Chapter 11 Real rights law

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Chapter 11 Real rights law
1 Concept 2 Classification 3 Publicity 4
Ownership 5 Neighborhood rights 6 SOEs
operation rights 7 Land use rights
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1 Concept
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Longines watch unlawfully deviates from owner
Longines Watch
C
D
Owner
Thief
A
B
Money
Longines Watch (Police)
Longines watch lawfully deviates from owner
Longines Watch
Owner
Borrower
D
C
B
A
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Illustration Mr. Liu acquired car ownership in
good faith
A couple Mr. Li and Mrs. Wang purchased a car and
used as taxi in 1993. On 6 March 1994 Mrs. Wang
drove the car away due to family quarrels and
lived alone. On 1 April 1994 she sold the car to
Mr. Liu and handled alteration registration with
the automobile administration department
thereafter. A few days later Mr. Li, her husband
discovered this and requested Mr. Liu to return
him the car. After rejection by Mr. Liu, Mr. Li
sued his wife and Mr. Liu before the court, which
ruled in favor of Mr. Liu since he obtained the
ownership of the car in good faith according to
Art.89 of the GPCL Opinions issued by the SPC in
1988.
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2 Classification
2.1 Ownership and real rights over others thing
(1) right holder is non-owner (2) subject
matter belongs to the owner (3) such right is
other real rights other than ownership

• Ownership is primary real right, real right over
  others thing is derivative right.
• Ownership is complete real right, real right over
  others thing is limited real right.

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2.2 Usufruct and real rights for security

• usufruct mainly controls over the utilization
  value of the
• thing, real right for security mainly
  control over the exchange value of the thing
• (2) usufruct is relatively independent, real
  right over others thing is hypotactic
• (3) possession of the subject matter is the
  precondition of exercising usufruct
• (4) subject matter of real right for security may
  be substituted, but that of usufruct may not be
  substituted

2.3 Movable and immovable real rights

• Real rights over others things established on
  them are
• quite different
• (2) Methods of publicity are different
• (3) Restrictions on them are different

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Illustration Who owns the 68-year-old kingo
The kingo planted by an 89-year-old lady, Zhou
Yuhua68 years ago is now about 30 meters in
height and its fruits may sell for more than
RMB1000. Zhou Yuhua planted it in 1934 with her
husband and constantly looked after it
thereafter. During the early 1950s land reform,
Zhou Yuhua owned it because it was within the
land of her house and land, but its ownership was
not registered. In 1963 the land at the location
of it was allocated to anther farmer Xuan
Yongquan, but reallocated to Zhou Yuhua in 1978.
In 1987 Xuan Yongquan built a new house nearby
the tree. According to the Building Title
Certificate issued by the peoples government of
Dujiangyan city in 1993, said tree was within the
four boundries of Xuan Yongquans house. There
were no disputes around the tree before 1992
since it did not produce fruits at all. However
things changed since 1992 because it produced
fruits worth of RMB 1000 each year. Though
relatives, the two families had violent quarrels
and even came into blows around the sharing of
fruits in September each year. In 1999 after
years of quarrels and application to government
agencies for ascertaining the ownership, the
municipal government of Dujiangyan city
designated its forestry bureau to handle said
disputes, which ruled that said tree should
belong to its planter, i.e. Zhou Yuhua.
Dissatisfied with said ruling, Xuan Yongquan sued
the municipal government claiming for
nullification of said ruling. The trial court
annulled the ruling and ordered the municipal
government to make a new decision within one
month from the effective date of the judgment.
The case was appealed to Sichuan provincial high
peoples court, which finally upheld the trial
court decision. As per court ruling, the
municipal government re-convened the parties,
clarified the facts and again decided in favor of
the planter, i.e. Zhou Yuhua.
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3 Publicity
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3.1 Methods of publicity

• Registration, possession and delivery

3.2 Registration immovable real rights
3.2.1 Scope of registration
Lands, buildings, mineral resources, water
resources, fishery resources and forestry
resources
3.2.2 Registration system
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3.2.2.1 Registration authority

• Land administration authority, building
  administrative authority, mineral administrative
  authority, water resources administrative
  authority, fishery administrative authority and
  forestry administrative authority

• Land administrations agricultural collective
  land ownership, land
• use rights and interests of real right nature
  on land use rights
• Building registration buildings, leasehold
  interests, mortgage
• interests and other security interests on
  buildings

3.2.2.2 Basic types of registration
(1) Original registration (2) Alteration
registration. (3) Cancellation registration
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3.2.2.3 Basic procedures

• (1) Application.
• (2) Acceptance of registration application
• (3) Examination and decision

3.2.3 Land registration
3.2.4 Building registration
3.3 Possession and delivery movable real rights
3.3.1 Possession
3.3.2 Delivery
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Illustration Is Mr. Liu the owner of the fodders
Mr. Liu and Mr. Wang are neighboring villagers.
Mr. Liu needed feedingstuff for his cows badly
and agreed buy 500 kg of fodders at the price
RMB0.4 per kg. Mr. Liu made a down payment of
RMB100 immediately upon agreement and agreed to
take delivery of all the fodders the next day.
There was an unexpected heavy rain that day which
destroyed majority of the fodders. A few days
later when Mr. Liu came to take delivery and
discovered the situation, thus requested Mr. Wang
to return him the down payment RMB100. Mr. Wang
refused and argued the fodders were yours at the
time when you made the down payment. Mr. Liu sued
Mr. Wang for restitution of the down payment
before the court. Obviously the court should
support Mr. Lius claim since the fodders have
not been delivered, thus Mr. Wang as the owner
should bear the risks of the fodders.
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4 Ownership
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4.1 Concept
4.2 State ownership
4.2.1 Scope of State ownership
(1) Land (2) All mineral resources, waters,
forests, mountains, grasslands, un-reclaimed
land, beaches, and other natural resources (3)
State-owned public utilities such as roads,
bridges, ports, irrigation works, post and
telecommunications, broadcasting, film and TV,
electricity supply, water supply and gas
supply (4) State-owned property in the State
organs, SOEs and State-owned institutions (5)
Such State owned facilities as culture and
education, scientific and technological
research, physical sports, health, cultural
relics and historic sites, scenic spots,
and natural protection zones (6) Currency
reserves, foreign exchange reserves, gold
reserves, and such securities as stocks
owned by the State (7) Military facilities (8)
State assets abroad (9) Other property owned by
the State
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4.2.2 Features

• (1) Soleness of the owner
• (2) Oneness and indefinite extensiveness of the
  subject matters
• (3) Multiple ways of realizing State ownership

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4.3 Collective ownership

• 4.3.1 Scope of collective ownership

• Land, forests, mountains, grasslands,
  un-reclaimed land, beaches and other areas that
  are stipulated by law to be under collective
  ownership. In other words, the collective-owned
  land comprises the land in the rural area and
  urban suburb except those should be the property
  of the State, the rural house sites, private
  farmed plots of cropland and hilly land
• (2) Property of collective economic
  organizations
• (3) Collectively owned buildings, reservoirs,
  farm irrigation facilities and educational,
  scientific, cultural, health, sports and other
  facilities
• (4) Other property owned by the collectives

4.3.2 Features
(1) Multiple owners (2) Extensiveness of the
subject matters (3) Multiple ways of realizing
such public property
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4.4 Private ownership

• 4.4.1 Subject matters

(1) Lawfully earned income (2) Housing (3)
Savings (4) Articles for daily use, cultural
relics, books and reference materials (5)
Trees livestock (6) Means of production
permitted by the law
4.4.2 Features
(1) Natural persons as owners (2) Means of
livelihood (3) Personal exercise of such
ownership
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4.5 Co-ownership

• Widespread co-ownership partnership and family
  property
• Two basic types co-ownership by shares and
  common ownership

Illustration Co-ownership the five rooms
Song Qingjuan is the wife of Mr. Li Junming who
died in 1965, and stepmother of Li Shuping. After
the death of Mr. Li, both Song Qingjuan and Li
Junming jointly lived in and used the houses
jointly built by Song Qingjuan and her husband,
with three rooms occupied by Song Qingjuan and
two by Li Shuping. In 1985 Song Qingjuan went
abroad and Li Shuping used all the 5 rooms of the
house. In 1988 Li Shuping changed the ownership
registration by utilizing personal relationship
in absence of the consent of Song Qingjuan. In
1992 Song Qingjuan discovered this and requested
her stepdaughter to return her share of three
rooms. Her stepdaughter, who denied the
stepmother relationship, rejected her. Thus she
sued her stepdaughter before the court. Obviously
the house with five rooms is the in the first
place the co-ownership of Song Qingjuan and her
husband. After her husbands death, 1/2 of the
house should belong to her. Then as the heirs of
first sequence, both Song Qingjuan and Li Shuping
shall equally inherit the remaining 1/2 of the
house. To be specific Song Qingjuan should own
3.75 rooms of house, while Li Shuping should
merely own 1.25 rooms of the house.
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4.6 Exercise of ownership

• 4.6.1 Exercise of public ownership

Possession, utilization, profiting from and
disposition of the subject matters by the owner
so as real its exclusive benefits
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4.6.2 Restrictions on ownership disposition

• No abuse of ownership

• Some real properties not assignable

• If land use rights are obtained through granting,
  the price of land has not been paid in full to
  the grantor and the certificate of land use
  rights has not been obtained. If it is a project
  for development of houses, injected capital has
  not reached 25 of total investment. If it
  belongs to development of tract of land,
  conditions for industrial purposes or other
  construction purposes have not been completed
• (2) Rights are restricted by rulings of judicial
  organs or administrative authorities
• (3) Land use rights have been taken back lawfully
  
• (4) Common real property where other owners
  disagree to do so
• (5) Ownership and title are at issue
• (6) Certificates of ownership have not been
  obtained
• (7) Other conditions as specified in laws and
  regulations

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Preconditions for pre-sale of real property

• (1) The land price for the land use rights has
  been paid in full and certificate of land use
  rights has been obtained
• (2) Having the planning permit for the
  construction project
• (3) 25 or more of the total amount of investment
  in the project have been injected, and
  construction schedule and completion date have
  been fixed
• (4) Pre-sale permit has been obtained

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5 Neighborhood rights

• 5.1 Legal basis

5.2 Basic types of neighborhood rights
5.2.1 Pass right
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Illustration Can residents of second and third
floors use stairs
The three-floor building based in Dongfeng county
of Jilin province was built jointly by Foreign
Trade Company and Machinery Company in 1992.
After completion the Foreign Trade Company owns
and uses the second and third floor, while the
Machinery Company owns and uses the ground floor.
In the 10 years prior to 1992 the two companies
had no major disputes in connection with the use
of the stairs leading to second and third floor.
That is say the Foreign Trade Company used the
internal stairs from the first floor leading up
to the second and third floor. The situation
changed since 1992, when the Foreign Trade
Company moved into its own new office building
and sold the original premises to IICH, Liu
Xuedong. When he moved into the second and third
floor, the Machinery Company jammed the stairs
and stopped him form using it to go upstairs.
Therefore he had no choice but using wooden
ladder outside the building, coming in and going
out through the window. Unfortunately his claim
was denied by courts of three instances including
Jilin provincial high peoples court on the
ground of expiry of limitation of action. Just
well known civil law jurist Professor Jiang Ping
pointed out, this is a typical case of pass
right. The first floor owner cannot justify its
denial of entrance through and using the stairs
to go upstairs.
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• 5.2.2 Water right
• 5.2.3 Utility services right
• 5.2.4 Avoidance of nuisance 
• 5.2.5 Boundary maintenance
• 5.2.6 Environmental protection

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6 SOEs operation rights

• Functions of ownership and operation rights

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6.1 Evolution

• 6.2 Functions

(1) Decision-making power in productions and
operations (2) Autonomy in purchase and
marketing including purchasing materials,
marketing products, pricing the products and
services, and import and export of goods and
materials (3) Power of disposing fixed assets
including the transfer of ordinary fixed
assets and leasing key equipments or major
buildings (4) Power of control over retained
funds and allocating wages and bonus (5) Power
of making investments, entering into joint
operations and mergers
Duties
(1) To maintain and multiply the value of
State-owned assets (2) To hand over profits to
the State so as to ensure the economic interests
of State ownership (3) To establish effective
disciplinary and supervision mechanisms over
distribution so as to practice the principle of
linking wages with efficiency (4) To bear the
liability of losses
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7 Land use rights
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7.1 Basic types of land use rights

• Allocated and granted land use rights

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7.1.1 Consideration7.1.2 Term 7.1.3 Purposes

• Allocation
• (1) land used by the State organs or for military
  purposes
• (2) land used for construction of urban
  infrastructure and public
• utilities
• (3) land used for construction of key energy,
  communication and
• transport, and water conservancy projects
  supported by the State
• (4) land used for other purposes as provided by
  laws and regulations

7.1.4 Nature of conferred interests
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7.2 Creation of granted land use rights

• Class ?and ?land use rights market

7.2.1 By Private Agreement
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7.2.1.1 Land users application

• (1) location, four boundaries, the area and the
  existing state of the surface
• (2) purpose of the land
• (3) planning requirements of the plot ratio, the
  building density and the garden-greenery ratio
• (4) requirements of environmental protection,
  health and prevention of epidemics and fire
  control
• (5) existing state of municipal facilities and
  the planning requirements of municipal
  constructions
• (6) draft of the granting contract
• (7) time limits for the construction of
  infrastructure works and ground facilities, and
  the minimum of money to be invested in such plot
  of land
• (8) special requirements for the plot of land to
  be granted

7.2.1.2 Letter of intent for land use 7.2.1.3
Negotiation and discussion 7.2.1.4 Execution of
contract
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7.2.2 By tender

• 7.2.2.1 Invitation to bid

(1) specifications of land use (2)
qualifications for bidders (3) place and closing
date for bidding and other pertinent procedures
and requirements (4) amount of bid bond and
method of payment (5) method of payment of the
land price and other liabilities of the land
users
7.2.2.2 Bidding 7.2.2.3 Bid appraising and
awarding 7.2.2.4 Execution of contract
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7.2.3 By auction

• 7.2.3.1 Auction announcement

(1) land-use specifications of the land at
auction (2) place and date of the auction (3)
rules and starting price of the auction (4)
amount of bid bond and method of payment (5)
other matters need to be announced
7.2.3.2 Auction 7.2.3.3 Execution of contract
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7.3 Term of land use rights

• 7.3.1 Term for corresponding purposes

Term of granted land use rights
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7.3.2 Renewal

• Apply for renewal at least one year prior to
  the expiry of
• the rights
• Grantee should pay land price to the grantor
  according
• to renewed contract and go through the
  registration
• procedures with the foregoing authorities.

7.3.3 Termination

• 7.3.3.1 By breach of the granting contract
• 7.3.3.2 By fraud
• 7.3.3.3 By expiration
• 7.3.3.4 By taking back by the government
• 7.3.3.5 By extinction of the land

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7.4 Land use rights transfer

• 7.4.1 Pre-conditions for the transfer

7.4.1.1 Actual development 7.4.1.2 Reasonable
land price 7.4.1.3 Assignee's duration of land
use rights
7.4.2 Formality

• Written contract for the transfer of land use
  rights
• Registration with the land administrative
  authorities

7.4.3 Legal consequences
Assignee steps into the shoes of the grantee
7.5 Lease of land use rights 7.6 Mortgage of
land use rights