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China: Commercial Property

Commercial Property Law

The current law governing property in China is the Property Law of 2007, although previous laws are still in force, including the Land Management Law of 1986, the Urban Real Estate Management Law of 1994 and the Rural Land Contract Law of 2002.

Under the Constitution, all land is owned by the State, so in China there is no consideration of freehold tenure, although in rural areas collectives have rights over the land they occupy. Until the new Property Law came into force, there was no clear separation of ownership rights between freehold and leasehold. Now, the State can (and does, in exchange for a fee) create time-limited rights for the use of land for commercial purposes. The 'owner' of such a land-use right can petition for an extension at the end of the permitted term; but since these terms are commonly 40, 50 or 70 years, that situation has yet to arise.

The law permits an ownership right over a building constructed on land which has a use permission, but it is quite unclear whether such a right could survive the expiry of the land-use permission, although it can be freely bought and sold during the land-use term.

(NB These remarks apply only to commercial property; residential use-rights benefit from an automatic extension when the use term expires.)

Chinese property law is very linked to the existence of a Land Registry, as is the case in many 'civil law' jurisdictions. It is important to remember that the existence of a contract, which is so crucial in 'common law' jurisdictions, is of comparatively little weight in China; instead, it is vital to make sure that the correct Land Registry entries are in existence. These are the best and probably the only defence against an attempt to expropriate or steal your property.

 

 

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