(Adopted at the 5th session of the Tenth National People's Congress on March 16, 2007)
 
Part I General Rules Chapter I Basic Principles

Article 1 In accordance with the Constitution Law, the present Law is enacted with a view to maintaining the basic economic system of the state, protecting the socialist market economic order, clearly defining the attribution of the res, bringing into play the utilities of the res and safeguarding the real right of the right holder.

Article 2 The civil relationships incurred from the attribution and utilization of the res shall be governed by the present Law. The term "res" as mentioned in the present Law means realties and chattels. Where it is prescribed in any provision that certain right shall be taken as an object of real right, such provision shall be applicable. The term "real right" as mentioned in the present Law means the exclusive right of direct control over a specific res enjoyed by the holder in accordance with law, including ownership, usufractuary right and real rights for security.

Article 3 In the primary phase of socialism, the state adheres to the basic economic system with the public ownership playing a dominant role and diverse forms of ownership developing side by side. The public economy shall be consolidated and developed by the state, and the development of the nonpublic economy shall be encouraged, supported and guided. The socialist market economy system shall be practiced by the state as well as the equal legal status and development rights of all market subjects shall be protected.

Article 4 The real right of the state, collective, individual or any other right holder shall be protected by law, and may not be damaged by any entity or individual.

Article 5 The varieties and contents of real rights shall be prescribed by law.

Article 6 The creation, alteration, alienation or termination of the real right of a realty shall be subject to registration in accordance with law. The creation or alienation of the real right of a chattel shall be delivered in accordance with law.

Article 7 One shall, when acquiring or exercising a real right, comply with the law, respect social morals and may not infringe upon the public interests or the lawful rights and interests of any other person.

Article 8 In case there exists any other special provision in respect of real right in any other law, such special provision shall prevail.
 
Chapter II Creation, Alteration, Alienation and Termination of Real Right Section 1 Reality Registration

Article 9 Until it is registered in accordance with law, the creation, alteration, alienation or termination of the real right of a realty shall come into effect; unless it is otherwise prescribed by any law, it shall have no effect if it is not registered in accordance with law. As regards the ownership of the natural resources owned by the state in accordance with law, the registration is not required.

Article 10 The registration of a realty shall be handled by the registration organ at the locality of the realty. A uniform registration system over realties shall be practiced by the state. The scope, organ and measures of uniform registration shall be specified by the related laws and administrative regulations.

Article 11 In light of the different registration items, an applicant shall, hen applying for the registration of a realty, provide the ownership certificate of the realty and such necessary materials as the location and area of the realty.

Article 12 A registration organ shall perform the duties as follows: (1) to examine the ownership certificate and other necessary materials as provided by the applicant; (2) to inquire the applicant about the registration items concerned; (3) to register the related items in accordance with the facts and in a timely manner; and (4) other duties as provided for in any law or administrative regulation. In case the related situation of the realty under application for registration needs further proving, the registration organ may request the applicant to provide supplementary materials and conduct on-the-spot inspection where necessary.

Article 13 No registration organ may commit any of the behaviors as follows: (1) to ask for an evaluation of a realty; (2) to repeatedly register registration in the name of annual inspection; or (3) other behaviors conducted beyond its scope of registration duties.

Article 14 As regards the creation, alteration, alienation or termination of the real right of a realty, it shall go into effect since the date when it is recorded in the realty register in case the registration thereof is required by law.

Article 15 As regards a contract entered into by the related parties concerned on the creation, alteration, alienation or termination of the real right of a realty, it shall go into effect upon the conclusion of the contract, unless it is otherwise prescribed by any law; and the validity of the contract is not affected, whether the real right has been registered or not.

Article 16 The realty register shall be the basis for deciding the ownership and contents of a realty and shall be under the management of the registration organ.

Article 17 The realty ownership certificate shall be the evidence for the holder's ownership of a realty. The items recorded in the realty ownership certificate shall accord with those recorded in the realty register; unless it is proved that there is anything wrong in the realty register, the one recorded therein shall prevail in the case of any inconsistence.

Article 18 Any right holder or interested party may file an application for consulting or copying the registration materials, and the registration organ may not reject.

Article 19 In case any right holder or interested party holds that there is anything wrong in any item recorded in the realty register, it/he may apply for a correction of the registration. The registration organ shall revise the registration accordingly, in case the holder recorded in the realty register agrees to revise the registration in written form or there is evidence to prove that the registration is wrong. The interested party may apply for dissidence registration, in case the holder recorded in the realty register does not agree to the alteration. Where the registration organ grants the dissidence registration but the applicant fails to lodge an action within 15 days as of the date of dissidence registration, the dissidence registration shall lose its effect. In case the dissidence registration is improper and bring into damages to the right holder, the holder may require the applicant to compensate for damages.

Article 20 In case the related parties entered into a purchase agreement on a premise or the real right of any other realty, they may apply for advance notice registration to the registration organ so as to ensure the realization of the real right in the future. Without the consent of the holder in the advance notice registration, any disposal of the realty, after the advance notice registration, may not produce effect of real right. In case the obligee's right is terminated after the advance notice registration is made, or the application for the registration of the realty is not filed within 3 months as of the date when it can be registered, the advance notice registration shall lose its effect.

Article 21 In case any related party provides false materials for applying for registration and causes damages to any other person, it/he shall assume the liability for compensation. In case any registration organ causes damages to any other person by virtue of any mistake in registration, it shall assume the liability for compensation. The registration organ may, after making the compensation, recover the amount from the person who causes the registration mistake.

Article 22 Realty registration fees shall be charged on each piece, and may not be charged on the basis of the size, volume or certain proportion of the realty's value. The concrete charging rates shall be formulated by the related departments in the State Council in collaboration with the competent pricing department.

Section 2 Chattel Delivery
Article 23 Unless it is otherwise prescribed by any law, the creation or alienation of the real right of a chattel shall come into effect upon delivery.

Article 24 The creation, alteration, alienation or termination of the real right of any vessel, aircraft or motor vehicle and so on may not challenge any bona fide third party if it is not registered.

Article 25 In case the right holder has legally possessed the chattel prior to the establishment or alienation of a chattel's real right, the real right shall come into effect upon the effectiveness of the legal act.

Article 26 In case a third party has legally possessed the chattel prior to the establishment or alienation of a chattel's real right, the person assuming the obligation of delivery may, instead of delivery, alien the right to request the third party to return the original object.

Article 27 In case both parties agree to let the alienator continuously possess the chattel when the real right of a chattel is alienated, the real right shall go into effect upon the effectiveness of the agreement.

Section 3 Other Rules
Article 28 In case the creation, alteration, alienation or termination of a real right is resulted from a legal document of the people's court or arbitration committee or a requisition decision of the people's government, etc, the real right shall come into effect upon the effectiveness of the legal document or the requisition decision of the people's government.

Article 29 In case real right is acquired through inheritance or bequest, it shall go into effect as of the beginning time of the inheritance or bequest. Article 30 In case a real right is created or terminated as a result of such factual behaviors as the legal construction or premise demolition, it shall come into effect upon the accomplishment of the factual behavior.

Article 31 As regards a real right of realty enjoyed according to the provisions of Articles 28 through 30 of the present Law, any disposal thereof may not produce effect of real right until it is registered as required by law.
 
Chapter III Protection of Real Right
Article 32 Where a real right is damaged, the right holder may settle the problem by means of conciliation, mediation or arbitration, etc.

Article 33 Where any dispute over the ownership or content of real right arises, the interested parties may require the confirmation of the right.

Article 34 Where a realty or chattel is under an unauthorized possession, the right holder may require the returning of the original object.

Article 35 In case a real right is under obstruction or may be obstructed, the right holder may require the removing of the impediment or the termination of the danger.

Article 36 In case a realty or chattel is damaged, the right holder may require the repairing, remaking, changing or the restoration of the original state.

Article 37 In case the infringement upon a real right causes losses to the right holder, the right holder may require the compensation for the losses or the assuming of any other civil liability.

Article 38 The ways for protecting real right as prescribed in the present Law
may apply either independently or jointly in light of the specific situation of
an injury of real right. In addition to assuming civil liabilities, any entity
or individual infringing upon a real right shall assume the administrative
liabilities where it/he violates any provision on administrative regulation; in
case any crime is established, it/he shall assume the criminal liabilities.
 
II Ownership Chapter IV General Rules
Article 39 The owner of a realty or chattel is entitled to possess, utilize,
seek profits from and dispose of the realty or chattel in accordance with law.
Article 40 The owner of a realty or chattel is entitled to establish a
usufructuary right or real right for security over the realty or chattel. The
holder of usufructuary right or the holder of real right for security may, when
exercising the right, not injure the owner ‘s rights and interests.
Article 41 As regards a realty or chattel that is exclusively owned by the state
as prescribed by law, its ownership may not be acquired by any entity or
individual.
Article 42 In order to meet the demands of public interests, it is allowed to
requisition lands owned collectively, premises owned by entities and individuals
or other realties according to the statutory power limit and procedures. When
requisitioning land owned collectively, it is required to, in accordance with
law and in full amount, pay land compensation fees, placement subsidies,
compensations for the above-ground fixtures of the lands and seedlings and other
fees, arrange for social security fees for the farmers with land requisitioned,
guarantee their livelihood and protect their lawful rights and interests. When
requisitioning the premises owned by entities and individuals or other realties,
it is required to compensate for demolishment and relocation in accordance with
law and protect the lawful rights and interests of the owners of the
requisitioned realties; when requisitioning the individuals' residential houses,
it is required to guarantee the housing conditions of the owners of the
requisitioned houses. The compensation fees for requisition and other fees may
not be embezzled, misappropriated, privately shared, detained or delayed in the
payment of by any entity or individual.
Article 43 Special protections are provided by the state for farm lands, the
conversion of farm lands into construction lands is strictly restricted and the
aggregate quantity of construction lands is under control. No one may
requisition any land owned collectively with violation of the statutory power
limit and procedures.
Article 44 For meeting needs of emergent dangers or disasters, it is allowed for
one to use the realties or chattels owned by entities and individuals according
to the statutory power limit and procedures. Such realties or chattels shall,
after the emergent use, be returned to the owners. In case any realty or chattel
owned by any entity or individual is used or damaged or lost after being used,
corresponding compensation shall be made.
 
Chapter V State Ownership, Collective Ownership and Private Ownership
Article 45 As regards the properties that shall be owned by the state as
provided for by law, they shall be in the ownership of the state, that is, owned
by all the people. The State Council shall exercise the ownership of state-owned
properties on behalf of the state; in case there is any otherwise provision in
any law, such provision shall prevail.
Article 46 Mineral deposits, waters and sea areas shall be in the ownership of
the state.
Article 47 Urban lands shall be in the ownership of the state. As regards lands
in the rural areas and suburban areas that shall be owned by the state as
prescribed by law, they shall be in the ownership of the state.
Article 48 Such natural resources as forests, mountains, grasslands, waste lands
and tidal flats shall be in the ownership of the state, except for those that
shall be in the ownership of collective as provided for by law.
Article 49 As regards the wildlife resources that shall be owned by the state as
provisioned by law, they shall be in the ownership of the state.
Article 50 Radio frequency spectrum resources shall be in the ownership of the
state.
Article 51 As regards the cultural relics that shall be owned by the state as
provisioned by law, they shall be in the ownership of the state.
Article 52 National defense assets shall be in the ownership of the state. As
regards such infrastructures as railways, highways, electric power facilities,
telecommunication facilities, and petrol and gas pipelines that shall be owned
by the state as provisioned by law, they shall be in the ownership of the state.

Article 53 State organs have the power, in accordance with the laws and the
relevant provisions of the State Council, to possess, utilize and dispose of any
realty or chattel directly controlled by them.
Article 54 The public institutions held by the state have the power to possess,
utilize, as well as, according to the laws and the relevant provisions of the
State Council, seek profits from and dispose of any realty or chattel directly
controlled by them.
Article 55 As regards the enterprises set up with the funds invested in by the
state, the State Council and the local people's governments shall perform and
enjoy the contributor's duties as well as rights and interests on behalf of the
state in accordance with the relevant laws and administrative regulations.
Article 56 The state-owned properties shall be protected by law, and no entity
or individual may encroach, plunder, privately distribute, hold back or damage
them.
Article 57 The institutions and working personnel thereof in charge of
performing the duties of managing and supervising state-owned assets shall,
according to law, strengthen the management and supervision of state-owned
assets so as to promote the value maintenance and appreciation prevent the
losses thereof; in case any entity or individual causes any loss of state-owned
assets by misusing authority or neglecting duty, it/he shall assume legal
liabilities in accordance with law. In case any entity or individual, in the
process of enterprise restructuring, merger, division or affiliated
transactions, causes losses of state-owned assets by way of transferring at a
low price, conspiring to distribute them secretly, providing guarantee with them
without authorization or any other way with violation of the provisions on the
management of state-owned assets, it/he shall assume legal liabilities in
accordance with law.
Article 58 The collectively-owned realties and chattels shall contain: (1)
Lands, forests, mountains, grasslands, wastelands and tidal flats that shall be
in the ownership of collective as provided for by law; (2) Buildings, production
facilities, farmland, and water conservancy facilities that are in the ownership
of collective; (3) Facilities for education, science, culture, sanitation and
sports, etc that are in the ownership of collective; (4) Other realties and
chattels that are in the ownership of collective.
Article 59 The realties and chattels that are in the ownership of a farmers'
collective shall be collectively owned by all the members of this collective.
The following issues shall be determined by the members of the collective
according to the statutory procedures: (1) land contracting plan and whether to
contract out a land to an entity or individual not included in the collective;
(2) adjustment of the contracted lands among the right holders of the contracted
management of land; (3) methods for using and distributing such fees as land
compensation fees; (4) the alteration of ownership or any other related issue of
an enterprise set up with the funds invested in by the collective; and (5) other
issues provided for by any law.
Article 60 As regards any collectively-owned land, forest, mountain, grassland,
wasteland or tidal flat, the ownership thereof shall be exercised according to
the provisions as follows: (1) In case it is owned by a farmers' collective of a
village, a collective economic organization or the villagers' committee of the
village shall exercise the ownership on behalf of the collective; (2) In case it
is owned by two farmers' collectives or more, all the collective economic
organizations or villagers' groups of the village shall exercise the ownership
on behalf of the collective; and (3) In case it is owned by a farmers'
collective of a town, a collective economic organization of the town shall
exercise the ownership on behalf of the collective.
Article 61 As regards any realty or chattel owned by an urban collective, this
urban collective has the rights to possess, use, seek profits from and dispose
of it according to the related laws and administrative regulations.
Article 62 The collective economic organization, villager's committee or
villagers' group shall, in accordance with the relevant laws, administrative
regulations, articles of association and village regulations and villagers'
pledges, publicize the situation of the properties owned by a collective to the
members of the collective.
Article 63 Collectively-owned properties shall be protected by law, and any
entity or individual may not encroach, plunder, privately distribute, hold back
or destroy them. Where the legitimate rights and interests of any member of the
collective are infringed upon by any decision made by a collective economic
organization, villagers' committee or the principle thereof, such member may
require the people's court to cancel the decision.
Article 64 An individual has the right to own his legal income, premise,
household goods, production instruments, raw materials as well as other realties
and chattels.
Article 65 The legal savings, investments and the proceeds therefrom of an
individual shall be protected by law. An individual's right of inheritance as
well as other legal rights and interests shall be protected by the state in
accordance with law.
Article 66 An individual's legal properties shall be protected by law, any
entity or individual may not encroach, plunder or destroy them.
Article 67 The state, any collective or individual may invest to set up a
limited liability company, a company limited by shares or any other form of
enterprise. In case the state, a collective or an individual invest the realties
or chattels it owns in an enterprise, the contributor shall, in accordance with
the agreement or on the basis of his proportion of investment, enjoy rights such
as obtaining asset returns, making important decisions and selecting operators
and managers and perform their duties.
Article 68 In accordance with the laws, administrative regulations and its
articles of association, An enterprise legal person is entitled to possess,
utilize, seek profits from and dispose of any realty or chattel it owns. As
regards the rights over the realties and chattels owned by a legal person other
than an enterprise legal person, the provisions of the related laws,
administrative regulations and its articles of associations shall apply.
Article 69 The realties and chattels owned by social organizations in accordance
with law shall be protected by law.
 
Chapter VI Owners' Partitioned Ownership of Building Areas
Article 70 As regards such exclusive parts within the buildings as the
residential houses or the houses used for business purposes, an owner shall
enjoy the ownership thereof, while as regards the common parts other than the
exclusive parts, the owner shall have common ownership and the common management
right thereof.
Article 71 An owner is entitled to possess utilize, seek profits from and
dispose of the exclusive parts of the building. Any owner may not endanger the
safety of the building or infringe upon the lawful rights and interests of any
other owner when exercising his or its rights.
Article 72 An owner enjoys the rights and assumes the obligations over the
common parts other than the exclusive parts of the building, and may not reject
performing the obligations under the pretext of abandoning rights. In case an
owner alienates his residential house or the house used for business purposes
within the building, the common ownership and the common management right
enjoyed by him/her over the common parts shall be alienated at the same time.
Article 73 The roads within the building zone, except for the public roads of
cities and towns, shall be commonly owned by the owners. The green lands within
the building area, except for the public green lands of cities and towns or
those which are definitely ascribed to individuals, shall be commonly owned by
all the owners. The other public places, common facilities and houses used for
realty services within the building zone shall be commonly owned by all the
owners.
Article 74 The parking places and garages within the building area planned for
parking cars shall be used to meet the needs of the owners above all else. The
ownership of the parking places and garages shall be agreed upon by the related
parties in the manners of selling, complementary using or leasing, etc. The
parking places, which occupy the roads or other fields commonly owned by all
owners, shall be in the common ownership of all the owners.
Article 75 The owners may set up an owners' assembly and vote for an owners'
committee. For the establishment of the owners' assembly and the vote of the
owners' committee, the related departments under the local people's governments
shall provide guidance and assistance.
Article 76 The following matters shall be commonly determined by all owners: (1)
to formulate and revise the rules of procedure for the owners' assembly; (2) to
formulate and revise the stipulations on managing the building and affiliated
facilities thereof; (3) to vote for the owners' committee or alter the members
thereof t; (4) to hire or fire the realty service enterprise or any other
manager; (5) to raise or use the funds for maintaining the building and
affiliated facilities thereof; (6) to rebuild the building or any of its
affiliated facilities; (7) other important matters on the common ownership and
the common management right. For making a decision on matters prescribed in Item
(5) or (6) of the preceding paragraph, the consent of the 2/3 or more of the
total owners with exclusive parts accounting for 2/3 or more of the total area
of the building shall be obtained. For making a decision on any other issue
prescribed in the preceding paragraph, the consent of half of the total owners
with exclusive parts accounting for half of the total area of the building shall
be obtained.
Article 77 Any owner may not alter a residential house into a house used for
business purposes with violation of any law, regulation or management
stipulation. An owner shall, when changing a residential house into a house used
for business purposes, obtain the consent of the interested owners, in addition
to complying with the laws, regulations and management stipulations.
Article 78 Decisions made by the owners' assembly or the owners' committee are
binding to each owner. In case the legitimate rights and interests of any owner
has been injured by any decision made by the owners' assembly or the owners'
committee, the injured owner may require the people's court to cancel the
decision.
Article 79 The funds for maintaining a building and affiliated facilities
thereof shall be commonly owned by the owners of the building. The funds may,
upon the codetermination of the owners, be used for maintaining such common
parts as elevators and water tanks. The circumstance about the raise and use of
the maintenance funds shall be released to the owners.
Article 80 As regards such matters as the expenses allocation and the proceeds
distribution of a building or any of its affiliated facilities, in case there
exists any stipulation for these, such stipulation shall apply; in the case of
no stipulation or unclear stipulation, these matters shall be determined in
accordance with the proportion of each owner's exclusive parts to the total area
of the building.
Article 81 The owners of a building may manage the building and affiliated
facilities thereof by themselves or they may entrust a realty service enterprise
or any other manager to conduct the management. As regards the realty service
enterprise or any other manager hired by the construction entity, the owners are
entitled to alter it in accordance with law.
Article 82 The realty service enterprise or any other manager shall, upon the
strength of the owners' entrustment, manage the building and affiliated
facilities thereof within the building area and accept the owners' supervision.
Article 83 The owners shall comply with the laws, regulations and management
stipulations. As regards any act infringing upon the lawful rights and interests
of other persons, such as discarding wastes at will, discharging atmospheric
pollutants and noise, breeding animals with violation of the related
regulations, illegally building shelters, occupying passages or rejecting paying
realty management fees, etc, the owners' assembly and the owners' committee have
the right, in accordance with the relevant laws, regulations and management
stipulations, to request the actor to stop the infringing act, terminate the
danger, remove the impediments and make compensation for the losses. Where any
owner's legitimate rights and interests are infringed upon, he/she may lodge an
action to the people's court in accordance with law.
 
Chapter VII Neighboring Relationship
Article 84 A neighboring right holder of a realty shall, in accordance with the
principles of facilitating production and livelihood, solidarity and mutual aid,
as well as fairness and equity, handle the neighboring relationship in a correct
manner.
Article 85 In case there exists any legal provision on the disposal of
neighboring relationship, such provision shall apply; in the case of no such
provision,, the neighboring relationship shall be disposed of in light of the
local customs.
Article 86 The holder of a realty shall provide necessary convenience for the
neighboring right holders in terms of the use of water and drainage. As regards
the utilization of natural running water, the neighboring right holders of a
realty shall rationally distribute it. The natural current direction shall be
respected when draining natural running water.
Article 87 Necessary conveniences shall be provided by the right holder of a
realty where a neighboring right holder has to use his land by virtue of passage
or for any other reason.
Article 88 In case the right holder of a realty has to use a neighboring land or
building by virtue of the construction or repairing of a building, or the laying
of wires, cables, water pipes, heating pipelines or fuel gas pipelines, etc,
necessary convenience shall be provided by the right holder of such land or
building.
Article 89 When constructing a building, no entity or individual may block the
ventilation, lighting or sunshine of any neighboring building with violation of
the relevant engineering construction standards of the state.
Article 90 No holder of realty may discard solid wastes or discharge such
harmful substances as atmospheric pollutants, water pollutants, noise, light and
magnetic radiation with violation of the related provisions of the state.
Article 91 The right holder of the realty may not, when excavating a land,
constructing a building, laying a pipeline or installing an equipment, endanger
the safety of any neighboring realty.
Article 92 Where the right holder of a realty has to use a neighboring realty by
virtue of using water, drainage, passage or laying pipelines, etc, he shall make
more efforts to avoid causing any damage to the right holder of the neighboring
realty; He shall make corresponding compensations in case any damage is caused.
 
Chapter VIII Common Ownership
Article 93 A realty or chattel may be commonly owned by two or more entities or
individuals. Common ownership contains several co-ownership and joint ownership.

Article 94 As regards a commonly owned realty or chattel, a several co-owner
shall, on the basis of his proportion, enjoy the ownership of the realty or
chattel.
Article 95 As regards a commonly owned realty or chattel, a joint owner shall,
on a common basis, enjoy the ownership of the realty or chattel.
Article 96 The co-owners shall manage the commonly owned realty or chattel in
accordance with stipulation; in the case of no or unclear stipulation,, all
co-owners have the right and obligation of management.
Article 97 As regards the disposal or heavy repair of a commonly owned realty or
chattel, unless it is stipulated otherwise by the co-owners, the consent of the
several co-owners holding 2/3 shares or all joint owners shall be obtained.
Article 98 As regards the management expenses or any other liabilities of a
commonly owned res, in case there exists any stipulation on these, such
stipulation shall apply; in the case of no or unclear stipulation, the expenses
shall be assumed by the several co-owners in accordance with their respective
shares or commonly assumed by all joint owners.
Article 99 Where the co-owners of a commonly owned realty or chattel has
stipulated that it is not allowed to partition the realty or chattel so as to
maintain the relationship of common ownership, such stipulation shall apply; but
where any co-owner has certain significant reasons for partitioning the realty
or chattel, he may request the partition; in the case of no or unclear
stipulation, a several co-owner may request the partition at any time, and a
joint owner may request the partition where the basis for the common ownership
disappears or he has certain significant reasons. In case any damage is caused
by the partition causes to any other person, the corresponding compensation
shall be made.
Article 100 The co-owners of a commonly owned realty or chattel may decide on
through negotiation the way of partition. The real object shall be partitioned
in case no agreement is achieved and the realty or chattel may be partitioned
without impacting its value,;, the partition shall be executed by distributing
the purchase price obtained from converting its value into money, the auction or
selling off the realty or chattel in case it is difficult to partition it or its
value would be affected because of the partition. Where the realty or chattel,
which is obtained from the partition of a commonly owned realty or chattel by a
co-owner, has any flaw, the other co-owners shall assume the losses together.
Article 101 A several co-owner may alienate his share of the commonly owned
realty or chattel. And the other several co-owners have the preemptive right for
purchase on an equal footing.
Article 102 As regards an obligee's right or a debt generated from a commonly
owned realty or chattel, unless it is otherwise prescribed by any law or the
third party is aware of the fact that the co-owner does not have the
relationship of joint and several creditor's right or debt, a co-owner shall
enjoy joint and several creditor's right or undertake joint and several debt in
terms of external relationship. In terms of the internal relationship among the
co-owners, unless it is otherwise stipulated by the co-owners, a co-owner shall
enjoy the creditor's right or undertake the debt on the basis of his own share,
while joint owners shall enjoy the creditor's right or undertake the debt on a
common basis. In case any several co-owner overpays his share of the debt,
he/she has the right to recover the overpaid amount from the other co-owners.
Article 103 In case the co-owners does not stipulate whether the commonly owned
realty or chattel is under several co-ownership or joint ownership, or if the
stipulation is unclear, unless there is a family relationship among the
co-owners, it shall be considered as a several co-ownership.
Article 104 A several co-owner's share of a commonly owned realty or chattel
shall be decided on according to his contribution amount in the case of no or
unclear stipulation; each several co-owner shall enjoy an equal share where it
is impossible to determine the contribution amount.
Article 105 In case two or more entities or individuals commonly own the
usufractuary right or real right for security of a realty or chattel, the
provisions in this Chapter shall be applicable by reference.
 
Chapter IX Special Provisions on Acquiring Ownership
Article 106 In case a person unauthorized to dispose a realty or chattel
alienates the realty or chattel to an assignee, the owner is entitled to recover
the realty or chattel. The assignee shall obtain the ownership of the realty or
chattel if meeting all of the following conditions, unless it is otherwise
prescribed by law: (1) to accept the realty or chattel in good faith; (2) to
purchase the realty or chattel at a reasonable price; and (3) in case
registration is required by law, the alienated realty or chattel shall have been
registered, while in case registration is not required, the delivery thereof
shall have been accomplished. In case, according to the preceding paragraph, an
assignee obtains the ownership of a realty or chattel, the original owner may
require the person unauthorized to dispose of the realty or chattel to
compensate for his losses. In case a related party obtains any other form of
real right in good faith, the preceding two paragraphs shall apply by reference.

Article 107 The owner or any other holder has the right to recover a lost
property. In case the lost property is possessed by any other person through
alienation, the owner has the right to require the person unauthorized to
dispose of the property to compensate for damages, or, ask the assignee to
return the original property within 2 years as of the date when he knows who is
the assignee. But in case the assignee purchases the lost property through
auction or from a qualified operator, the holder shall, when requiring the
returning of the original property, pay the assignee the amount that the
assignee has paid for purchasing the property. After paying the amount, the
owner has the right to recover the amount from the person unauthorized to
dispose of the property.
Article 108 After a bona fide assignee obtains a realty, the original rights on
the realty shall be terminated, unless the bona fide assignee has already been
or ought to be aware of the right when the transfer is made.
Article 109 A lost-and-found object shall be returned to the right holder. The
person finding such object shall inform the right holder to claim the object or
hand it over to such related departments as the public security department in
time.
Article 110 After receiving a lost-and-found object, the related department
shall notify the right holder to claim the object in a timely manner in case it
knows who is the right holder; it shall publish an announcement on the claiming
of the lost property in a timely manner in case it does not know.
Article 111 The person who finds the object shall properly keep it before it is
handed over to the related department, and the related department also shall do
so before it is claimed by the right holder. Where the object is injured or lost
deliberately or for gross negligence, the personnel concerned shall assume the
civil liabilities.
Article 112 The right holder of the object, when obtaining a lost-and-found
object, shall pay the person who finds the object or the related department such
necessary expenses as the cost for safekeeping the object. Where a right holder
promises to offering a reward for finding the object, he shall, when claiming
the object, perform the obligation of granting the reward. Where the person who
finds the object misappropriates the lost object, he/she shall be deprived of
the right to ask for paying the expenses he/she has paid for safekeeping the
object or require the holder to perform the obligation as promised.
Article 113 In case a lost-and-found object fails to be claimed within 6 months
as of the date when the claiming announcement o is published, it shall be owned
by the state.
Article 114 As regards the finding of a drifter or the discovery of an object
buried underground or a hidden property, the relevant provisions on the finding
of a lost-and-found property shall apply by analogy. Where there is any other
provision in such laws as the law concerning the protection of cultural relics,
such provisions shall prevail.
Article 115 Unless it is otherwise stipulated by the parties concerned, the
accessory res shall be alienated together with the alienation of the principal
res.
Article 116 Natural fruits shall be enjoyed by the owner; it shall be obtained
by the holder of usufructuary right where there are both owner and holder of
usufructuary right. In case there are otherwise stipulations between by the
parties concerned, such stipulation shall apply. Statutory fruits shall be
obtained by the parties concerned in accordance with stipulations if any; in the
case of no or unclear stipulations, it shall be obtained in light of the
practices of trading.
 
Part III Usufructuary Right Chapter X General Rules
Article 117 As regards the realty or chattel owned by someone else, a
usufructuary right holder is entitled to possess, use and seek proceeds from it
in accordance with law.
Article 118 As regards the natural resources that are owned by the state or that
are owned by the state but used by the collective as well as those that are
owned by the collective as prescribed by law, an entity or individual may
possess, use and seek proceeds from them.
Article 119 Unless it is otherwise prescribed by any law, the state practices
the system of paid use of natural resources.
Article 120 When exercising right, a usufructuary right holder shall comply with
the provisions on protecting, reasonably exploring and utilizing resources as
provided for in the laws. When the usufructuary right holder exercises rights,
the owner may not intervene in.
Article 121 Where the usufructuary right is terminated or its exercise is
affected for reasons of expropriation or requisition, the usufructuary right
holder has the right to obtain corresponding compensations in accordance with
Articles 42 and 44 of the present Law.
Article 122 The lawfully obtained right to use sea areas shall be under the
protection of law.
Article 123 The mineral prospecting right, the mining right, the water intake
right and the right to use water areas or tidal flats for breeding or fishery
shall be under the protection of law.
 
Chapter XI Right to the Contracted Management of Land
Article 124 Such a dual operation system, under which centralized operation and
decentralized operation are combined on the basis of household contracted
management, shall be practiced by any rural economic organization. As regards
the cultivated land, wood land, grassland, and other land for agricultural uses
that are owned by farmers' collectives as well as those that are owned by the
state and used by farmers' collectives, the system of land contracted management
shall be adopted.
Article 125 The holder of the right to the contracted management of land has the
right to possess, utilize and seek proceeds from the cultivated land, wood land
and grassland, etc. under the contracted management thereof, and is entitled to
such agricultural production activities as the planting, forestry,
stockbreeding, etc.
Article 126 The contractual term of cultivated land shall be 30 years. The
contractual term of grassland shall be 30 up to 50 years. The contractual term
of wood land shall be 30 up to 70 years. The contractual term of special forest
land may, upon approval of the forestry administrative department under the
State Council, be extended. After the contractual term as referred to in the
preceding paragraph expires, the holder of the right to the contracted
management of land may, according to the relevant provisions of the state,
contract continuously.
Article 127 The right to the contracted management of land shall be established
since the contract thereon goes into effect. The local people's government at
the country level or above shall issue a certificate of the right to the
contracted management of land, a forestry right certificate or a grassland-use
right certificate to the holder, register it in the brochure so as to confirm
such rights.
Article 128 The holder of the right to the contracted management of land has the
right, in accordance with the provisions in the law on the contracting of rural
land, to circulate his/her such right. The circulated term may not be more than
the remnant term of the original contract. Any contracted land may not be used
for non-agricultural constructions without approval.
Article 129 In case the right to the contracted management of land is circulated
by means of exchange or transfer, where the parties concerned require for the
registration of such circulation, an application for the alteration registration
thereof shall be filed to the local people's government at the county level or
above. Without such registration, neither party may challenge any third party
with good faith.
Article 130 The contract-letting party may not readjust the contracted land
within the duration of a contract. In case it is necessary to readjust the
cultivated land or grassland as contracted by virtue of such especial events as
natural calamities that have materially injured the contracted land, a
readjustment may, in accordance with the legal provisions in the law on the
contracting of rural land and other related laws, be carried out.
Article 131 The contract-letting party may not take back the contracted land
within the term of the contract. In case there exists any otherwise provision in
the law on the contracting of rural land or any other law, such provision shall
prevail.
Article 132 In case a contracted land is expropriated, the holder of the right
to the contracted management of such land has the right to obtain corresponding
compensations in accordance with Paragraph 2 of Article 42 in the present Law.
Article 133 As regards the barren land or other rural land that is contracted
through bid invitation, auction, or open negotiation, etc, the right to the
contracted management thereof may, according to the law on the contracting of
rural land and other laws as well the related regulations of the State Council,
be circulated by means of alienation, lease, equity contribution, or mortgage,
etc.
Article 134 In case the contracted management is conducted over any state-owned
rural land, the related provisions in the present Law shall apply by analogy.
 
Chapter XII Right to Use Construction Land
Article 135 The holder of the right to use construction land has the right to
possess, use and seek proceeds from the land owned by the state, and shall be
entitled to the construction of buildings, fixtures and their auxiliary
facilities by making use of such land.
Article 136 The right to use construction land may be created separately on the
surface of or above or under the land. The newly-established one may not injure
the usufructuary right that has already been established.
Article 137 The right to use construction land may be created through transfer
or allotment, etc. As regards the land used for purposes of industry, business,
entertainment or commercial dwelling houses, etc. as well as the land with two
or more intended users, the alienation thereof shall adopt such means as
auction, bid invitation or any other public bidding method. It is severely
restrained to create the right to use construction land through allotment. For
adopting such means, the provisions on land uses in the laws and administrative
regulations shall be observed.
Article 138 In case the right to use construction land is created through
auction, bid invitation, or agreement, etc., the related parties shall conclude
a written contract on the transfer of such right. In general, a contract on
transfer of the right to use construction land shall contain the items as
follows: (1) name and domicile of the parties concerned; (2) location and
acreage, etc. of the land; (3) space to be covered by buildings, fixtures and
affiliated facilities thereof; (4) use purposes; (5) use term; (6) payment
methods for allotment fees and other fees; and (7) dispute settlement method.
Article 139 For establishing the right to use construction land, an application
for registering such right shall be submitted to the registration organ. The
right to use construction land shall be established as of the accomplishment of
such registration. A certificate on the right to use construction land shall be
issued by the registration organ to the holder of the right to use construction
land.
Article 140 The holder of the right to use construction land shall reasonably
use the land and may not alter the use purpose. In case the purpose of land use
needs to be altered, the approval of the relevant administrative department
shall be obtained.
Article 141 The holder of the right to use construction land shall, according to
the legal provisions and the contract, pay transfer fees and other fees.
Article 142 As regards the buildings, fixtures and their affiliated facilities
built by the holder of the right to use construction land, the holder shall
enjoy the ownership thereof, unless it is otherwise proved by any contrary
evidence.
Article 143 Unless it is otherwise prescribed by any law, the holder of the
right to use construction land has the right to alienate, exchange, use as
equity contributions, endow or mortgage the right to use construction land.
Article 144 For alienating, exchanging, using as equity contribution, endowing,
or mortgaging the right to use construction land, the parties shall enter into a
corresponding written contract. The parties concerned may make stipulations on
the contractual term, but which may not exceed the remnant term as stipulated in
the contract on transfer of the right to use construction land.
Article 145 For alienating, exchanging, using as equity contribution, endowing,
or mortgaging the right to use construction land, an application for alteration
registration shall be submitted to the registration organ.
Article 146 When alienating, exchanging, using as equity contribution, endowing,
or mortgaging the right to use construction land, the buildings, fixtures and
affiliated facilities thereof on such land shall be disposed of at the same
time.
Article 147 When alienating, exchanging, using as equity contribution, endowing,
or mortgaging the buildings, fixtures and affiliated facilities thereof, the
right to use construction land covered by the aforesaid buildings, fixtures and
affiliated facilities thereof shall be disposed of at the same time. Article 148
Before the term of the right to use construction land expires, where it is
necessary to take back the land in advance by virtue of public interests,
compensations shall, according to Article 42 of this Law, be given to the houses
and other realties on such land, and corresponding land transfer fees shall be
returned back.
Article 149 When the term of the right to use construction land for dwelling
houses expires, it shall be renewed automatically. As regards the term of the
right to use construction land not for dwelling houses, the renewing shall be
subject to legal provisions. In case there exists any stipulation on the
ownership of houses and other realties on the aforesaid land, such stipulation
shall prevail; in the case of no or unclear such stipulation, the ownership
shall be determined in accordance with the provisions in the laws and
administrative regulations.
Article 150 Where the right to use construction land is terminated, the
transferor shall go through deregistration formalities in time, and the
certificate on the right to use construction land shall be taken back by the
registration organ.
Article 151 Where a piece of collectively-owned land is used as construction
land, it shall be handled in accordance with the law on land administration and
other related laws.
 
Chapter XIII Right to Use House Sites
Article 152 The holder of the right to use house sites has the right to possess
and use land owned by a collective, and to construct residential houses and
affiliated facilities thereof by utilizing such land.
Article 153 For acquiring, exercising and alienating the right to use house
sites, the law on land administration, other related laws and the related
provisions of the state shall apply.
Article 154 The right to use house site shall be terminated where a house site
is terminated by virtue of any natural disaster, etc.. A villager losing a house
site shall be allotted a house site again.
Article 155 The alteration or cancellation registration shall be made in time in
the case of the alienation or termination of a registered right to use house
sites.
 
Chapter XIV Easement
Article 156 An easement holder shall, according to the contract, be entitled to
utilize the realty of someone else so as to enhance the efficiency of his own
realty. The term "realty of someone else" as referred to in the preceding
Paragraph shall be the servient tenement, and "one's own realty" shall be the
dominant tenement.
Article 157 For establishing an easement, the parties concerned shall enter into
an written easement contract. In general, an easement contract shall contain the
items as follows: (1) name and domicile of the related parties; (2) locations of
servient tenement and dominant tenement; (3) purposes of use and methods; (4)
use term; (5) fees and payment method; and (6) dispute settlement method.
Article 158 The easement shall be established since the easement contract comes
into effect. Where the related parties considers that the registration thereof
is necessary, they may apply to the registration organ for easement
registration; otherwise, they may not challenge any third party with good faith.

Article 159 The holder of servient tenement shall allow an easement holder to
use his/its land in accordance with the contract, and may not hamper the latter
from exercising the right.
Article 160 An easement holder shall, according to the purposes and methods as
stipulated in the contract, use the servient tenement, and make efforts to
reduce the real right restrictions on the holder of the servient tenement.
Article 161 The easement term shall be stipulated by the related parties,
however, it can not be longer than the remnant term of such usufructuary rights
as the right to the contracted management of land, the right to use construction
land, etc.
Article 162 As regards the easement enjoyed or assumed by the owner of the land,
where the right to the contracted management of land or the right to use house
site is created, holders of such rights the right to the contracted management
of land or rights may continuously enjoy or assume such established easement.
Article 163 Where any such usufructuary right as the right to the contracted
management of land, the right to use house site, etc on the land has already
been established, the land owner may, without consent of the aforesaid
usufructuary right holder, not establish any easement.
Article 164 The easement may not be transferred alone. Unless it is otherwise
stipulated by the contract, where any such usufructuary right as the right to
the contracted management of land, the right to use construction land, the right
to use house site, etc is alienated, the easement shall be alienated at the same
time.
Article 165 The easement may not be mortgaged alone. Where the right to the
contracted management of land or the right to use construction land, etc. is
mortgaged, when such mortgage is realized, the easement shall be alienated
simultaneously.
Article 166 When the dominant tenement as well as the right to the contracted
management of land, the right to use construction land or the right to use house
site thereon are partially alienated, the transferee shall enjoy the easement
simultaneously in case the easement is involved in the alienated part,.
Article 167 When the servient tenement as well as the right to the contracted
management of land, the right to use construction land thereon are partially
alienated, the easement shall be binding on the alienatee if the easement is
involved in alienated part.
Article 168 The holder of the servient tenement has the right to rescind the
easement contract in case an easement holder is under any of the following
circumstances, and the easement shall be terminated: (1) to go against the legal
provisions or the contract, or misuse the easement; or (2) as regards the paid
use of servient tenement, upon expiration of the stipulated time limit for
payment, fails to pay fees within a reasonable period for two times after being
urged to do so.
Article 169 For changing, alienating or eliminating the registered easement, the
alteration or cancellation registration shall be go through in a timely manner.
 
Part IV Real Rights for Security Chapter XV General Rules
Article 170 Where the obligor fails to pay its due debts or any circumstance for
realizing real rights for security as stipulated by the parties concerned
happens, the holder of real rights for security shall enjoy preferred payments
from the property for security, except that it is otherwise provided for by any
law.
Article 171 According to the present Law or any other law, an obligee may, in
such civil activities as loans or sales, establish the real rights for security
in case the security is required for ensuring the realization of its/his
credits. Where a third party provides security to the obligee for an obligor,
countersecurity from the obligor may be required. The countersecurity shall be
pursuant to the present Law and other related laws.
Article 172 For establishing real rights for security, a security contract shall
be entered into in accordance with the present Law and the other related laws. A
security contract shall be a subordinate one to the principal contract. Unless
it is otherwise prescribed by any law, the security contract shall be invalid
when the principal contract is nullified. After a security contract is confirmed
to be nullified, the obligor, the security provider and the obligee that has
faults shall, in light of their respective faults, undertake corresponding civil
liabilities.
Article 173 The security range shall cover principal obligee's rights and their
interests, default fines, damages as well as expenses for keeping the property
for security and for realizing the real rights for security. In case there are
otherwise stipulations between the related parties, such stipulations shall
prevail.
Article 174 In case, during the security term, the property for security is
damaged, lost or expropriated, the security holder may seek preferred payments
from the insurance money, damages or indemnities, etc. incurred therefrom. If
the term for performing the obligee's rights as secured has not expired, such
insurance money, damages or indemnities, etc. may be submitted to a competent
authority for keeping.
Article 175 As regards any security provided by a third party, where the
obligee, without obtaining the written consent of the third party, allows the
obligor to transfer all or part of its obligations, the security provider does
not have to undertake corresponding security liabilities any more.
Article 176 As regards a secured credit involving both physical and personal
security, where the obligor fails to pay its due debts or any circumstance as
stipulated by the parties concerned for realizing the property for security
happens, the obligee shall realize the obligee's rights as stipulated; in the
case of no or unclear such stipulation, and where the obligor provides his/its
own property for the security, the obligee's rights shall be realized firstly by
the security in property; and if the security by property is provided by a third
party, the obligee may, by the physical security or through requiring the
guarantor to assume the guaranty liability, realize the obligee's rights. The
third party has the right,, after undertaking the security liability, to recover
payments from the obligor.
Article 177 Real rights for security may be terminated under any of the
following circumstances: (1) The principal obligee's rights are terminated; (2)
The real rights for security have been realized; (3) The obligee waives the real
rights for security; or (4) Any other circumstance under which the real rights
for security will be terminated as provided for by any law.
Article 178 Where any provision in the Security Law conflicts with that of the
present Law, the latter shall prevail.
 
Chapter XVI Mortgage Right
Section 1 General Mortgage Right
Article 179 In order to ensure the payment of debts, an obligor or a third party
mortgages his/its properties to the obligee without transferring the possession
of such properties, and when the obligor fails to pay due debts or any
circumstance as stipulated by the parties concerned for realizing the mortgage
right happens, the obligee has the right to seek preferred payments from such
properties. The "obligor" or "third party" as referred to in the preceding
paragraph shall be the mortgagor, the "obligee" shall be the mortgagee, while
the "properties for security" shall be the mortgaged properties.
Article 180 As regards the following properties that the obligor or the third
party has the right to dispose of, mortgage may be established thereon : (1)
buildings and other objects fixed to land; (2) the right to use construction
land; (3) the right to contracted management of such land as barren land, etc.
that is acquired through bid invitation, auction and public consultation, etc.;
(4) manufacturing facilities, raw materials, semi-manufactured goods and
finished products; (5) buildings, vessels and aircraft under construction; (6)
means of communications and transportation; and (7) other properties not
prohibited from being mortgaged by any law or administrative regulation. All the
properties listed in the previous paragraph may be mortgaged together by a
mortgagor.
Article 181 An enterprise, individual industrial and commercial household or
agricultural production operator may, upon the written agreement between the
parties concerned, mortgage the existing manufacturing facilities, raw
materials, semi-manufactured goods and finished products or those to be owned in
future, and when the obligor fails to pay its/his due debts or any circumstance
as stipulated by the parties concerned for realizing the right to mortgage
arises, the obligee has the right to seek preferred payments from the chattels
existing at the time of the realization of the right to mortgage.
Article 182 For mortgaging building, the right to use construction land within
the area of this building shall be mortgaged together. When mortgaging the right
to use construction land, all the buildings on such land shall be mortgaged
together. Where a mortgagor fails to mortgage the properties in accordance with
the provisions in the preceding paragraph, the properties not mortgaged shall be
treated as having been mortgaged together.
Article 183 As regards the right to use construction land of a township or
village enterprise, mortgages may not be alone established thereon. Where the
plant of a township and village enterprise is mortgaged, the right to use
construction land within the area of such plant shall be mortgaged together.
Article 184 Any of the following properties may not be mortgaged: (1) ownership
of land; (2) the right to use such collectively-owned land as cultivated land,
house sites, land and hilly land allotted for private use, etc, except for those
mortgagable as prescribed by any law; (3) educational, medical, healthy and
other public welfare facilities of such institutions and social groups with the
aim of benefiting the public as schools, kindergartens, hospitals, etc; (4)
properties with unclear or controversial ownership or use rights; (5) properties
legally confiscated, seized or controlled; or (6) other properties that cannot
be mortgaged as prescribed by any law or administrative regulation. Article 185
For establishing a mortgage right, the parties concerned shall enter into a
written mortgage contract. In general, a mortgage contract shall contain the
items as follows: (1) the variety and sum of the secured obligee's rights; (2)
the time limit to pay debts by the obligor; (3) the name, amount, quality,
situation, location, attribution of ownership or use right of the mortgaged
property; and (4) the security scope.
Article 186 The mortgagee and the mortgagor may, prior to the expiration of the
time limit for paying debts, not stipulate that the ownership of the mortgaged
property will attributed to the obligee when the obligor fails to pay its due
debts.
Article 187 In case properties as provided for in Items (1), (2) and (3) of
Paragraph 1 of Article 180 in the present Law or a building under construction
in Item (5) are mortgaged, the mortgage registration shall be gone through, and
such mortgage right shall be established as of the date of registration.
Article 188 In case properties as provided for in Items (4) or (6) of Paragraph
1 of Article 180 of the present Law or a vessel or aircraft under construction
as provided for in Item (5) are mortgaged, the mortgage right shall be
established since the mortgage contract comes into effect; without the
registration, the mortgage right may not challenge any third party with good
faith.
Article 189 As regards the mortgage of the chattels prescribed in Article 181 of
the present Law provided by an enterprise, individual industrial and commercial
household or agricultural production operator, registration shall be handled by
the administrative department for industry and commerce at the locality of the
mortgagor. The mortgage right shall be established since the mortgage contract
comes into effect; without the registration, such mortgage right may not
challenge any third party with good faith. The mortgage as provided for in
Article 181 of the present Law may not challenge the buyer which has paid a
reasonable price and obtained the mortgaged property in normal business
operations.
Article 190 Where the mortgaged property has been leased prior to the entering
into of the mortgage contract, the original leasehold relations may not be
impacted by the mortgage right. Where it is leased after the establishment of
the mortgage right, the leasehold relation may be challenge the registered
mortgage right.
Article 191 Where a mortgagor alienates, upon consent of the mortgagee, the
mortgaged property during the mortgage term, the money generated from such
alienation shall be used to pay off debts to the mortgagee in advance or be
submitted to a competent authority for keeping. The value exceeding the
obligee's rights shall be attributed to the mortgagor, and the gap shall be paid
off by the obligor. Without the mortgagee's consent, a mortgagor may not
alienate the mortgaged property during the mortgage term,, unless the transferee
pays off the debts on behalf of the mortgagor so as to terminate the mortgage
right.
Article 192 The mortgage right may not be alienated alone, or be used as a
security for other obligee's rights by departing from the obligee's rights.
Unless it is otherwise prescribed by any law or is otherwise stipulated by the
parties concerned, when the obligee's rights are alienated, the mortgage right
thereof shall be alienated concurrently.
Article 193 Where any act of the mortgagor may sufficiently cause the reduction
of the value of the mortgaged property, the mortgagee has the right to require
the mortgagor to cease such act. Where the value of the mortgaged property has
been lowered, the mortgagee has the right to require the mortgagor to recover
the value, or provide a security equal to the reduced value. Where the mortgagor
neither recovers the value nor provides any security, the mortgagee has the
right to require the obligor to pay off the debts in advance.
Article 194 A mortgagee may abandon the mortgage right or the sequence thereof.
A mortgagee and a mortgagor may, through negotiations, alter the sequence of the
mortgage right or the amount of secured obligee's rights, etc., however, such
alteration may not produce unfavorable influences on any other mortgagee without
the written consent thereof. Where an obligor creates the mortgage by its/his
own properties, and the mortgagee abandons the mortgage right or the sequence
thereof or alter such mortgage right, other security providers shall, within the
scope for which the said mortgagee has lost the right to seek preferred
payments, be exempted from the security liability, unless any of other security
providers promises to provide the security all the same.
Article 195 When the obligor fails to pay its/his due debts or any circumstance
as stipulated by the parties concerned for realizing the right to mortgage
arises, the mortgagee may, upon negotiation with the mortgagor, convert the
mortgaged property into money or seek preferred payments from the money
generated from the auction or sale of the mortgaged property. Where the said
agreement has injured the interests of any other obligee, the obligee may,
within one year after he/it has known or should know the cause for cancellation,
require the people's court to cancel such agreement. Where no agreement on the
means of realizing the mortgage right is achieved between the mortgagee and the
mortgagor, the mortgagee may require the people's court to auction or sell off
the mortgaged property. When converting into money or selling off the mortgaged
property, its marker price shall be referred to.
Article 196 As regards the mortgage created in accordance with Article 181 of
the present Law, the mortgaged property shall be determined when any of the
following circumstances arises: (1) Upon expiration of the time limit for paying
debts, the obligee's rights have not been realized; (2) The mortgagor has been
declared bankrupt or has been canceled; (3) Other circumstances as stipulated by
the parties concerned occurs for realizing the mortgage right; or (4) Any other
circumstance seriously impacting the realization of obligee's rights.
Article 197 When the obligor fails to pay its/his due debts or any circumstance
as stipulated by the parties concerned for realizing the mortgage right arises,
and the mortgaged property is thus seized by the people's court in accordance
with law, the mortgagee has the right to collect natural or statutory fruits of
the mortgaged property as of the date of seizure, unless the mortgagee has
failed to inform the subject liable to pay off statutory fruits. As regards the
"fruits" as referred to in the preceding paragraph, they shall be firstly used
for paying the collection expenses thereof.
Article 198 The value exceeding the obligee's rights shall be attributed to the
mortgagor, and the gap shall be paid off by the obligor, after the mortgaged
property has been converted into money, auctioned or sold off.
Article 199 In case a same property is mortgaged to two or more obligees
concurrently, the money generated from the auction or sale of the mortgaged
property shall be used for paying debts in light of the prescriptions as
follows: (1) In case all the mortgage rights to have been registered, the
payments shall be made according to the registration sequence; and where the
sequence is the same, the payments shall be made on the basis of the proportion
of obligee's rights; (2) The registered mortgage right shall be cleared off
prior to the unregistered one; and (3) In case no mortgage right has been
registered, the payments shall be made on basis of the proportion of obligee's
rights.
Article 200 The buildings newly constructed on the land after the mortgage of
the right to use construction land may not belong to the mortgaged properties.
Such newly-constructed buildings can be disposed of together with the disposal
of the aforesaid right to use construction land so as to realize the mortgage
right, however, the mortgagee has no right to seek preferred payments from the
money generated from the disposal of these newly-constructed buildings.
Article 201 As regards the mortgage of the right to the contracted management of
land as provided for in Item (3) of Paragraph 1 of Article 180 of the present
Law or the right to use construction land occupied by the plant or any other
building of a township or village enterprise as prescribed in Article 183 of the
present Law, after such mortgage right is realized, without completing the
statutory procedures, the nature of land ownership or land use may not be
altered.
Article 202 A mortgagee shall, within the limitation of action for the principal
obligee's rights, exercise the mortgage right, otherwise, such mortgage right
will not be protected by the people's court.
　
 Section 1I Mortgage Right at Maximum Amount
Article 203 For ensuring the payment of debts, an obligor or third party may
provide mortgage security to the obligee for the obligee's rights that will
continuously happen within a certain term, and when the obligor fails to pay
its/his due debts or any circumstance as stipulated by the parties concerned for
realizing the mortgage right happens, the mortgagee has the right to seek
preferred payments from the security properties within the maximum amount of
obligee's rights. The obligee's rights existing prior to the establishment of
the mortgage right at maximum amount may, upon the consent of the parties
concerned, be incorporated into the scope of obligee's rights under the mortgage
security at maximum amount.
Article 204 Unless it is otherwise stipulated by the parties concerned, in case
part of obligee's rights are transferred prior to the establishment of the
mortgage security at maximum amount, the mortgage right at maximum amount may
not be transferred.
Article 205 Prior to the determination of the obligee's rights under the
mortgage security at maximum amount, the mortgagee and the mortgagor may, upon
agreement, alter the term for the determination of the obligee's rights, the
scope of obligee's rights or the maximum amount of obligee's rights, however,
such alteration may not cause any unfavorable influence to any other mortgagee.
Article 206 The mortgagee's obligee's rights shall be determined, if any of the
following circumstances occurs,: (1) The stipulated term for the determination
of the obligee's rights expires; (2) In case there is no stipulation on such
term or the related stipulations are not explicit, and where the mortgagee or
the mortgagor requires determine the obligee's rights after two years as of the
date for the establishment of the mortgage right at maximum amount; (3) no new
obligee's right may happen; (4) The mortgaged property is sealed up or seized;
(5) The obligor or the mortgagor is declared bankrupt or is revoked; or (6) Any
other circumstance as prescribed by any other law for determining the obligee's
rights arises.
Article 207 The mortgage right at maximum amount shall be governed by, in
addition to the provisions in this Section, the provisions on general mortgage
right as provided for in Section 1 of this Chapter.
 
Chapter XVII Pledge Right
Section 1 Chattel Pledge
Article 208 For the security of the payment of debts，an obligor or a third party
may pledge his (its) chattels to the obligee for occupation, and when the
obligor fails to pay due debts or any circumstance for realizing the pledge
right as stipulated by the parties happens, the obligee has the right to seek
preferred payments from the pledged chattels. The "debtor" or "third party" as
referred to in the preceding paragraph shall be the pledger, the "obligee" shall
be the pledgee, and the "chattels" as delivered shall be the pledged property.
Article 209 The chattels，which are forbidden from being pledged by any law or
administrative regulation， may not be pledged.
Article 210 For establishing the pledge right, the parties concerned shall enter
into a contract on pledge right in written form. In general， a contract on
pledge right shall contain the following items: (1) the variety and amount of
the principal obligee's rights; (2) the time limit for the obligor to pay off
debts; (3) the name, amount, quality and condition of the pledge; (4) the scope
of security; and (5) the time for the deliver of pledged properties.
Article 211 The pledgee and the pledger may not, prior to the time limit for
paying debts expires， stipulate that the ownership of pledged properties be
attributed to the obligee when the obligor fails to pay due debts.
Article 212 The pledge right shall be established after the pledgee has
delivered the pledged properties.
Article 213 Unless it is otherwise stipulated in the contract, a pledgee has the
right to obtain the fruits of the pledged properties. The "fruits" as referred
to in the preceding paragraph shall be firstly used for paying the expenses for
collecting the fruits.
Article 214 Where a pledgee, without consent of the pledger, illegally uses or
disposes of the pledged properties within the duration of the pledge right, and
thus damages are caused to the pledger, he/it shall make compensations.
Article 215 A pledgee shall be obliged to properly keep pledged properties; and
where pledged properties are damaged or lost by virtue of improper keeping, the
pledgee shall make compensations. Where pledged properties may be damaged or
lost by act of the pledgee, the pledger may ask for the pledgee to submit them
to a competent authority for keeping or require pay debts in advance and take
back them.
Article 216 Where any cause not attributable to t the pledge' fault may result
in the destruction of the pledged properties or an obvious decrease of the value
of the pledge, and which is sufficient to damage the pledgee's rights, the
pledgee has the right to require the pledger to provide corresponding security.
Where the pledger refuses to do so, the pledgee may auction or sell off the
pledged properties, and may, by negotiating with the pledger, seek preferred
payments for the obligee's rights in advance with the money generated from such
auction or sell-off, or submit the said money to a competent authority for
keeping.
Article 217 Where a pledgee transfers, without consent of the pledger, the
pledge within the duration of the pledge right, and thus destroy or loss are
caused to the pledged properties, he/it shall make compensations to the pledger.

Article 218 A pledgee may abandon the pledge right. Where an obligor provide the
pledge right by his/its own properties, and the pledgee abandons the pledge
right, unless any of other security providers promises to provide the security
all the same, other security providers' security liability will be exempted
within the scope for which the pledgee has lost the right to seek preferred
payments.
Article 219 Where the obligor has paid off the debts or the pledger has
fulfilled the secured obligee's rights in advance, the pledgee shall return the
pledged properties. Where an obligor fails to pay off its due debts or any
circumstance for realizing the pledge right as stipulated by the parties
concerned happens, the pledgee may, by negotiating with the pledger, convert the
pledge into money or seek preferred payments from the money generated from the
auction or sell-off of the pledged properties. When converting the pledged
properties into money or selling off them, their market price shall be referred
to.
Article 220 A pledger may, upon expiration of the time limit for paying debts,
request the pledgee to exercise the pledge right in a timely manner; if the
pledgee fails to do so, the pledger may ask for the people's court to auction or
sell off the pledged properties. Where a pledger has requested the pledgee to
exercise the pledge right in a timely manner, but the pledgee is lazy to do so
and thus damages are caused, the pledgee shall make compensations.
Article 221 After pledged properties are converted into money, auctioned or sold
off, the value exceeding the obligee's rights shall be attributed to the
pledger, and the gap shall be paid off by the obligor.
Article 222 The pledger and the pledgee may, upon negotiation, set up the pledge
right of maximum amount. The pledge right of maximum amount shall be governed
by, in addition to the related provisions in this Section, the provisions on
mortgage right at maximum amount prescribed in Section 1I of Chapter 16 of the
present Law by reference.
Section 1I Right Pledge
Article 223 Pledge may be established on any of the following rights which an
obligor or third party has the right to dispose of: (1) money orders, checks,
and cashier's checks; (2) bonds and deposit receipts; (3) warehouse receipts and
lading bills; (4) transferable fund units and stock rights; (5) such
transferable property rights in intellectual property as exclusive trademark
rights, patent rights, copyrights, etc; (6) account receivables; or (7) other
property rights that can be pledged as prescribed by any law or administrative
regulation.
Article 224 The parties concerned shall conclude a written contract for the
pledge of a money order, check, cashier's check, securities, deposit receipt,
warehouse receipt or bill of lading. The pledge right shall be established after
the deliver of the title certificate of the pledge to the pledgee. In case there
is no title certificate, the pledge right shall be established after the related
department has handled the registration of the pledge.
Article 225 The pledgee may make redemption or pick up the goods, and may, by
negotiating with the pledger, seek preferred payments in advance with the
redeemed money or the picked up goods, or submit the said money or goods to a
competent authority for keeping，in case the date of redemption or delivery of
the money order, check, cashier's check, bonds, deposit receipt, warehouse
receipt or lading bill of is prior to the deadline of principal obligee's
rights.
Article 226 The parties concerned shall enter into a written contract for the
pledge of fund units or stock rights. As regards the pledge of fund units or the
stock rights that are registered in the securities depository and clearing
institution, the pledge right shall be established after the securities
depository and clearing institution has handled the registration of the pledge.
As regards the pledge of other stock rights, the pledge right shall be
established after the administrations for industry and commerce has handled the
registration of the pledge. After the fund units or stock rights have been
pledged, unless it is otherwise agreed to by the pledger and the pledgee upon
negotiations， they may not be alienated. As regards the money incurred from the
transfer of fund units or stock rights， the pledger shall fulfill the obligee's
rights to the pledgee in advance with it, or submit it to a competent authority
for keeping.
Article 227 As regards the pledge such property rights in the intellectual
property as registered trademark rights, patent rights, copyrights，etc, the
parties concerned shall enter into a written contract, and the pledge right
shall be established after the related competent authority has handled the
registration of the pledge. After the property rights in the intellectual
property have been pledged, unless it is otherwise agreed to between the pledger
and the pledgee upon negotiations， the pledger may not alienate the pledge or
permit anyone else to use it. As regards the money incurred from the alienation
of the pledged intellectual property or the permission of anyone else to use it，
the pledger shall use it to fulfill the obligee's rights in advance, or submit
it to a competent authority for keeping.
Article 228 As regards the pledge of receivables, the parties concerned shall
enter into a written contract, and the pledge right shall be established after
the related credit rating institution has handled the registration of the
pledge. After the receivables have been pledged, unless it is otherwise agreed
on by the pledger and the pledgee upon negotiations， the pledger may not
alienate the pledged receivables. As regards money incurred form the alienation
of accounts receivable， the pledger shall use it to fulfill the obligee's rights
in advance, or submit it to a competent authority for keeping.
Article 229 The pledge of rights shall be governed by， in addition to the
provisions prescribed in this Section， the provisions in Section 1 of this
Chapter on the pledge of chattels.
 
Chapter XVIII Lien
Article 230 Where an obligor fails to pay off its due debts, the obligee may
take lien of the chattels that are owned by the obligor and lawfully occupied by
the obligee, and has the right to seek preferred payments from such chattels.
The "obligee" as referred to in the preceding Paragraph shall be the lienor, and
the occupied chattels shall be the property under lien.
Article 231 The chattels taken as lien by the obligee and the obligee's rights
shall fall into a same legal relationship, except for the lien between
enterprises.
Article 232 As regards chattels of which no lien may be taken as prescribed by
law or stipulated by the parties concerned, lien may not be taken of them.
Article 233 Where a property under lien is a divisible object, its value shall
be equal to the amount of debts.
Article 234 A lienor shall assume the obligation to properly keep the property
under lien, and shall make compensations in case the property under lien is
damaged or lost by virtue of improper safekeeping.
Article 235 A lienor has the right to obtain the fruits generated from the
property under lien. The "fruits" as referred to in the preceding paragraph
shall be firstly used for the payments of the expenses for collecting the
fruits.
Article 236 A lienor shall, after the property is taken as lien, stipulate with
the obligor the term for the fulfillment of the obligee's rights; and in caseof
no or unclear stipulation, two months or more shall be given to the obligor for
fulfilling the obligee's rights, except for such chattels that are not easy to
be kept as fresh goods, perishable goods, etc.. Where the obligor fails to
fulfill within the time limit, the lienor may convert the property under lien
into money by negotiating with the obligor, or seek preferred payments from the
money generated from the auction or sell-off the property under lien. When the
property under lien is converted into money or sold off, its market price should
be referred to.
Article 237 An obligor may, upon expiration of the time limit for fulfilling the
obligee's rights, require the lienor to exercise the lien; and where the lienor
fails to do so, the obligor may ask for the people's court to auction or sell
off the property under lien.
Article 238 The obligor shall after the property under lien is converted into
money, auctioned or sold off, enjoy the ownership of the value exceeding the
obligee's rights or make up shall be attributed to the gap.
Article 239 The lienor has the right to seek preferred payments in case the
right to mortgage or the right of pledge has been established on a chattel
before it is taken as lien.
Article 240 The lien shall perish in case a lienor losses the possession of the
property under lien or accepts other security separately provided by the
obligor.
 
Part V Possession Chapter XIX Possession
Article 241 In case the possession occurs on the basis of a contractual
relationship, the related stipulations in the contract shall be apply to the
use, proceedings and default liability of the realty or chattel concerned; and
the relevant legal provisions shall apply if there is no such stipulation in the
contract or the stipulations are not clear,.
Article 242 Where a possessor causes infringes to the realty or chattel under
his (its) possession when using them, it/he shall make compensations if being
malicious.
Article 243 Where a realty or chattel is possessed by a possessor, the holder
may ask for the return of original object and fruits thereof, but necessary
expenses for the maintenance of this realty or chattel paid by the bone fide
possessor shall be paid possessor l.
Article 244 Where a realty or chattel under possession is damaged or lost, the
possessor shall return the insurance money, damages or indemnities for the said
destruction or loss to the holder if the holder requires compensations; and a
malicious possessor shall make compensations in case the impairment to the
holder has not been sufficiently made up.
Article 245 Where a realty or chattel under possession is encroached on, the
possessor has the right to require the return of the original object; where any
act impairs the possession, the possessor has the right to request the
termination of impairment or danger; and where any damage is caused by virtue of
encroachment or interference, the possessor has the right to require
compensations. The claim of a possessor for returning the original object shall
perish, if the possessor fails to exercise it within one year as of the date of
encroachment. Supplementary Rules
Article 246 A local regulation may, before any law or administrative regulation
prescribes the scope, organ and measures for uniform registration of realties,
provide for related matters in accordance with the related provisions in the
present Law.
Article 247 The present Law shall enter into force as of October 1, 2007.