Research On Guarding Risk Of Real Estate Investment Trust By Law

The Real Estate Investment Trusts (REITs) is a new financing way in the real estate capital market,its tendency of development is obvious. Investors pay close attention to it. But in capital market of our country,it exists in a short time,the system is not consummate,the risk is high. Therefore guarding risk by law appears especially importantly. REITs is that the trust investment company concentrate the capital which two or more than two settlors possess legitimately by the way of trusting capital, according to settlors's wish in company's name,manage,utilize and handle the capital for beneficiaries's benefits. The capital is invested in real estate or its management enterprise. REITs is based on the trust law. Its legal characteristic includees independence of trust capital,tripartite bodies and limited liability. At present because of law's vacancy,financial innovation and evasion of the law,supervising separately,REITs faced with risk. Guarding risk by law needs to consummate the legal system. Recognizing the risk,establishing the warning system and appraising the risk by law help to control risk.Guarding risk of REITs by law include interior relations and exterior supervising relations. The interior relations are based on the trust contract. The behaviors which may causes risks include the valid of capital that is offered by settlors,managing the trust capital,pledging the anticipated income in the trust contract,the trust guarantee, the information disclosed and trust business's management and the beneficiary transferring trust profits. The internal system's construction cannot leave the influence of the external environment. The supervising risk caused by system's arrangement, legal backwardness , supervising weakness and the opening capital market.The perfection of real estate laws,trust laws,securities laws, self-discipline and laws about social supervision contribute to the formation of an effective legal system to guard against risk. The overall goal of legal system is to protect the interests of investors and promote the development of REITs.