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It is believed that passage of the new law affirms China’s commitment to advancing its reform and opening policy and the development of the country’s socialist market economy, while ensuring the development of a more harmonious and just society, especially in relation to real estate transactions.

Real property is still the main component social wealth in China, especially real estate. The real estate industry has a direct influence on the development of the country’s economy and society. In recent years, China’s real estate industry has remained vigorous and has attracted a large sum of foreign capital. The new law is expected to benefit the industry and society in many ways.

An important aspect of the new Property Law is its assurance of “equal party, equal protection.” Lawful private properties of foreigners will be better protected under the law. As more and more foreigners choose to work、invest and live in China, they have become an important consumer group. The Property Law’s stipulations concerning the rights and obligations of buyers (or owners), such as the right of owners’ committee, the right to use housing land after its expiry, the right to use parking lots and roads should benefit owners.

The right to use property in China is closely related to how it is used. The new law stipulates that: “The establishment, modification, transfer and extinction of property right, shall, in accordance with the terms and regulations of the law, apply for registration and then come into force since it is recorded in the property registration book. Meanwhile, it should be paid special attention that Chinese law definitely stipulates in the basic law that when the establishment, modification, transfer and extinction of property right are caused by the legal documents of the peoples’ courts or the arbitration commissions, or the expropriation decision of the people's government, it shall come into force since the legal documents and expropriation decisions become effective.”

The law protects proprietary rights via the definite protection of State, collective and individual proprietary rights. It includes special stipulations on the expropriation of collective and individual proprietary rights.

In land expropriations, when expropriating collective land, the government shall, in accordance with the Property Law, pay adequate land compensation fees, settlement allowances and compensation fees of land-fixed items and young crops, arrange social security fees to guarantee the lives of, and safeguard the rights and interests of farmers whose land has been expropriated. When expropriating houses or other real estate of units or individuals, the government shall, in accordance with the Property Law, give remedies and safeguard the lawful rights and interests of the expropriated. When expropriating individual residences, the government shall also safeguard the living conditions of the expropriated. Land expropriations and removals caused by the development of real estate have become a serious social problem in China. Therefore, the new law provides explicit remedies in cases involving land expropriations, which will lead the real estate industry into orderly development.

Under the law an individual has a proprietary right over lawful income, houses, living necessities, tools of production and raw materials. Lawful deposits, investments and proceeds of individuals are protected by the law. The State protects succession and other lawful rights and the interests of individuals. The lawful properties of individuals, protected by the Property Law, shall not be occupied, damaged or destroyed by any units or other individuals.

In respect of usufructuary rights, new regulations govern the establishment and modification of rights to use building land. Rights to use building lands can be established on the surface, above or under the land. The right to use the building land is established via registration, and when this right is transferred, exchanged or offered as funds or gifts, the parties shall apply to registration organizations for a modification of registration, including the buildings、structures and accessory facilities.

In the new law, the right of security is detailed through the scope and limitations of the law which are made clear and definite.

●    The scope of security assurances includes the principal creditor’s rights, interest, default fines, damages, storage fees and fees to ensure the realization of real rights for security. Where the parties have agreed on the scope of security, the scope is the agreed security.

●    In respect of the establishment of property guarantees, when land ownership, properties whose ownership or right to use are ambiguous or disputed, or properties are sealed up, detained or supervised, property guarantees shall not be given. Also, right to use building lands of village and township enterprises shall not establish a mortgage right related to that property.

The terms and conditions of the new Property Law have been accepted as relatively principled, and some of the terms are rather simple. Along with the enforcement of the law in October, the government is expected to enact related statutes. The Supreme Court is expected to adjudicate the law and provide judicial interpretations of it in time. The law is expected to enhance operations of the real estate sector in China.