This paper seeks to provide a summary overview of the new law, beyond just those provisions directly relevant to foreign investors in China real estate. However, because this new law is so sweeping and so important, it would be difficult to argue any of it is irrelevant to someone planning to invest in China real property.
On March 16, 2007, the National People's Congress of the PRC adopted the New Property Law (wuquan fa 物权法
, literally: "Law of the Rights in Things"). For the first time in the legal history of the PRC, this law provides for
basic ownership rights in immovables (real property) and movables (personal property). Since individual property rights are the foundation of any market economy, the promulgation of a full Property Law is significant. For businesses and persons engaged in real property investment in China, the law is of fundamental importance. In providing for absolute ownership rights for private individuals and businesses, the Property Law marks a major change in the rights of both Chinese citizens and foreign investors. This law is set to go into effect on October 1, 2007.
The Property Law is quite difficult to understand. There are three reasons for this.
The
first and most significant reason is that the Property Law is based on civil law models, primarily Chapter 3 of the German Civil Code. The Law also draws heavily on the Swiss and Japanese Civil Codes. Its fundamental principles differ significantly from the U.S. and British common law based real property system. In addition, the civil method of exposition is quite unfamiliar to most civil law practitioners. The structure and method tends only to make sense to those familiar with the German and Japanese codes.
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