Rural Revitalization丨Legal Topic 9 on the Entry of Collectively-owned Construction Land into the Market——Re-transfer via Mortgage
Time:
2022-03-04
Author:
Xu Xiaoye
Source:
Visits:
210
Preface
The "Land Administration Law" and the "Regulations for the Implementation of the Land Administration Law" stipulate that the land use right holder can re-transfer the collective commercial construction land use right in accordance with the law after obtaining it. The re-transfer includes five methods. This article specifically introduces one of the re-transfer methods: mortgage.
I. The Meaning of Mortgage in Re-transfer
The mortgage right is one of the security rights in rem stipulated in the "Civil Code", and mortgage is also the most important form of security. Article 394 of the "Civil Code" stipulates: "In order to guarantee the performance of debts, if the debtor or a third party does not transfer the possession of the property and mortgages the property to the creditor, the creditor has the right to give priority to the property if the debtor fails to perform the due debts or if the circumstances for realizing the mortgage right agreed by the parties occur. The debtor or third party stipulated in the preceding paragraph is the mortgagor, the creditor is the mortgagee, and the property provided for security is the mortgaged property." This is the official explanation of the meaning of mortgage. The mortgage in re-transfer refers to the collective commercial construction land use right holder who obtains the collective commercial construction land use right through assignment and other methods and the creditor conclude an agreement in writing, without transferring the possession of the collective commercial construction land use right, and use the collective commercial construction land use right as a guarantee for the creditor's rights.
II. Establishment of Mortgage Right
The "Civil Code" stipulates that a mortgage contract should be concluded in writing and mortgage registration should be handled for the establishment of a mortgage right, and the mortgage right is established at the time of registration. With reference to the relevant provisions and procedures for the mortgage of state-owned construction land use rights, the premise for establishing a mortgage right with the collective commercial construction land use right is that all the land use right transfer fees have been paid in accordance with the agreement of the transfer contract, etc., and the land use right registration has been handled in accordance with the law. The collective commercial construction land use right holder shall sign a written mortgage contract with the creditor and handle the mortgage registration.
In addition, with reference to the provisions of Article 398 of the "Civil Code": "The construction land use rights of township and village enterprises shall not be mortgaged separately. If the factory buildings and other buildings of township and village enterprises are mortgaged, the construction land use rights within their occupied area shall be mortgaged together.", and the provisions of Article 417: "After the construction land use right is mortgaged, the new buildings on the land do not belong to the mortgaged property. When the mortgage right of the construction land use right is realized, the new buildings on the land shall be disposed of together with the construction land use right. However, the mortgagee has no right to priority compensation for the price of the new buildings.", the establishment of a mortgage with the collective commercial construction land use right should not break through the above provisions of the "Civil Code" on the mortgage of construction land use rights.
III. Analysis of Practical Problems of Mortgaging Collective Commercial Construction Land Use Rights
(I) Can the collective commercial construction land use right be transferred during the mortgage period?
Article 63 of the "Land Administration Law" stipulates that the collective commercial construction land use right obtained through assignment and other methods can be mortgaged. Article 406 of the "Civil Code" stipulates: "During the mortgage period, the mortgagor can transfer the mortgaged property. If the parties agree otherwise, follow their agreement. If the mortgaged property is transferred, the mortgage right shall not be affected.", which inevitably extends to thinking about a question, can the collective commercial construction land use right be transferred during the mortgage period? The author believes that, from the perspective of the principle of civil autonomy, the market circulation of collective commercial construction land use rights belongs to the civil category, and transfer and mortgage are both a way of re-transfer, and the law does not explicitly prohibit the parallel application of transfer and mortgage, which can be agreed upon by the autonomy of both parties; Furthermore, the second half of the third paragraph of Article 63 of the "Land Administration Law" stipulates "However, unless otherwise stipulated by laws and administrative regulations or otherwise agreed in the written contract signed by the land owner and the land user.", and Article 406 of the "Civil Code" also stipulates "If the parties agree otherwise, follow their agreement.", the legal level also stipulates that if the parties agree otherwise, follow the agreement; Therefore, the collective commercial construction land use right can be transferred during the mortgage period if the following two conditions are met: First, the written contract signed by the land owner and the land user in the first transfer does not stipulate that the collective commercial construction land use right cannot be mortgaged for re-transfer; Second, the mortgage contract does not stipulate that the transfer of the collective commercial construction land use right is prohibited or restricted during the mortgage period.
At the same time, it should also be noted that if the mortgage contract stipulates that the transfer of the collective commercial construction land use right is prohibited or restricted during the mortgage period, it is recommended to register the agreed matters in a timely manner. In the case of registration, if the mortgagor violates the agreement to transfer the collective commercial construction land use right and has already changed the registration, and the mortgagee claims that the transfer does not have the effect of property rights, the people's court will support the claim, that is, the legal consequence is that the mortgagor still enjoys the collective commercial construction land use right but needs to bear the liability for breach of contract, and the exception is that the mortgage right is extinguished because the transferee pays off the debt on behalf of the debtor.
(II) Mortgage Financing of Collective Commercial Construction Land Use Rights
After obtaining the collective commercial construction land use right, the collective commercial construction land use right holder needs a lot of funds for construction and operation. To raise funds of an appropriate amount for an appropriate period at the lowest cost, it is often necessary to solve the funding problem through financing. The "Opinions on Establishing and Improving the System and Mechanism and Policy System for Integrated Urban-Rural Development" clarifies the need to improve the rural financial service system, specifically to strengthen the construction of the rural credit environment, promote the return of rural credit cooperatives and rural commercial banks to their origins, and increase the support of development and policy financial institutions; Carry out secured financing such as rural collective commercial construction land use rights in accordance with laws and regulations. The No. 1 Central Document "Opinions of the CPC Central Committee and the State Council on Doing a Good Job in the Key Work of Comprehensively Promoting Rural Revitalization in 2022" issued on February 22, 2022 emphasized promoting mortgage financing of collective commercial construction land use rights. With the support of these policies, mortgage financing of collective commercial construction land use rights will be an important means to solve the source of funds for rural industrial construction. The advantages of mortgage financing are high loan amount, relatively low loan interest rate, long loan term, more flexible repayment methods, etc., especially for those demanders who need large amounts of funds, mortgage loans are the best choice.
There are also many problems to be solved at the practical level, such as: the issue of the eligibility of the mortgagor or mortgagee, whether there are defects in the mortgaged property, and how to refer to the relevant provisions for the mortgage of state-owned construction land, etc.
Conclusion
After the implementation of the "Land Administration Law" and the "Regulations for the Implementation of the Land Administration Law", there are also many problems in the specific operation level of the re-transfer of collective commercial construction land use rights in the secondary market. Combined with the primary market, there are still many legal issues to be resolved in the market entry process. In order to maximize the benefits and avoid the legal risks brought about by these problems, it is recommended to hire professional legal counsel to participate in it.
About the Author
Xu Xiaoye Lawyer
Partner of Guangxi Tongwang Law Firm, Master of Laws of Guangxi Normal University, Corporate Law Professional Lawyer assessed by Guangxi Bar Association.
Focuses on professional fields such as equity, mergers and acquisitions, restructuring, corporate governance, due diligence, and civil and commercial litigation. Has served or currently serves as legal counsel for several banks, state-owned enterprises, and large enterprises. Has provided clients with special legal services such as due diligence and equity transfer on multiple occasions. By assisting clients in negotiations, drafting legal documents, issuing legal opinions, and acting as an agent in litigation, provides professional legal services to clients for various issues arising in investment and financing, corporate governance, and litigation cases.
