 44 After the transfer of a real estate with the right of land use obtained through lease, if the transferee wants to change the use of the land prescribed by

     the original contract for the lease of the right of land use a consent must be acquired from the transferor and the urban planning department of the city county people’s government with an agreement signed on revision of the contract or a signing of a contract with an adjustment of the lease fees of the right of land use.

    Article 45 An advanced sale of commodity houses must meet the following conditions:

    (1) All the lease fees of the right of land use have been paid and a land use certificate has been obtained;

    (2) A construction planning permit has been held;

    (3) Funds put for construction of the houses for advanced sale have exceeded 25

     percent of the total budgetary investment for the project and the construction schedule and date of completion of the project have been set; and

    (4) An advance sales registration has been made with the real estate administration of the people’s government above the county level and a permit of advance sales of commodities house has been obtained.

    The advance seller of the commodity houses shall, in accordance with the relevant State provisions, report the advance sales contracts for record to real estate administration and land administration departments of the people’s government above the county level.

    The funds derived from advance sales of commodity houses must be used in construction of the relevant projects.

    Article 46 The procedures for the transfer of houses in advance sales by the buyers of the houses will be stipulated by the State Council.

    PART 3 MORTGAGE OF REAL ESTATE

    Article 47 Mortgage of real estate shall mean provision of legal real estate in non-transfer mode by the debtor to mortgagee as guarantee of debt payment. When

     the debtor fails to carry out the debt service, the mortgagee has the priority of

    being paid back first through the auction of the mortgaged real estate according to law.

    Article 48 The title of a housing property plus the right to use the land occupied by the housing property obtained lawfully may be designated as mortgage right. The right to use land obtained through lease may be used as a mortgage. Article 49 The mortgage of real estate shall be made upon the presentation of the land use certificate and housing property title certificate.

    Article 50 In mortgage of real estate, the mortgagor and mortgagee shall sign a written mortgage contract.

    Article 51 In mortgage of real estate with the right of land use obtained through allocation, the mortgagor has the priority to be paid first only after a fund equivalent to the lease fees for the right to use the land has been paid upon an auction of the real estate according to law.

    Article 52 After a real estate mortgage contract is signed, the newly added housing property on the land does not belong to the mortgaged property. When the mortgaged real estate must be auctioned, the newly added housing property may be auctioned together with the mortgaged property, but for the fund derived from the auction of the newly added housing property, the mortgagee has not the priority for first payment.

    PART 4 LEASING OF HOUSES

    Article 53 The leasing of houses shall mean ranting of houses with a certain amount of rental paid by lessees to the lessors.

    Article 54 When leasing a house, the lessor and lessee shall sign a written lease contract, prescribing such provisions as the leasing term, use of the house, rental

     and repair liabilities, and other rights and obligations of both parties; and go through registration procedures for record with the real estate administration department.

    Article 55 When leasing a residential house, it is necessary to implement the leasing policy stipulated by the State and the people’s government of the city where the house is located. When leasing a house for production or commercial use the two parties for the leasing shall determine the rental and other terms of lease through consultation.

    Article 56 When the owner of a house rents out a house built on the State-owned land with the right to use the land through allocation for a profit, the rental ari

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