Chinese Property Law

The Real Rights Law and the Civil Code

Chinese property law is codified in the Real Rights Law (Wuquan Fa), adopted on 16 March 2007 after a thirteen-year drafting process involving seven separate readings by the National People’s Congress — an unusually protracted legislative history that reflected intense ideological debates about the protection of private property in a socialist market economy. The Real Rights Law, comprising 247 articles in 19 chapters, entered into force on 1 October 2007 and remained the principal source of property law until the adoption of the Civil Code of the People’s Republic of China on 28 May 2020, effective 1 January 2021. Book II of the Civil Code (Articles 205-462) incorporates the substance of the 2007 Real Rights Law with modest amendments, preserving its core structure while integrating the property law rules within the broader codification of civil law. The Civil Code’s Book II is divided into five parts: general provisions, ownership, usufructuary rights, security rights, and possession. The legislative history of the Real Rights Law reflects fundamental debates about the balance between state and collective ownership on one hand and the protection of private property rights on the other, with the final compromise establishing the principle of equal protection of the property rights of the state, collectives, individuals, and other property right holders (Article 4 of the Real Rights Law; Article 207 of the Civil Code).

The Distinction Between Movables and Immovables

Article 115 of the Civil Code maintains the fundamental classification of things into immovables (budong chan) and movables (dong chan), though the Code does not provide a comprehensive statutory definition of each category. Immovables are understood in Chinese legal doctrine as things that cannot be moved or whose movement would损害 their economic value — principally land and buildings. Movables are all other things. The distinction is legally significant in several respects: the creation, transfer, and extinction of property rights in immovables require state registration (Article 209), while rights in movables are generally transferred by delivery; the rules of bona fide acquisition (shan qude) apply differently to immovables and movables; and prescription periods for the protection of rights may differ. The Civil Code also recognises the classification of things into specific things (te ding wu) and generic things (zhong lei wu), divisible and indivisible things, principal things and accessory things, and fruits (zi xi), which may be natural or civil.

Types of Property Rights

The Civil Code recognises three principal categories of property rights. Ownership (suoyou quan) under Articles 240-304 is the right of the owner to possess, use, profit from, and dispose of the property in accordance with law. Ownership is comprehensive and exclusive. Usufructuary rights (yongyi wuquan) under Articles 321-381 are limited real rights granting the holder the right to possess, use, and profit from property owned by another. The Civil Code specifies six types of usufructuary rights: the contractual management right for farmland (tudi chengbao jingying quan), the right to use construction land (jianshe yongdi shiyong quan), the right to use homestead land (zhai ji di shiyong quan), the right of habitation (ju zhu quan — a new right introduced by the 2020 Civil Code), the right to use sea areas (haiyong quan), and the easement right (di yi quan). Security rights (danbao wuquan) under Articles 386-462 include the mortgage (di ya quan), the pledge (zhi ya quan), and the lien (liu zhi quan), providing creditors with rights in property to secure the performance of obligations.

Ownership and Its Forms

The Civil Code recognises three principal forms of ownership corresponding to the structure of the socialist market economy. State ownership (guojia suoyou quan) under Articles 246-254 vests ownership of natural resources — including mineral deposits, waters, sea areas, and wildlife — in the state, and ownership of urban land in the state. State property is managed by the State Council on behalf of the people. The transfer of state property without proper authorisation renders the transaction void. Collective ownership (jiti suoyou quan) under Articles 260-265 vests ownership of rural land (including agricultural land, homestead land, and village construction land) and collectively owned enterprises in the village collective. Collective ownership is exercised through the villagers’ committee or the collective economic organisation. Private ownership (si ren suoyou quan) under Articles 266-270 protects the ownership rights of individuals over their lawful income, savings, houses, household goods, means of production, and other lawfully acquired property. The equal protection principle — Article 4 of the Real Rights Law — was a landmark innovation, declaring that the state, collective, and private property rights are protected equally by law, and that no organisation or individual may violate these rights. This represented a significant departure from the traditional privileging of public ownership over private ownership in socialist legal theory.

The Registration System for Immovables

Articles 209-223 of the Civil Code establish the registration system for immovable property. The principle of mandatory registration provides that the creation, transfer, or extinction of property rights in immovables takes legal effect only upon registration (Article 209). The exception is the contractual management right for farmland, which is created upon the conclusion of the contract rather than upon registration. The Unified Real Estate Registration Decree (Budong chan tongyi deng ji tiao li, State Council Decree No. 656, effective 1 March 2015) established a unified national system administered by the Ministry of Natural Resources, consolidating the previously fragmented registration system that had separate registers for land, buildings, forests, and other immovables. The register is public, and any person may apply to查阅 (chayue) the register — to inspect the registration information — upon demonstrating a legitimate interest. Registration inquiry is governed by the Measures for the Inquiry of Immovable Registration Information (2018). The register records the category of the immovable, the right holder, the content and scope of the right, and any encumbrances or restrictions. Errors in the register may be corrected upon application by the right holder or by court order, and a person who suffers loss due to an error in the register is entitled to compensation.

Bona Fide Acquisition

The doctrine of bona fide acquisition (shan qude) under Articles 311-317 of the Civil Code protects a person who acquires property — whether movable or immovable — from an unauthorised transferor, provided three conditions are satisfied: (1) the acquirer is in good faith (shan yi), meaning they did not know and should not have known that the transferor lacked authority; (2) the acquisition was for a reasonable price (he li de jia ge); and (3) the property has been transferred — by registration for immovables and by delivery for movables. Where these conditions are satisfied, the acquirer obtains ownership free of the claims of the original owner. Bona fide acquisition also applies to the acquisition of other property rights, including usufructuary rights and security rights. The original owner may claim damages from the unauthorised transferor but cannot recover the property from the bona fide acquirer. Movables lost by the owner without their consent — stolen or lost property — are generally not subject to bona fide acquisition, but the acquirer may obtain ownership after two years if the original owner does not claim the property (Article 312). Money and negotiable instruments are not subject to this limitation.

Land Use Rights

The system of land use rights (tudi shiyong quan) is the distinctive institution of Chinese property law, reconciling state and collective ownership of land with the private use and development of land in a market economy. In urban areas, land is owned by the state. The state grants construction land use rights (jianshe yongdi shiyong quan) to developers and individuals for fixed periods: 70 years for residential use, 50 years for industrial, educational, or commercial use, and 40 years for other commercial uses. These rights are granted through either the grant system (churang), where the grantee pays a lump-sum premium in a public tender, auction, or listing process, or the allocation system (huabo), where land is allocated without charge to state institutions and public utilities. The grant system was established by the 1990 Provisional Regulations on the Granting and Transferring of the Right to the Use of State-Owned Land in Urban Areas, which created the legal foundation for the urban real estate market. In rural areas, land is owned by the village collective. Contractual management rights (tudi chengbao jingying quan) give farmers the right to possess, use, and profit from agricultural land for a period of 30 years (extendable to 70 years for forestry land), and may be transferred to other members of the collective. Homestead land use rights (zhai ji di shiyong quan) give rural households the right to use residential land for housing. Article 359 of the Civil Code, amended in 2017 before incorporation into the Code, provides that the construction land use right for residential purposes shall be automatically renewed upon expiry, resolving decades of uncertainty about the fate of apartment ownership after the 70-year term.

Security Rights

The Civil Code’s system of security rights (danbao wuquan) under Articles 386-462 provides three forms of real security. Mortgage (di ya quan) under Articles 394-430 allows the mortgagor to create a security interest in property — including buildings, construction land use rights, ships, aircraft, and equipment — without transferring possession to the mortgagee. The maximum amount mortgage (zui gao e di ya quan) under Articles 420-424 secures future or fluctuating claims up to a maximum amount, commonly used for credit facilities and continuing business relationships. Pledge (zhi ya quan) under Articles 425-457 requires the transfer of possession of the pledged property to the pledgee, and applies to both tangible movables and rights (such as shares, intellectual property rights, and accounts receivable). Lien (liu zhi quan) under Articles 447-462 gives a creditor who holds property belonging to the debtor the right to retain possession until the debt is satisfied, provided the debt relates to the property held. The pledge of accounts receivable is registered in the Credit Reference Center of the People’s Bank of China, which maintains a unified online registration system for security interests in movables and rights.