On Priority Of Claim On Constructions

Article 286 in The Contract Law of People's Republic of China specifies the priority of claim on constructions for the first time. It is the right that offers special protection from the law for the contractors on claim of construction payments, which, to a certain extent, balances the unequal status between the developer and the contractor, and has played a positive role in resolving the issues of outstanding payments and promoting a healthy development of the construction industry. However, with years of practical applications and increasingly intensive study of the theories, this article of emergency is exposed to more shortcomings. Even after the Supreme People's Court issued a judicial interpretation for this article, there are still unclear and unreasonable aspects about the nature, subject, object, external effect, the scope of secured claims and the implementation of procedures for this right, and it is also easy to cause confusions in practice. Conducting systematic studies on the priority of claim on constructions has important theoretical and practical significance for the improvement of legislations and the promotion of judicial practices. From the two aspects of legal principles and judicial practice, this thesis discusses various issues about claim priority on constructions, and proposes suggestions for legislation to enhance the system of claim priority for constructions.The main body of this thesis consists of five parts. The first part is A Brief Introduction to the Priority of Claim on Constructions. First, it specifies the definition and legal concept of the priority of claim on constructions, and summarizes the legal characteristics of this right; Second, it analyzes the nature of property rights and the types in secured real rights system, and ascertains that the priority of claim on constructions belongs to a special priority in real rights of security; And then, it introduces the legislation and the value functions of China's current claim priority system on constructions.The second part is the Elements of the Priority of Claim on Constructions. First, it discusses the subject of this right, and points out that the contractors of survey and design contracts, subpackage contractors, subcontractors, and actual constructors under ineffective contracts can not be the subjects of this right; Second, it examines the controversial issues about the object of priority of claim on constructions; and then, it discusses the scope of security of debt of claim priority on constructions, suggesting that the profits and interest, advance payments, and the cost to achieve priority of claim should be included in the scope of priority of claims; In the end, it argues that the priority of claim on constructions takes effect when the construction contract (i.e., the claim of construction payments occurs) becomes effective.The third part discusses conflict solutions between the priority of claim on constructions and other rights. First, it analyzes the legislative intent of the priority of claim on constructions over mortgage; Second, when a house consumer conflicts with the claim priority on construction, the consumer's survival interests take precedence over the business interests of the contractor, but it only applies to the consumer who has paid all or most of house payments. After the implementation of the Property Act, the advance notice of registration should be considered as a necessity to determine the priorities of rights. For the house that has been transferred under the name of the buyer, the contractors can not claim priority; In the end, it states that, when several claim priorities occur to the same building, the contractors shall be compensated according to the proportion of their determinate claims.The fourth part is the Realization of the Priority of Claim on Constructions. First, it expounds the required qualifications to exercise this right; Second, the implementation of the priority of claim on constructions consists of two means, discount negotiations and application for court auctions, and it describes the required qualifications and the unclear problems in judicial practice for these two implementation ways; In the end, it suggests that the 6-month period for the right to exercise is the scheduled period in nature. This provision for the deadline is too short and simple, and is to the disadvantage of protecting the interest of contractors.The fifth part is the Improvement of China's Priority of Claim System on Constructions. It brings forward four pertinent legislative proposals: Introducing the system of registration publicity, specifying elements that constitute the right, improving the effectiveness content, and defining implementation rules for this right. This part gives a detailed explanation about the importance of registration publicity and the ways to build such a system, and lists relatively operable suggestions for amendments for the issues such as the subject, object, security scope, effecting rules, implement conditions, implement methods of the priority of claim on constructions.