Part I General Provisions

Chapter 1: Basic Principles

Chapter 2: Establishment, Modification, Transfer, and Extinction of Property Rights

Section 1: Real Estate Registration

Section 2: Delivery of Movable Property

Section 3: Other Provisions

Chapter 3: Protection of Property Rights

Section Two: Ownership

Chapter IV General Provisions

Chapter Five: State Ownership, Collective Ownership, and Private Ownership

Chapter Six: The Owner’s Right of Separate Ownership in a Building

Chapter 7: Neighboring Relations

Chapter 8: Joint Ownership

Chapter 9: Special Provisions on Acquisition of Ownership

Section III: Usufructuary Rights

Chapter Ten: General Provisions

Chapter Eleven: Land Contract Management Rights

Chapter 12: Right to Use Construction Land

Chapter 13: Right to Use Residential Land

Chapter 14 Easements

Section IV: Security Interests

Chapter 15: General Provisions

Chapter 16: Mortgage Rights

Section 1: General Mortgage Right

Section 2: Maximum Mortgage Right

Chapter 17: Pledge of Rights

Section 1: Pledge of Movable Property

Section 2: Pledge of Rights

Chapter 18: Lien

Section V: Possession

Chapter 19: Possession

Supplementary Provisions

Part I General Provisions

Chapter 1: Basic Principles

Article 1: In order to safeguard the fundamental economic system of the state, maintain the order of the socialist market economy, clarify ownership of property, maximize the utility of property, and protect the property rights of right holders, this Law is enacted in accordance with the Constitution.

Article 2: Civil relationships arising from the ownership and use of things shall be governed by this Law.

The “things” referred to in this Law include both real property and personal property. Where the law stipulates that rights may serve as objects of property rights, such stipulations shall prevail.

The property rights referred to in this Law refer to the direct and exclusive rights that a rights holder has, in accordance with the law, over specific objects, including ownership, usufructuary rights, and security interests.

Article 3: At the primary stage of socialism, the state adheres to the basic economic system under which public ownership plays the dominant role and diverse forms of ownership develop jointly.

The state consolidates and develops the public ownership economy, and encourages, supports, and guides the development of the non-public ownership economy.

The country implements a socialist market economy, ensuring equal legal status and development rights for all market entities.

Article 4: The property rights of the state, collectives, private individuals, and other right holders are protected by law, and no organization or individual may infringe upon them.

Article 5: The types and contents of property rights shall be prescribed by law.

Article 6: The establishment, modification, transfer, and extinction of real property rights shall be registered in accordance with the provisions of law. The establishment and transfer of personal property rights shall be effected by delivery in accordance with the provisions of law.

Article 7: The acquisition and exercise of property rights shall comply with the law, respect social ethics, and shall not harm the public interest or the legitimate rights and interests of others.

Article 8: Where other relevant laws provide special provisions regarding property rights, such provisions shall prevail.

Chapter 2: Establishment, Modification, Transfer, and Extinction of Property Rights

Section 1: Real Estate Registration

Article 9: The establishment, modification, transfer, and extinction of real property rights shall take effect upon lawful registration; without such registration, they shall not take effect, unless otherwise provided by law.

Natural resources that, according to law, are owned by the state may not require registration of ownership.

Article 10: Registration of real estate shall be handled by the registration authority located in the place where the real estate is situated.

The State implements a unified registration system for real estate. The scope of unified registration, the registration authorities, and the registration procedures shall be stipulated by laws and administrative regulations.

Article 11: When a party applies for registration, it shall provide the necessary materials, such as proof of ownership and details regarding the boundaries and area of the real estate, depending on the specific registration item.

Article 12: The registration authority shall perform the following duties:

(1) Verify the ownership certificates and other necessary materials provided by the applicant;

(2) Ask the applicant about the relevant registration details;

(3) Accurately and promptly register the relevant matters;

(4) Other duties prescribed by laws and administrative regulations.

If further proof is required regarding the property for which registration is being applied, the registration authority may request the applicant to submit additional materials and, if necessary, conduct an on-site inspection.

Article 13: The registration authority shall not engage in any of the following acts:

(1) Request an appraisal of the real estate;

(2) Conducting duplicate registrations under the guise of annual inspections, etc.;

(3) Other actions that exceed the scope of registered duties.

Article 14: The establishment, modification, transfer, and extinction of real property rights shall take effect upon registration in the real property registry, provided that such registration is required by law.

Article 15: A contract entered into between parties concerning the establishment, modification, transfer, or extinction of real property rights shall become effective upon the conclusion of the contract, unless otherwise provided by law or otherwise agreed upon in the contract. Failure to register the property right shall not affect the validity of the contract.

Article 16: The real estate registry is the basis for determining ownership and content of property rights. The real estate registry is managed by the registration authority.

Article 17: The real estate ownership certificate is proof that the holder enjoys property rights over the real estate. The information recorded on the real estate ownership certificate shall be consistent with that in the real estate registry; in case of inconsistency, unless there is evidence proving that the real estate registry contains an actual error, the real estate registry shall prevail.

Article 18: The rights holder and any interested party may apply to inquire about and copy the registration records, and the registration authority shall provide such access.

Article 19: If the rights holder or any interested party believes that the entries in the real estate registry are incorrect, they may apply for a correction of registration. If the rights holder recorded in the real estate registry consents in writing to the correction, or if there is evidence proving that the registration is indeed erroneous, the registration authority shall make the correction.

If the rights holder recorded in the real estate registry does not consent to the correction, any interested party may apply for a registration of objection. If the registration authority registers the objection, and the applicant fails to file a lawsuit within fifteen days from the date of the objection registration, the objection registration shall become invalid. If the objection registration is improper and causes damage to the rights holder, the rights holder may request compensation for damages from the applicant.

Article 20: When the parties enter into an agreement for the sale of a house or other real property rights, and in order to secure the future realization of such property rights, they may, as agreed upon, apply to the registration authority for a pre-registration. After pre-registration is completed, any disposition of the real property without the consent of the right holder who has undergone pre-registration shall not produce any effect under property law.

After preliminary registration, the preliminary registration shall become invalid if the claim is extinguished or if no application for registration is filed within three months from the date on which real estate registration could have been carried out.

Article 21: If a party provides false materials in applying for registration and thereby causes damage to others, it shall bear liability for compensation.

If a registration error causes damage to another party, the registration authority shall bear liability for compensation. After making compensation, the registration authority may seek reimbursement from the person who caused the registration error.

Article 22: The fee for real estate registration shall be charged on a per-case basis and may not be calculated as a percentage of the real estate’s area, volume, or value. Specific fee standards shall be formulated by the relevant departments of the State Council in conjunction with the price authorities.

Section 2: Delivery of Movable Property

Article 23: The establishment and transfer of property rights in movable property shall take effect upon delivery, unless otherwise provided by law.

Article 24: The establishment, modification, transfer, and extinction of property rights in vessels, aircraft, motor vehicles, and the like shall not be enforceable against bona fide third parties unless such rights have been registered.

Article 25: If, before the establishment or transfer of a property right in movable property, the rights holder has already lawfully taken possession of such movable property, the property right shall take effect from the time the legal act becomes effective.

Article 26: Before the establishment or transfer of a property right in movable property, if a third party lawfully occupies such movable property, the person obligated to deliver may, instead of delivering the property itself, transfer the right to request the third party to return the property.

Article 27: When a movable property right is transferred, if the parties agree that the transferor shall continue to possess the movable property, the property right shall take effect from the time such agreement becomes effective.

Section 3: Other Provisions

Article 28: Where the establishment, modification, transfer, or extinction of property rights is caused by legal documents issued by the People's Courts or arbitration commissions, or by expropriation decisions made by the people's governments, such effects shall take place from the time when the legal documents or the expropriation decisions of the people's governments become effective.

Article 29: Where a real right is acquired through inheritance or bequest, it shall take effect from the time the inheritance or bequest begins.

Article 30: Where a real right is established or extinguished through factual acts such as the lawful construction or demolition of a house, the effect shall take place from the moment the factual act is completed.

Article 31: Where a real property right is enjoyed pursuant to the provisions of Articles 28 to 30 of this Law, if registration is required by law when disposing of such right, the disposition shall not produce any effect with respect to the real property right unless such registration has been completed.

Chapter 3: Protection of Property Rights

Article 32: If property rights are infringed upon, the right holder may resolve the dispute through means such as conciliation, mediation, arbitration, or litigation.

Article 33: If there is a dispute over the ownership or content of a property right, any party with an interest may request confirmation of their rights.

Article 34: If a person is occupying real or personal property without the right to do so, the rightful owner may request the return of the property.

Article 35: If a person’s property rights are being or may be infringed upon, the rights holder may request that the interference be eliminated or the danger be removed.

Article 36: If real or personal property is damaged, the rights holder may request repair, remaking, replacement, or restoration to the original condition.

Article 37: If a property right is infringed upon, causing damage to the rights holder, the rights holder may request compensation for damages or may request that the infringer assume other civil liabilities.

Article 38: The methods of property rights protection stipulated in this chapter may be applied individually or combined, depending on the specific circumstances of the infringement of rights.

In addition to bearing civil liability for infringement upon property rights, any violation of administrative regulations shall entail administrative liability in accordance with the law; if such violation constitutes a crime, criminal liability shall be pursued according to law.

Section Two: Ownership

Chapter IV General Provisions

Article 39: The owner of real or personal property shall, in accordance with the law, enjoy the rights of possession, use, income, and disposal over such property.

Article 40: The owner has the right to establish usufructuary rights and security interests over his or her real or personal property. When exercising their rights, the holders of usufructuary rights and security interests shall not impair the rights and interests of the owner.

Article 41: Real and personal property that, according to law, is exclusively owned by the state may not be acquired in ownership by any organization or individual.

Article 42: For the needs of public interest, collectively owned land and houses as well as other immovable properties belonging to organizations and individuals may be requisitioned in accordance with the powers and procedures prescribed by law.

When collectively owned land is requisitioned, the land compensation fee, resettlement subsidy, compensation for ground attachments and young crops, and other related expenses shall be paid in full according to law. Social security expenses for the farmers whose land has been requisitioned shall also be arranged to ensure their livelihood and safeguard their legitimate rights and interests.

When houses and other immovable properties owned by entities or individuals are expropriated, lawful compensation for demolition shall be provided to safeguard the legitimate rights and interests of the expropriated parties. In cases where residential housing owned by individuals is expropriated, the living conditions of the expropriated persons shall also be guaranteed.

No organization or individual shall embezzle, misappropriate, privately divide, withhold, or delay the payment of compensation fees and other related expenses.

Article 43: The State shall implement special protection for cultivated land, strictly limit the conversion of agricultural land into construction land, and control the total amount of construction land. No collective-owned land may be expropriated in violation of the authorities and procedures prescribed by law.

Article 44: In cases of emergency requiring rescue operations or disaster relief, immovable or movable property belonging to organizations or individuals may be requisitioned in accordance with the powers and procedures prescribed by law. After the requisitioned immovable or movable property has been used, it shall be returned to the person whose property was requisitioned. If the immovable or movable property of an organization or individual is requisitioned or is damaged or lost after being requisitioned, compensation shall be provided.

Chapter Five: State Ownership, Collective Ownership, and Private Ownership

Article 45: Property that is stipulated by law as belonging to the state is owned by the state, which in turn means it is owned by the entire people.

State-owned property is owned by the State, with the State Council acting as its representative; where otherwise provided by law, the provisions of such law shall prevail.

Article 46: Mineral deposits, watercourses, and marine areas are owned by the state.

Article 47: Land in cities is owned by the state. Land in rural areas and suburban districts that, according to law, is designated as state-owned also belongs to the state.

Article 48: Natural resources such as forests, mountains, grasslands, wastelands, and tidal flats are owned by the state, except for those legally designated as collectively owned.

Article 49: Wild flora and fauna resources that are stipulated by law as belonging to the state shall be owned by the state.

Article 50: Radio spectrum resources are owned by the state.

Article 51: Cultural relics that, according to law, are owned by the state shall be owned by the state.

Article 52: National defense assets are owned by the state.

Infrastructure such as railways, highways, power facilities, telecommunications facilities, and oil and gas pipelines, which are owned by the state according to law, shall be deemed state-owned.

Article 53: State organs shall enjoy the rights of possession, use, and disposal—in accordance with laws and relevant regulations of the State Council—over real and personal property directly under their control.

Article 54: Public institutions established by the state shall enjoy the rights of possession, use, and, in accordance with laws and relevant regulations of the State Council, the right to derive income from and dispose of the immovable and movable property directly under their control.

Article 55: For enterprises funded by the state, the State Council and local people's governments shall, in accordance with laws and administrative regulations, respectively exercise the duties of investor on behalf of the state and enjoy the rights and interests of an investor.

Article 56: All property owned by the state is protected by law. Any entity or individual is prohibited from encroaching upon, looting, privately dividing, withholding, or damaging such property.

Article 57: The institutions and their staff members responsible for the management and supervision of state-owned property shall, in accordance with the law, strengthen the management and supervision of such property, promote the preservation and appreciation of its value, and prevent any loss of state-owned property. Those who abuse their powers or neglect their duties, thereby causing losses to state-owned property, shall bear legal responsibility in accordance with the law.

Any violation of regulations governing the management of state-owned assets—such as transferring state-owned assets at a low price, colluding to privately divide them, providing unauthorized guarantees, or otherwise causing losses to state-owned assets during corporate restructuring, mergers and divisions, related-party transactions, and other similar processes—shall entail legal liability in accordance with the law.

Article 58: Real and personal property collectively owned includes:

(1) Land, forests, mountains, grasslands, wastelands, and tidal flats that are legally designated as collectively owned;

(2) Buildings, production facilities, and agricultural water conservancy facilities collectively owned;

(3) Facilities collectively owned, such as those for education, science, culture, health, and sports;

(4) Other real and personal property collectively owned.

Article 59: Immovable and movable property collectively owned by farmers shall be collectively owned by the members of the collective.

The following matters shall be decided by the members of this collective in accordance with statutory procedures:

(1) Land contracting plans and the leasing of land to entities or individuals outside the collective;

(2) Adjustment of contracted land among individual land contract operators;

(3) The methods for the use and distribution of land compensation fees and other related expenses;

(4) Changes in ownership of enterprises funded collectively;

(5) Other matters prescribed by law.

Article 60: With regard to collectively owned land, as well as forests, mountains, grasslands, wastelands, tidal flats, and the like, ownership shall be exercised in accordance with the following provisions:

(1) Property owned collectively by the village farmers shall be owned collectively and exercised by the village collective economic organization or the villagers’ committee on behalf of the collective.

(2) Where the land is collectively owned by two or more farmer collectives within the village, the ownership shall be exercised collectively by the respective collective economic organizations or villagers’ groups within the village.

(3) For land collectively owned by rural township farmers, the township-level collective economic organization shall exercise ownership on behalf of the collective.

Article 61: Real and personal property collectively owned by urban communities shall, in accordance with laws and administrative regulations, be entitled to the rights of possession, use, income generation, and disposal by the community itself.

Article 62: Collective economic organizations, village committees, and village groups shall, in accordance with laws, administrative regulations, as well as their articles of association and village rules and covenants, publicly disclose the status of collective assets to members of the collective.

Article 63: Property collectively owned is protected by law. Any entity or individual is prohibited from encroaching upon, looting, privately dividing, or damaging such property.

If a decision made by a collective economic organization, a village committee, or its responsible person infringes upon the legitimate rights and interests of collective members, the aggrieved collective members may request the people’s court to revoke such decision.

Article 64: Individuals have ownership over their lawful income, housing, household goods, production tools, raw materials, and other immovable and movable property.

Article 65: Private, lawful savings, investments, and their returns are protected by law.

The state protects private individuals’ rights of inheritance and other lawful rights and interests in accordance with the law.

Article 66: The lawful property of individuals is protected by law, and no organization or individual shall encroach upon, loot, or damage such property.

Article 67: The State, collectives, and private individuals may, in accordance with the law, contribute capital to establish limited liability companies, joint-stock companies, or other enterprises. Real or personal property owned by the State, collectives, and private individuals that is invested into an enterprise shall entitle the investors, according to their agreement or their respective contribution proportions, to rights such as enjoying asset returns, making major decisions, and selecting management personnel, as well as to obligations they must fulfill.

Article 68: A corporate legal person shall, in accordance with laws, administrative regulations, and its articles of association, enjoy the rights to possess, use, derive income from, and dispose of its immovable and movable property.

For legal persons other than corporate legal persons, the rights to their real and personal property shall be governed by the relevant laws, administrative regulations, and articles of association.

Article 69: Real and personal property owned by social organizations in accordance with the law is protected by law.

Chapter Six: The Owner’s Right of Separate Ownership in a Building

Article 70: Owners have ownership of the exclusive portions within a building, such as residential units and commercial premises, and enjoy the rights of co-ownership and joint management over the common areas outside the exclusive portions.

Article 71: Owners have the rights of possession, use, income, and disposal over the exclusive portions of their buildings. When exercising these rights, owners must not endanger the safety of the building nor infringe upon the legitimate rights and interests of other owners.

Article 72: Owners have rights and bear obligations with respect to the common areas of a building other than their exclusive-use portions; they may not waive their rights without simultaneously fulfilling their corresponding obligations.

When a property owner transfers residential or commercial premises within a building, the rights they hold in the common areas—namely, their co-ownership and joint management rights—are transferred together with the premises.

Article 73: Roads within a building development area are jointly owned by the property owners, except for those that are designated as public roads of the town. Green spaces within a building development area are jointly owned by the property owners, except for those that are designated as public green spaces of the town or explicitly assigned to individual ownership. Other public places, public facilities, and property service premises within a building development area are also jointly owned by the property owners.

Article 74: Within a building zoning area, parking spaces and garages planned for vehicle parking shall first meet the needs of the property owners.

Within the building zoning area, the ownership of parking spaces and garages planned for vehicle parking shall be determined by the parties through agreements such as sale, gift, or lease.

Parking spaces that occupy roads or other areas jointly owned by the property owners belong to the joint ownership of all owners.

Article 75: Owners may establish an owners’ assembly and elect an owners’ committee.

Relevant departments of the local people's government shall provide guidance and assistance in establishing owners’ assemblies and electing owners’ committees.

Article 76: The following matters shall be decided jointly by the owners:

(1) Formulating and amending the rules of procedure for the owners’ assembly;

(2) Formulating and amending the management regulations for buildings and their ancillary facilities;

(3) Electing the owners’ committee or replacing members of the owners’ committee;

(4) Selecting and dismissing property service enterprises or other managers;

(5) Raising and using funds for the maintenance of the building and its ancillary facilities;

(6) Renovating or rebuilding buildings and their ancillary facilities;

(7) Other significant matters concerning co-ownership and joint management rights.

Decisions regarding the matters specified in items 5 and 6 of the preceding paragraph shall be approved by owners whose exclusive-use portions account for more than two-thirds of the total building area and who represent more than two-thirds of the total number of owners. Decisions regarding other matters mentioned in the preceding paragraph shall be approved by owners whose exclusive-use portions account for more than half of the total building area and who represent more than half of the total number of owners.

Article 77: Owners shall not, in violation of laws, regulations, or the management rules, convert residential properties into commercial premises. If an owner converts a residential property into a commercial premise, in addition to complying with applicable laws, regulations, and management rules, such conversion must also obtain the consent of owners with interests affected by the change.

Article 78: Decisions made by the owners’ assembly or the owners’ committee are binding on the owners.

If a decision made by the owners’ assembly or the owners’ committee infringes upon the legitimate rights and interests of an owner, the affected owner may request the people’s court to revoke such decision.

Article 79: The funds for the maintenance of buildings and their ancillary facilities are jointly owned by the property owners. With the joint decision of the property owners, these funds may be used for the maintenance of common areas such as elevators and water tanks. The collection and use of these maintenance funds shall be publicly disclosed.

Article 80: With regard to the allocation of costs and distribution of revenues for buildings and their ancillary facilities, if there is an agreement, the agreement shall prevail. If there is no agreement or the agreement is unclear, the allocation shall be determined according to the proportion of the owner’s exclusive-use portion to the total area of the building.

Article 81: Owners may manage the building and its ancillary facilities themselves, or they may entrust a property service enterprise or other manager to carry out such management.

Homeowners have the right, in accordance with the law, to replace the property service company or other manager hired by the construction unit.

Article 82: Property service enterprises or other managers shall, upon the entrustment of owners, manage the buildings and their ancillary facilities within the building zoning area and shall be subject to the supervision of the owners.

Article 83: Owners shall comply with laws, regulations, and the management rules.

The owners’ assembly and the owners’ committee have the right, in accordance with laws, regulations, and management rules, to require those who engage in behaviors that harm the legitimate rights and interests of others—such as arbitrarily discarding waste, discharging pollutants or noise, violating regulations by keeping animals, carrying out unauthorized construction, encroaching on passageways, or refusing to pay property fees—to cease their infringing acts, eliminate existing hazards, remove obstructions, and compensate for any resulting losses. Owners may, in accordance with the law, file a lawsuit with the people’s court against anyone who infringes upon their legitimate rights and interests.

Chapter 7: Neighboring Relations

Article 84: The neighboring right holders of real estate shall properly handle their neighboring relations in accordance with the principles of promoting production, facilitating daily life, fostering solidarity and mutual assistance, and ensuring fairness and reasonableness.

Article 85: Where laws and regulations provide for the handling of neighboring relations, such provisions shall be followed. Where no such provisions are laid down in laws and regulations, local customs may be applied.

Article 86: The owner of real property rights shall provide necessary convenience to neighboring right holders for water use and drainage.

The utilization of natural flowing water should be reasonably allocated among neighboring property owners. The discharge of natural flowing water should respect its natural flow direction.

Article 87: The owner of real property rights shall provide necessary convenience to neighboring right holders who must use their land for purposes such as passage.

Article 88: If the owner of real property rights must utilize adjacent land or buildings for the construction or repair of buildings, as well as for the laying of wires, cables, water pipes, heating systems, and gas pipelines, the owner of such land or buildings shall provide the necessary convenience.

Article 89: The construction of buildings shall not violate national standards for engineering construction and shall not obstruct the ventilation, daylighting, or sunlight exposure of neighboring buildings.

Article 90: The owner of real property rights shall not, in violation of state regulations, discard solid waste or discharge harmful substances such as atmospheric pollutants, water pollutants, noise, light, and electromagnetic radiation.

Article 91: When a property rights holder excavates land, constructs buildings, lays pipelines, or installs equipment, such activities must not endanger the safety of neighboring properties.

Article 92: If a property rights holder uses neighboring real estate for purposes such as water use, drainage, passage, or pipeline laying, he or she shall, to the greatest extent possible, avoid causing damage to the neighboring property rights holders. If damage is caused, compensation shall be provided.

Chapter 8: Joint Ownership

Article 93: Real property or personal property may be jointly owned by two or more entities or individuals. Joint ownership includes tenancy-in-common and joint tenancy.

Article 94: Joint owners in proportionate shares shall each enjoy ownership of the jointly owned real or personal property according to their respective shares.

Article 95: Co-owners jointly enjoy ownership of the jointly owned real or personal property.

Article 96: Co-owners shall manage jointly owned real or personal property in accordance with their agreement. If no agreement has been reached or the agreement is unclear, each co-owner shall have both the right and the obligation to manage the property.

Article 97: The disposition of jointly owned real or personal property, as well as any major repairs to such jointly owned real or personal property, shall require the consent of more than two-thirds of the joint owners holding shares or all joint co-owners, unless otherwise agreed upon among the co-owners.

Article 98: With respect to management expenses and other burdens incurred in the administration of jointly owned property, if there is an agreement, such expenses shall be borne according to the agreement. If no agreement exists or the agreement is unclear, joint tenants shall bear such expenses in proportion to their respective shares, while joint owners shall bear them jointly.

Article 99: If co-owners have agreed not to divide the jointly owned immovable or movable property in order to maintain the joint ownership relationship, they shall abide by such agreement. However, if a co-owner has a substantial reason to request a division, such request may be granted. In the absence of an agreement or where the agreement is unclear, tenants-in-common may at any time request a division; joint tenants may request a division when the basis of their joint ownership has been lost or when there are substantial reasons requiring a division. If the division causes damage to other co-owners, compensation shall be provided.

Article 100: Co-owners may, through negotiation, determine the method of division. If no agreement can be reached, and the jointly owned real or personal property can be divided without diminishing its value, such property shall be divided in kind. If the property is difficult to divide or its value would be diminished by division, the proceeds from valuation, auction, or sale shall be divided instead.

If the real or personal property obtained through division by co-owners has defects, the other co-owners shall share the resulting losses.

Article 101: A joint owner in proportionate shares may transfer his or her share of jointly owned real or personal property. Other joint owners shall have the right of first refusal under the same conditions.

Article 102: With regard to claims and debts arising from jointly owned real or personal property, co-owners enjoy joint and several rights and assume joint and several obligations in their external relations, unless otherwise provided by law or unless a third party knows that the co-owners do not have a joint and several relationship with respect to such claims and debts. In their internal relations among co-owners, unless otherwise agreed upon by the co-owners, tenants-in-common shall enjoy rights and assume obligations according to their respective shares, while joint tenants shall jointly enjoy rights and assume obligations. A tenant-in-common who has paid more than his or her share of the debt is entitled to seek reimbursement from the other co-owners.

Article 103: If co-owners have not agreed on whether the jointly owned real or personal property is held as tenancy in common or joint tenancy, or if the agreement is unclear, it shall be deemed to be tenancy in common, unless the co-owners have a familial relationship or other similar connection.

Article 104: If the shares held by joint owners in jointly owned real or personal property are not specified in the agreement or the agreement is unclear, the shares shall be determined according to the respective contributions made. If the amounts of contributions cannot be determined, it shall be deemed that each joint owner enjoys an equal share.

Article 105: Where two or more entities or individuals jointly enjoy usufructuary rights or security interests, the provisions of this chapter shall apply by analogy.

Chapter 9: Special Provisions on Acquisition of Ownership

Article 106: If a person without the right of disposal transfers real property or personal property to a transferee, the owner has the right to reclaim the property. Unless otherwise provided by law, the transferee shall acquire ownership of the real property or personal property if the following conditions are met:

(1) The transferee was a bona fide purchaser when acquiring the real property or personal property;

(2) Transfer at a reasonable price;

(3) Real or personal property transferred has been registered as required by law if registration is mandated, and has been delivered to the transferee if no registration is required.

If the transferee acquires ownership of real property or personal property in accordance with the preceding paragraph, the original owner shall have the right to claim compensation for losses from the person who lacked the authority to dispose of the property.

If a party acquires other property rights in good faith, the provisions of the preceding two paragraphs shall apply by analogy.

Article 107: The owner or other rights holder has the right to recover lost property. If the lost property has been acquired by another party through transfer, the rights holder has the right to claim damages from the person without the right to dispose of the property, or, within two years from the date on which the rights holder knew or should have known about the transferee, to request the return of the property from the transferee. However, if the transferee acquired the lost property through auction or from a business operator qualified to engage in such activities, the rights holder, when requesting the return of the property, shall pay the expenses paid by the transferee. After paying the expenses to the transferee, the rights holder has the right to seek reimbursement from the person without the right to dispose of the property.

Article 108: After a bona fide transferee acquires movable property, any pre-existing rights to that property shall be extinguished, unless the bona fide transferee knew or should have known about such rights at the time of the transfer.

Article 109: If someone finds a lost item, they shall return it to the rightful owner. The finder shall promptly notify the rightful owner to claim the item or hand it over to the public security authorities or other relevant departments.

Article 110: When the relevant authorities receive lost items and know the identity of the rightful owner, they shall promptly notify the owner to claim the item. If the identity of the rightful owner is unknown, the authorities shall promptly issue a notice seeking the owner.

Article 111: Before the finder delivers the lost item to the relevant authorities, and before the lost item is claimed by its owner, the relevant authorities shall properly safeguard the lost item. If the lost item is damaged or lost due to intentional misconduct or gross negligence, the authorities shall bear civil liability.

Article 112: When the rightful owner claims a lost item, they shall pay the finder or the relevant authorities the necessary expenses incurred in safeguarding the lost item.

If the rights holder offers a reward for the return of a lost item, the person claiming the lost item shall fulfill the promised obligations upon receiving it.

If a finder appropriates a lost item, they have no right to claim reimbursement for expenses incurred in safeguarding the lost item, nor do they have the right to demand that the rightful owner fulfill their promised obligations.

Article 113: If a lost item remains unclaimed for six months from the date of publication of the notice seeking its return, it shall become the property of the state.

Article 114: In the event of finding a floating object, discovering buried objects, or uncovering hidden objects, the relevant provisions applicable to the recovery of lost items shall be followed. If other laws, such as the Cultural Relics Protection Law, provide otherwise, those provisions shall prevail.

Article 115: If the principal object is transferred, the accessory object shall be transferred together with the principal object, unless otherwise agreed upon by the parties.

Article 116: Natural fruits shall be acquired by the owner. If both the owner and the usufructuary exist, the usufructuary shall acquire them. If the parties have made other agreements, their agreement shall prevail.

With respect to statutory孳息, if the parties have made an agreement, they shall obtain it in accordance with the agreement; if no agreement has been made or the agreement is unclear, it shall be obtained in accordance with trade practices.

Section III: Usufructuary Rights

Chapter Ten: General Provisions

Article 117: The holder of a usufructuary right shall, in accordance with the law, enjoy the rights to possess, use, and derive benefits from real or personal property owned by others.

Article 118: Natural resources owned by the state or collectively used by collectives, as well as those legally designated as collectively owned, may be possessed, used, and derived for benefit by organizations and individuals in accordance with the law.

Article 119: The State shall implement a system of paid use of natural resources, unless otherwise provided by law.

Article 120: When exercising their rights, usufructuary right holders shall comply with the legal provisions concerning the protection and rational development and utilization of resources. The owner shall not interfere with the exercise of rights by the usufructuary right holder.

Article 121: If the exercise of a usufructuary right is extinguished or affected due to the expropriation or requisition of real or personal property, the usufructuary has the right to receive corresponding compensation in accordance with the provisions of Articles 42 and 44 of this Law.

Article 122: The right to use sea areas acquired in accordance with the law is protected by law.

Article 123: The rights to prospect for minerals, to mine minerals, to withdraw water, and to use waters and tidal flats for aquaculture and fishing, all acquired in accordance with the law, are protected by law.

Chapter Eleven: Land Contract Management Rights

Article 124: Rural collective economic organizations shall implement a dual-tier operating system based on household contract management, combining unified management with decentralized operations.

Farmland, forestland, grassland, and other land used for agricultural purposes that are collectively owned by farmers and used by farmer collectives shall, in accordance with the law, be subject to a land contracting and management system.

Article 125: The holder of the land contract management right shall, in accordance with the law, enjoy the rights to possess, use, and obtain benefits from the cultivated land, forest land, grassland, and other lands contracted for management. They are entitled to engage in agricultural production activities such as crop cultivation, forestry, and animal husbandry.

Article 126: The contract period for cultivated land is thirty years. The contract period for grassland is from thirty to fifty years. The contract period for forest land is from thirty to seventy years; with the approval of the forestry administrative authority under the State Council, the contract period for forest land used for special timber species may be extended.

Upon expiration of the contract period specified in the preceding paragraph, the holder of the land contract management right shall continue to contract the land in accordance with relevant state regulations.

Article 127: The land contract management right is established upon the entry into force of the land contract management rights contract.

Local people's governments at or above the county level shall issue certificates of land contract management rights, forest rights certificates, and grassland use rights certificates to the holders of such rights, and shall register and keep records to confirm the land contract management rights.

Article 128: In accordance with the Rural Land Contracting Law, the holder of land contract management rights has the right to transfer such rights through methods such as subleasing, exchange, or assignment. The duration of any such transfer shall not exceed the remaining term of the contract period. Without prior legal approval, contracted land may not be used for non-agricultural construction.

Article 129: If the holder of a land contract management right exchanges or transfers such right, and the parties concerned request registration, they shall apply to the local people's government at or above the county level for registration of the change in the land contract management right. Without such registration, the right shall not be enforceable against bona fide third parties.

Article 130: During the contract period, the contracting party shall not adjust the contracted land.

In special circumstances, such as when contracted land is severely damaged by natural disasters, requiring appropriate adjustments to the contracted cultivated and grassland areas, such adjustments shall be carried out in accordance with the provisions of the Rural Land Contracting Law and other applicable laws.

Article 131: During the contract period, the contracting party shall not reclaim the contracted land. If other provisions are stipulated in laws such as the Rural Land Contracting Law, those provisions shall prevail.

Article 132: If contracted land is expropriated, the holder of the land contract management right shall be entitled to receive corresponding compensation in accordance with the provisions of Paragraph 2 of Article 42 of this Law.

Article 133: The land contract management rights obtained through contracting rural land such as wasteland via methods including bidding, auction, and public negotiation may be transferred, contributed as equity, mortgaged, or otherwise circulated in accordance with the Rural Land Contracting Law and other relevant laws, as well as regulations issued by the State Council.

Article 134: Where state-owned agricultural land is subject to contracted management, the relevant provisions of this Law shall apply by analogy.

Chapter 12: Right to Use Construction Land

Article 135: The holder of the right to use land for construction enjoys, in accordance with the law, the rights of possession, use, and benefit over land owned by the state, and is entitled to utilize such land to construct buildings, structures, and their ancillary facilities.

Article 136: The right to use land for construction purposes may be established separately on the surface, above ground, or underground of the land. The newly established right to use land for construction purposes shall not impair any existing usufructuary rights already in place.

Article 137: The establishment of land use rights for construction purposes may be carried out through methods such as assignment or allocation.

For land designated for commercial, industrial, tourism, recreational, and residential purposes—as well as for land on which there are two or more prospective users—the land shall be transferred through open bidding methods such as tendering and auction.

The establishment of land use rights for construction purposes through allocation shall be strictly restricted. Where the allocation method is adopted, compliance with the provisions of laws and administrative regulations regarding land use is required.

Article 138: Where the right to use construction land is established through methods such as bidding, auction, or agreement, the parties involved shall enter into a written contract for the transfer of the right to use construction land.

A contract for the transfer of land use rights for construction purposes generally includes the following clauses:

(1) The name and address of the party concerned;

(2) Land boundaries, area, etc.;

(3) The space occupied by buildings, structures, and their ancillary facilities;

(4) Land use;

(5) Term of Use;

(6) The transfer fee and other charges, as well as the payment method;

(7) Methods for resolving disputes.

Article 139: Where a right to use land for construction purposes is established, an application for registration of such right shall be submitted to the registration authority. The right to use land for construction purposes shall come into existence upon registration. The registration authority shall issue a certificate of right to use land for construction purposes to the holder of such right.

Article 140: The holder of the right to use land for construction purposes shall make rational use of the land and shall not alter its intended use. If a change in land use is required, such change must be approved by the relevant administrative authorities in accordance with the law.

Article 141: The holder of the right to use construction land shall pay the assignment fee and other related expenses in accordance with the law and the terms of the contract.

Article 142: The ownership of buildings, structures, and their ancillary facilities constructed by the holder of the land use right for construction purposes shall belong to the holder of the land use right, unless there is contrary evidence to the contrary.

Article 143: The holder of a land use right for construction purposes has the right to transfer, exchange, contribute as capital, donate, or mortgage such land use right, unless otherwise provided by law.

Article 144: When the right to use land for construction is transferred, exchanged, contributed as capital, gifted, or mortgaged, the parties involved shall enter into a corresponding contract in writing. The term of use shall be agreed upon by the parties, but it shall not exceed the remaining term of the right to use land for construction.

Article 145: When the right to use land for construction is transferred, exchanged, contributed as capital, or gifted, an application for change of registration shall be submitted to the registration authority.

Article 146: When the right to use land for construction is transferred, exchanged, contributed as capital, or gifted, any buildings, structures, and their associated facilities erected on that land shall be disposed of together.

Article 147: When a building, structure, or its ancillary facilities is transferred, exchanged, contributed as capital, or gifted, the land use right for the construction land within the scope occupied by such building, structure, and its ancillary facilities shall be disposed of together.

Article 148: If, prior to the expiration of the term of the land use right for construction purposes, the land is requisitioned ahead of schedule for public interest purposes, compensation shall be provided for the buildings and other immovable properties on the land in accordance with the provisions of Article 42 of this Law, and the corresponding land premium shall be refunded.

Article 149: Upon expiration of the term of the land use right for residential construction, the right shall be automatically renewed.

The renewal of the land use right for non-residential construction land upon expiration of its term shall be handled in accordance with applicable laws and regulations. As for the ownership of houses and other immovable properties on such land, if there is an agreement, the agreement shall prevail; if there is no agreement or the agreement is unclear, the provisions of laws and administrative regulations shall apply.

Article 150: If the right to use land for construction is extinguished, the transferor shall promptly handle the cancellation registration. The registration authority shall retrieve the certificate of the right to use land for construction.

Article 151: Land collectively owned that is designated for construction purposes shall be handled in accordance with the provisions of the Land Management Law and other relevant laws.

Chapter 13: Right to Use Residential Land

Article 152: The holder of the right to use residential land has, in accordance with the law, the right to occupy and use collectively owned land and is entitled to construct residences and their ancillary facilities on such land in compliance with the law.

Article 153: The acquisition, exercise, and transfer of the right to use residential land shall be governed by the Land Management Law and other relevant laws and state regulations.

Article 154: If a residential plot of land is lost due to natural disasters or other similar reasons, the right to use such land shall be extinguished. Villagers who have lost their residential plots shall be reassigned new residential plots.

Article 155: Where the right to use a residential plot that has already been registered is transferred or extinguished, the relevant change registration or cancellation registration shall be promptly processed.

Chapter 14 Easements

Article 156: The holder of an easement has the right, in accordance with the terms of the contract, to use another person’s real property in order to enhance the value and utility of their own real property.

The real property of others referred to in the preceding paragraph is known as the servient estate, while one’s own real property is known as the dominant estate.

Article 157: To establish an easement, the parties shall enter into an easement contract in writing.

Easement agreements generally include the following clauses:

(1) The name or title and domicile of the party concerned;

(2) The locations of the servient and dominant estates;

(3) Purpose and methods of use;

(4) Term of Use;

(5) Fees and payment methods;

(6) Methods for resolving disputes.

Article 158: Easements are established upon the entry into force of the easement contract. If the parties request registration, they may apply to the registration authority for registration of the easement; without such registration, the easement shall not be enforceable against bona fide third parties.

Article 159: The owner of the servient estate shall, in accordance with the terms of the contract, permit the holder of the easement to use its land and shall not obstruct the easement holder from exercising its rights.

Article 160: The holder of an easement shall utilize the servient estate in accordance with the purpose and method of use stipulated in the contract, and shall minimize any restrictions imposed on the property rights of the owner of the servient estate.

Article 161: The term of an easement shall be agreed upon by the parties, but it shall not exceed the remaining term of the land contract management right, the right to use construction land, or other usufructuary rights.

Article 162: If the owner of land rights holds an easement or is subject to an easement, when establishing a land contract management right or a residential land use right, the holder of the land contract management right or the residential land use right shall continue to enjoy or bear the previously established easement.

Article 163: If land rights such as land contract management rights, land use rights for construction purposes, and residential land use rights have already been established on a piece of land, the land owner may not establish an easement without the consent of the usufructuary.

Article 164: Easements may not be transferred independently. If the land contract management rights or the use rights for construction land are transferred, the corresponding easements shall be transferred together, unless otherwise agreed in the contract.

Article 165: Easements may not be mortgaged separately. If the land contract management right or the right to use construction land is mortgaged, the easement shall be transferred together with it upon enforcement of the mortgage right.

Article 166: When the servient estate, as well as the land contract management rights or land use rights for construction purposes on the servient estate, are partially transferred, if the transferred portion involves an easement right, the transferee shall simultaneously acquire the easement right.

Article 167: When a portion of the servient estate, together with the land contract management rights or land use rights for construction purposes located on the servient estate, is transferred, and the transferred portion involves an easement right, the easement right shall be binding on the transferee.

Article 168: If the easement holder falls under any of the following circumstances, the right holder of the servient estate shall have the right to terminate the easement contract, thereby extinguishing the easement:

(1) Abusing easements in violation of legal provisions or contractual agreements;

(2) If the paid use of the servient estate has reached the agreed-upon payment period, and after two reminders within a reasonable time frame, the fee remains unpaid.

Article 169: Any changes, transfers, or termination of a registered easement shall be promptly registered for amendment or cancellation.

Section IV: Security Interests

Chapter 15: General Provisions

Article 170: A secured creditor shall, in accordance with the law, have the right to be paid in priority from the secured property if the debtor fails to perform the due debt or if any of the circumstances for exercising the security interest agreed upon by the parties occurs, unless otherwise provided by law.

Article 171: In civil activities such as lending and sales, where a creditor needs security to ensure the realization of its claim, it may establish a security interest in accordance with the provisions of this Law and other applicable laws.

If a third party provides a guarantee to the creditor on behalf of the debtor, it may request the debtor to provide counter-guarantees. Counter-guarantees shall be governed by the provisions of this Law and other applicable laws.

Article 172: The establishment of a security interest shall be governed by this Law and other applicable laws, and a security contract shall be concluded accordingly. The security contract is an accessory contract to the principal debt contract. If the principal debt contract is invalid, the security contract shall also be invalid, unless otherwise provided by law.

After a guarantee contract is declared invalid, if the debtor, guarantor, and creditor all bear fault, each party shall bear its respective civil liability according to its degree of fault.

Article 173: The scope of security interests shall include the principal debt and its interest, default penalties, damages, expenses for the custody of the secured property, and costs incurred in enforcing the security interests. If the parties have made other agreements, such agreements shall prevail.

Article 174: During the guarantee period, if the guaranteed property is damaged, lost, or expropriated, the holder of the security interest may have priority in receiving any insurance proceeds, compensation, or indemnity paid out. If the maturity date of the secured claim has not yet arrived, the insurance proceeds, compensation, or indemnity may also be deposited in escrow.

Article 175: If a third party provides a guarantee and, without the third party’s written consent, the creditor permits the debtor to transfer all or part of the debt, the guarantor shall no longer be liable for the corresponding guarantee obligations.

Article 176: If the secured claim is secured both by a real property security interest and by a personal guarantee, and the debtor fails to perform the due debt or an event occurs as agreed upon by the parties that triggers the enforcement of the security interest, the creditor shall enforce the claim in accordance with the agreement. If no agreement has been reached or the agreement is unclear, and the debtor himself has provided a real property security interest, the creditor shall first enforce the claim against such real property security interest. If a third party has provided a real property security interest, the creditor may either enforce the claim against such security interest or demand that the guarantor assume the guarantee liability. After a third party providing the security interest has assumed the guarantee liability, it shall have the right to seek reimbursement from the debtor.

Article 177: A security interest shall be extinguished if any of the following circumstances exists:

(1) The principal debt is extinguished;

(2) Enforcement of security interests;

(3) The creditor waives the security interest;

(4) Other circumstances under which the security interest is extinguished as provided by law.

Article 178: If there is any inconsistency between the Security Law and the provisions of this Law, this Law shall prevail.

Chapter 16: Mortgage Rights

Section 1: General Mortgage Right

Article 179: To secure the performance of a debt, if the debtor or a third party pledges property to the creditor without transferring possession of the property, and the debtor fails to perform the due debt or any event occurs as agreed upon by the parties that triggers the exercise of the mortgage right, the creditor shall have the right to be paid in priority from such property.

The debtor or a third party specified in the preceding paragraph is the mortgagor, the creditor is the mortgagee, and the property provided as security is the mortgaged property.

Article 180: The following property that the debtor or a third party has the right to dispose of may be mortgaged:

(1) Buildings and other fixtures on land;

(2) Right to use land for construction purposes;

(3) Land contract management rights obtained through methods such as bidding, auction, and public negotiation for barren land and other similar lands;

(4) Production equipment, raw materials, semi-finished products, and products;

(5) Buildings, ships, and aircraft under construction;

(6) Means of transportation;

(7) Other property not prohibited from being mortgaged by laws and administrative regulations.

The mortgagor may mortgage the properties listed in the preceding paragraph collectively.

Article 181: By written agreement of the parties, enterprises, individual industrial and commercial households, and agricultural producers may mortgage their existing and future production equipment, raw materials, semi-finished products, and finished products. If the debtor fails to perform the debt when due or if any event occurs as agreed upon by the parties that triggers the exercise of the mortgage right, the creditor shall have the right to be优先 repaid from the movable property at the time of exercising the mortgage right.

Article 182: If a building is mortgaged, the land use right for the construction land within the scope occupied by that building shall be mortgaged together. If the land use right for construction land is mortgaged, any buildings on that land shall be mortgaged together.

If the mortgagor fails to mortgage all properties as required by the preceding paragraph, the un-mortgaged properties shall be deemed to have been mortgaged together.

Article 183: The land-use rights for construction purposes of township and village enterprises may not be mortgaged separately. If the buildings, such as factory premises, of township and village enterprises are mortgaged, the land-use rights for construction purposes within the scope occupied by these buildings shall also be mortgaged together.

Article 184: The following properties may not be mortgaged:

(1) Land ownership;

(2) The right to use collectively owned land, such as cultivated land, residential land, self-retained land, and self-retained mountains, except where otherwise provided by law that such rights may be mortgaged;

(3) Educational facilities, medical and health facilities, and other social welfare facilities of public-interest-oriented institutions and social organizations such as schools, kindergartens, and hospitals;

(4) Property whose ownership or usage rights are unclear or disputed;

(5) Property that has been sealed, seized, or placed under regulatory control in accordance with the law;

(6) Other property that is prohibited from being mortgaged by laws and administrative regulations.

Article 185: To establish a mortgage right, the parties involved shall enter into a mortgage contract in writing.

A mortgage contract generally includes the following clauses:

(1) The type and amount of the secured claim;

(2) The deadline for the debtor to perform the debt;

(3) The name, quantity, quality, condition, location, ownership, or right of use of the mortgaged property;

(4) Scope of the guarantee.

Article 186: Before the maturity of the debt, the mortgagee may not agree with the mortgagor that, if the debtor fails to perform the debt at maturity, the mortgaged property shall become the property of the creditor.

Article 187: Where property specified in Article 180, paragraph 1, items 1 through 3, or a building under construction specified in item 5 of this Law is mortgaged, mortgage registration shall be carried out. The mortgage right shall be established upon the date of registration.

Article 188: A mortgage over the property specified in Paragraph 4 or Paragraph 6 of Article 180, Item 1 of this Law, or over a vessel or aircraft under construction as specified in Item 5, shall take effect from the time the mortgage contract becomes effective; without registration, such a mortgage shall not be enforceable against bona fide third parties.

Article 189: Where enterprises, individual industrial and commercial households, and agricultural producers pledge movable property as collateral pursuant to Article 181 of this Law, they shall register with the administrative department for industry and commerce at the domicile of the pledgor. The pledge right shall be established upon the effectiveness of the pledge contract; without such registration, it shall not be enforceable against bona fide third parties.

If a mortgage is established in accordance with Article 181 of this Law, it shall not be enforceable against a purchaser who has paid a reasonable price and acquired the mortgaged property in the course of normal business operations.

Article 190: If the mortgaged property has already been leased prior to the conclusion of the mortgage contract, the original lease relationship shall not be affected by the mortgage right. If the mortgaged property is leased after the establishment of the mortgage right, such lease relationship shall not prevail over the registered mortgage right.

Article 191: During the term of the mortgage, if the mortgagor transfers the mortgaged property with the consent of the mortgagee, the mortgagor shall use the proceeds from the transfer to prepay the debt to the mortgagee or deposit them in escrow. Any portion of the transfer proceeds that exceeds the amount of the secured claim shall belong to the mortgagor; any shortfall shall be borne by the debtor.

During the term of the mortgage, the mortgagor may not transfer the mortgaged property without the consent of the mortgagee, unless the transferee assumes responsibility for paying off the debt and thereby extinguishes the mortgage right.

Article 192: A mortgage right may not be separated from the underlying claim and transferred independently, nor may it be used as security for other claims. If the underlying claim is transferred, the mortgage right securing that claim shall be transferred together with it, unless otherwise provided by law or agreed upon by the parties.

Article 193: If the actions of the mortgagor are sufficient to reduce the value of the mortgaged property, the mortgagee has the right to demand that the mortgagor cease such actions. If the value of the mortgaged property has been reduced, the mortgagee has the right to demand that the mortgagor restore the property’s value or provide security corresponding to the amount of the reduction. If the mortgagor neither restores the value of the mortgaged property nor provides such security, the mortgagee has the right to demand that the debtor repay the debt ahead of schedule.

Article 194: The mortgagee may waive the mortgage right or the priority of the mortgage right. The mortgagee and the mortgagor may, by agreement, modify the priority of the mortgage right as well as the amount of the secured claim. However, any modification to the mortgage right shall not adversely affect other mortgagees without their written consent.

If the debtor establishes a mortgage on its own property, and the mortgagee waives the mortgage right, alters the priority of the mortgage, or makes other changes to the mortgage, the other guarantors shall be exempt from their guarantee obligations to the extent that the mortgagee loses its priority in receiving payment—unless the other guarantors have expressly undertaken to continue providing guarantees.

Article 195: If the debtor fails to perform the due debt or if any of the circumstances stipulated by the parties for exercising the right of mortgage occurs, the mortgagee may, by agreement with the mortgagor, settle the debt by valuing the mortgaged property at a reduced price or by giving priority payment from the proceeds obtained through auction or sale of the mortgaged property. If such agreement harms the interests of other creditors, those other creditors may, within one year from the date on which they knew or should have known of the grounds for revocation, request the people’s court to revoke the agreement.

If the mortgagee and the mortgagor have not reached an agreement on the method of enforcing the mortgage right, the mortgagee may request the people’s court to auction or sell the mortgaged property.

In the event that mortgaged property is sold at a discounted price or through liquidation, the sale price shall be referenced to market prices.

Article 196: Where a mortgage is established in accordance with Article 181 of this Law, the mortgaged property shall be determined upon the occurrence of any of the following circumstances:

(1) The debt repayment period has expired, but the claim remains unfulfilled;

(2) The mortgagor has been declared bankrupt or has been revoked;

(3) Circumstances under which the parties have agreed to exercise the mortgage right;

(4) Other circumstances that seriously impair the realization of creditors’ rights.

Article 197: If the debtor fails to perform the due debt or if circumstances arise as agreed upon by the parties that trigger the exercise of the mortgage right, resulting in the mortgaged property being lawfully seized by the People's Court, the mortgagee shall, from the date of seizure, be entitled to collect any natural fruits or statutory fruits derived from the mortgaged property, unless the mortgagee has failed to notify the obligor who is required to pay the statutory fruits.

The interest specified in the preceding paragraph shall first be used to offset the expenses incurred in collecting such interest.

Article 198: After the mortgaged property has been valued and sold through auction or disposal, any portion of the proceeds exceeding the amount of the creditor’s claim shall belong to the mortgagor; any shortfall shall be borne by the debtor.

Article 199: If the same property is mortgaged to two or more creditors, the proceeds from the auction or sale of the mortgaged property shall be used for repayment in accordance with the following provisions:

(1) If a mortgage has been registered, it shall be repaid in the order of registration; if the orders are the same, repayment shall be made according to the proportion of each creditor’s claim.

(2) A mortgage right that has been registered takes precedence over one that has not been registered in terms of repayment.

(3) If the mortgage right has not been registered, repayment shall be made according to the proportion of creditors’ claims.

Article 200: After the right to use construction land is mortgaged, any newly constructed buildings on that land shall not be considered part of the mortgaged property. When the mortgage right over the right to use construction land is enforced, the newly constructed buildings on the land shall be disposed of together with the right to use construction land; however, the mortgagee shall have no priority in receiving payment from the proceeds derived from the newly constructed buildings.

Article 201: Where the land contract management right is mortgaged in accordance with Item 3 of Paragraph 1 of Article 180 of this Law, or where the use right of construction land within the scope occupied by buildings such as factory premises of township and village enterprises is mortgaged together in accordance with Article 183 of this Law, after the mortgage rights have been enforced, the nature of the land ownership and the intended use of the land may not be altered without following the prescribed legal procedures.

Article 202: The mortgagee shall exercise its right of mortgage within the statute of limitations for the principal claim; otherwise, the people’s court will not provide protection.

Section 2: Maximum Mortgage Right

Article 203: If the debtor or a third party provides security property for claims that are expected to arise continuously over a certain period in order to secure the performance of a debt, and the debtor fails to perform the due debt or any event occurs as agreed upon by the parties that triggers the exercise of the mortgage right, the mortgagee shall have the right to be paid in priority from the secured property within the limit of the maximum claim amount.

Creditors existing prior to the establishment of a maximum-amount mortgage may, with the consent of the parties involved, be transferred into the scope of credit secured by the maximum-amount mortgage.

Article 204: Before the claims secured by a maximum-amount mortgage are determined, if part of the claims is transferred, the maximum-amount mortgage right may not be transferred, unless otherwise agreed upon by the parties.

Article 205: Before the claims secured by a maximum-amount mortgage are determined, the mortgagee and the mortgagor may, by agreement, modify the period for determining the claims, the scope of the claims, and the maximum amount of the claims; however, any such modification shall not adversely affect other mortgagees.

Article 206: The creditor's claim of the mortgagee shall be determined if any of the following circumstances exists:

(1) The agreed-upon period for determining the claim has expired;

(2) If no period for determining the claim has been agreed upon, or if the agreement is unclear, the mortgagee or mortgagor may request the determination of the claim two years after the date on which the maximum-amount mortgage was established.

(3) A new claim cannot arise;

(4) The mortgaged property has been seized or detained;

(5) The debtor or mortgagor has been declared bankrupt or revoked;

(6) Other circumstances where the creditor's rights are determined by law.

Article 207: In addition to the provisions of this section, the right of maximum-amount mortgage shall also be governed by the general provisions on ordinary mortgages set forth in Section 1 of this chapter.

Chapter 17: Pledge of Rights

Section 1: Pledge of Movable Property

Article 208: If the debtor or a third party pledges movable property to the creditor for the purpose of securing the performance of a debt and the creditor takes possession of such property, then, in the event that the debtor fails to perform the due debt or when the circumstances agreed upon by the parties for exercising the pledge right occur, the creditor shall have the right to be paid in priority from the pledged movable property.

The debtor or a third party specified in the preceding paragraph is the pledgor, the creditor is the pledgee, and the movable property delivered is the pledged property.

Article 209: Movable property prohibited from being transferred by laws and administrative regulations may not be pledged.

Article 210: To establish a pledge right, the parties shall enter into a pledge contract in writing.

A pledge contract generally includes the following clauses:

(1) The type and amount of the secured claim;

(2) The deadline for the debtor to perform the debt;

(3) The name, quantity, quality, and condition of the pledged property;

(4) Scope of the guarantee;

(5) The time of delivery of the pledged property.

Article 211: Before the maturity of the debt, the pledgee may not agree with the pledgor that, if the debtor fails to perform the due debt, the pledged property shall become the property of the creditor.

Article 212: A pledge is established upon the pledgor's delivery of the pledged property.

Article 213: The pledgee has the right to collect the fruits or income generated by the pledged property, unless otherwise agreed upon in the contract.

The interest specified in the preceding paragraph shall first be used to offset the expenses incurred in collecting such interest.

Article 214: During the duration of the pledge, if the pledgee uses or disposes of the pledged property without the pledgor’s consent and thereby causes damage to the pledgor, the pledgee shall be liable for compensation.

Article 215: The pledgee has the obligation to properly safeguard the pledged property. If the pledged property is damaged or lost due to improper care, the pledgee shall be liable for compensation.

If the actions of the pledgee may cause damage to or loss of the pledged property, the pledgor may request the pledgee to deposit the pledged property in escrow, or demand early repayment of the debt and return of the pledged property.

Article 216: If, due to reasons not attributable to the pledgee, the pledged property may be damaged or its value may significantly decrease to the extent that it endangers the rights of the pledgee, the pledgee shall have the right to request the pledgor to provide corresponding security. If the pledgor fails to provide such security, the pledgee may auction or sell the pledged property and, through an agreement with the pledgor, use the proceeds from the auction or sale to prepay the debt or deposit them in escrow.

Article 217: During the duration of the pledge, if the pledgee transfers the pledged property to a third party without the pledgor’s consent, causing damage or loss to the pledged property, the pledgee shall be liable for compensation to the pledgor.

Article 218: The pledgee may waive the pledge right. If the debtor pledges its own property as security and the pledgee waives such pledge right, other guarantors shall be exempted from their guarantee obligations to the extent that the pledgee loses its priority right of recovery—unless the other guarantors have expressly undertaken to continue providing guarantees.

Article 219: If the debtor performs the debt or the pledgor repays in advance the secured claim, the pledgee shall return the pledged property.

If the debtor fails to perform the due debt or if any of the circumstances stipulated by the parties for exercising the pledge right occur, the pledgee may, by agreement with the pledgor, settle the debt by valuing the pledged property at a reduced price, or may have priority in receiving payment from the proceeds obtained through the auction or sale of the pledged property.

In the event that pledged property is sold at a discount or through liquidation, the sale price shall be based on market prices.

Article 220: The pledgor may request the pledgee to promptly exercise the pledge right after the maturity of the debt obligation. If the pledgee fails to exercise such right, the pledgor may request the people’s court to auction or sell the pledged property.

If the pledgor requests the pledgee to exercise the pledge right promptly, and the pledgee fails to do so in a timely manner, causing damage, the pledgee shall bear the liability for compensation.

Article 221: After the pledged property is valued and sold by way of discount, auction, or disposal, any portion of the proceeds exceeding the amount of the creditor’s claim shall belong to the pledgor; any shortfall shall be borne by the debtor.

Article 222: The pledgor and the pledgee may, by agreement, establish a floating charge.

With regard to the maximum-amount pledge, in addition to applying the relevant provisions of this section, reference shall be made to the provisions on maximum-amount mortgage set forth in Section 2 of Chapter 16 of this Law.

Section 2: Pledge of Rights

Article 223: The following rights that the debtor or a third party has the right to dispose of may be pledged:

(1) Bills of exchange, checks, and promissory notes;

(2) Bonds and certificates of deposit;

(3) Warehouse receipts, bills of lading;

(4) Fund shares and equity interests that can be transferred;

(5) Property rights in intellectual property such as the exclusive right to use registered trademarks, patent rights, and copyright that are transferable;

(6) Accounts receivable;

(7) Other property rights that may be pledged as stipulated by laws and administrative regulations.

Article 224: Where a pledge is established using a bill of exchange, check, promissory note, bond, deposit certificate, warehouse receipt, or bill of lading, the parties shall enter into a written contract. The pledge right shall be established upon delivery of the rights document to the pledgee; if there is no rights document, the pledge right shall be established upon registration of the pledge with the relevant authorities.

Article 225: If the maturity date of a bill of exchange, check, promissory note, bond, deposit certificate, warehouse receipt, or bill of lading precedes the due date of the principal debt, the pledgee may cash or take delivery of the instrument and, with the pledgor’s agreement, use the proceeds from the cashing or the delivered goods to prepay the debt or place them in escrow.

Article 226: Where a fund share or equity interest is pledged, the parties shall enter into a written contract. If the fund share or equity interest is pledged and registered with a securities registration and settlement agency, the pledge right shall be established upon the completion of the pledge registration by the securities registration and settlement agency. If other equity interests are pledged, the pledge right shall be established upon the completion of the pledge registration by the administration for industry and commerce.

After fund shares or equity interests are pledged, they may not be transferred unless agreed upon by the pledgor and the pledgee. Any proceeds obtained by the pledgor from the transfer of fund shares or equity interests shall be used to prepay the debt owed to the pledgee or deposited in escrow.

Article 227: Where property rights in intellectual property such as the exclusive right to use a registered trademark, patent rights, and copyright are pledged, the parties shall enter into a written contract. The pledge shall be established upon registration of the pledge with the competent authority.

After the property rights in an intellectual property right have been pledged, the pledgor may not transfer them or grant others the right to use them, unless otherwise agreed upon through consultation between the pledgor and the pledgee. Any proceeds obtained by the pledgor from the transfer or licensing of the property rights in the pledged intellectual property shall be used to prepay the debt owed to the pledgee or deposited in escrow.

Article 228: Where accounts receivable are pledged, the parties shall enter into a written contract. The pledge right shall be established upon registration of the pledge with the credit information agency.

After accounts receivable are pledged, they may not be transferred unless otherwise agreed upon by the pledgor and the pledgee through consultation. Any proceeds from the transfer of accounts receivable by the pledgor shall be used to prepay the debt to the pledgee or deposited in escrow.

Article 229: With regard to security interests in rights, in addition to the provisions of this section, the provisions of Section 1 of this chapter concerning security interests in movable property shall also apply.

Chapter 18: Lien

Article 230: If a debtor fails to perform a debt due, the creditor may retain the debtor’s movable property that the creditor lawfully possesses and shall have the right to be paid in priority from such property.

The creditor specified in the preceding paragraph is the lienholder, and the movable property in possession constitutes the property subject to the lien.

Article 231: The movable property retained by a creditor shall pertain to the same legal relationship as the claim, except in cases where retention is between enterprises.

Article 232: Movable property that is prohibited from being retained by law or agreed upon by the parties shall not be retained.

Article 233: If the property subject to retention is divisible, the value of the retained property shall be equivalent to the amount of the debt.

Article 234: The holder of a lien has the obligation to properly safeguard the property subject to the lien. If the property is damaged or lost due to improper care, the lien holder shall be liable for compensation.

Article 235: The holder of a lien has the right to collect the fruits or income generated by the property subject to the lien.

The interest specified in the preceding paragraph shall first be used to offset the expenses incurred in collecting such interest.

Article 236: The holder of a lien and the debtor shall agree on a period for performing the debt after the property has been subject to lien. If no agreement is reached or the agreement is unclear, the lien holder shall grant the debtor a period of at least two months to perform the debt, except in the case of movable property that is perishable, easily spoiled, or otherwise difficult to preserve. If the debtor fails to perform the debt within the prescribed period, the lien holder may, by agreement with the debtor, convert the liened property into cash at a reduced price, or may have priority in being paid from the proceeds obtained through the auction or sale of the liened property.

When property subject to detention is valued at a reduced price or sold, the market price should be referred to.

Article 237: The debtor may request the lienholder to exercise the right of lien after the debt performance period has expired. If the lienholder fails to exercise such right, the debtor may request the people’s court to auction or sell the property subject to the lien.

Article 238: After the property subject to lien is valued and sold through auction or disposal, any portion of the proceeds exceeding the amount of the creditor’s claim shall belong to the debtor; any shortfall shall be borne by the debtor for repayment.

Article 239: If a lien has already been established on the same movable property and that property is subsequently subject to a pledge or a security interest, the lienholder shall have priority in receiving payment.

Article 240: The lien shall be extinguished if the lienholder loses possession of the property subject to lien, or if the lienholder accepts alternative security provided by the debtor.

Section V: Possession

Chapter 19: Possession

Article 241: With respect to possession arising from contractual relationships and the like, the use, enjoyment, and liability for breach of contract concerning immovable or movable property shall be governed by the terms of the contract. If the contract does not specify such matters or the terms are unclear, the relevant statutory provisions shall apply.

Article 242: If a possessor causes damage to the real property or movable property in their possession due to the use of such property, the malicious possessor shall be liable for compensation.

Article 243: If real property or movable property is in the possession of a possessor, the right holder may request the return of the property and any fruits or proceeds derived therefrom; however, the right holder shall pay the necessary expenses incurred by the bona fide possessor in maintaining such real property or movable property.

Article 244: If the immovable or movable property in possession is damaged or lost, and the owner of such property requests compensation, the possessor shall return to the owner any insurance proceeds, compensation payments, or other indemnities received as a result of the damage or loss. If the owner’s damages are not fully compensated, the malicious possessor shall also be liable for further damages.

Article 245: If the real property or movable property in possession is encroached upon, the possessor has the right to request the return of the property. With regard to any act that interferes with possession, the possessor has the right to request the removal of such interference or the elimination of any danger. If damage is caused by the encroachment or interference, the possessor has the right to claim compensation for damages.

The right of a possessor to demand the return of the property shall be extinguished if it is not exercised within one year from the date the occupation occurred.

Supplementary Provisions

Article 246: Before laws and administrative regulations specify the scope, registration authorities, and registration procedures for unified real estate registration, local regulations may make provisions in accordance with the relevant provisions of this Law.

Article 247: This Law shall come into force on October 1, 2007.