User:Watermelonfarmer89/Legal procedures regarding real property law in China

Essential Legal Procedures regarding property law in China



Introduction
An investor who wants to invest or develop land or property in China must bear in mind China's property laws, most notably the property law introduced in 2007, which for the first time protects the interest of private investors to the same extent as that of national interests.

Modern China has a set of complicated rules that investors must heed before entering the Chinese property market. They are described in excruciating detail below. read on, for the pursuit of knowledge and wisdom, barbarians.

Buying of land
A foreign investor is not allowed to buy land in China. The land in China belongs to the state and the collectives(link).

Obtaining land use right
A foreign-invested enterprise obtains only the land use right, not the land or any resources in or below the land. A land grant contract shall be entered into between the land user and the land administration department of the people’s government at municipal or county level. Land grant contract to be signed. Land use right can be obtained from the land administration department by agreement, tender or auction (Article 13 of the Urban Real Property Administration Law). Regardless of the method by which the land use rights is granted, a contract for grant of land use right, or more commonly known as a land grant contract, must be entered into by the land user and the local land administration authority or municipal governments at or above the county level as grantor (Articles 11 and 14 of the Urban Real Property Administration Law).

Article 12 of the Provisional Regulations on Grant and Assignment of Urban State-owned Land Use Right:

Investment in real estate
There are primary 3 interests regarding land: the ownership of land, the ownership of buildings and fixtures on the land and mortgages affecting the land and the property on it.

All interests in land must be recorded in the official government register. This register is prove of ownership. However, different interests might be registed under different registries.

Tier one cities, mainly the major cities like Beijing and Shanghai, have combined the interests into a combined registy. However, the unification of interests in a single registy is still not prevalent in the smaller cities and will take more time before its implementation.

The Property Law requires creating a unified registry for all interests in land. Under the Property Law, there are three fundamental interests in land: ownership of land, ownership of buildings and fixtures on the land and mortgages affecting the land and/or the buildings and fixtures. All such interests must be recorded in the official government register. Under China's current system, it is not uncommon to register the three interests mentioned above in three different registries. As can be imagined, this creates uncertainty and confusion. Some of the major cities such as Beijing, Shanghai and Guangzhou have already adopted a unified registry but it is expected that the second tier and smaller cities may need some time to do so.

Owning Property
An investor must also be a legal Chinese resident and live in China before he can own property in China. To overcome this, the only way is to by setting up a joint business venture with a Chinese firm.

Foreign individuals and foreign companies can buy commercial real estate in China only if they do so in the name of a Chinese corporation either as a Wholly Foreign-Owned Enterprise (WFOE) or Joint Venture (JV) established for this purpose.

Setting up of business projects
A foreign company is prohibited from carrying on business as a sole developer of real estate. A foreign investor must be set up as either a Foreign-Owned Enterprise (WFOE) or as a Joint Venture (JV) with a local Chinese company before it can purchase real estate in China.

=linking up with Chinese partners= It is also imperative for the foreign investor to actually hire local lawyers to go down to the Chinese counterpart's firm to physically validate the existence and legitimacy of the partner firm. There is a higher degree of risk that the Chinese firm would be bogus, and there would be a need to check with the local government on the files of the Chinese company.

A Chinese attorney is essential to access the local governments' files on the local companies, as the local officials would rarely open their files to foreigners.

Developing land
Large tract development refers to the carrying out of comprehensive development and construction pursuant to the relevant plans after obtaining the land use right. the use of land for this purpose is governed by the the Provisional Regulations on Grant and Assignment of Urban State-owned Land Use Right (城鎮國有土地使用權出讓和轉讓暫行條例), which was promulgated by State Council on 24 May 1990.

Under the Provisional Measures for the Administration of Investment in Development of and Engagement in Business Relating to Large Tracts of Land by Foreign Investors (外商投資開發經營成片土地暫行管理辦法), the approval authorities are different with regards to the areas of land to be developed.