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Knowing China's New Property Law

B. Division 2: Creation, Change, Transfer and Termination of Property Rights

This division focuses on the technical issues relating to Property Rights. For immovables, the key provisions are as follows:

1. 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.

2. The Law provides that ownership or any change in ownership of land or buildings and fixtures is effective only upon registration in the official land register. The land register is also conclusive evidence of ownership. This means that in the case of multiple sales of the same property, the first party to register the sale will prevail over any other claimants to the property, no matter who was first with the contract of sale. This follows the German approach to this issue, and rejects the French and Japanese approach which provides that the contract of sale is effective to transfer ownership and registration simply provides notice to innocent third parties.

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