Property Rights Shops Legal Assessment

Equity merchant store is a kind of real estate product of which the right to manage is departed from the owner .The usual practice is that, a mall is divided by its developer into many small-size merchant stores to offer for sale so that it attracts thousands of investors, thus lifts its price. Investors own merchant stores, yet, within the agreed period, they have no right to manage by themselves, and all merchant stores shall be exclusively let by the developer or a third-party corporation, or all the investors shall delegate their management right in order that the mall can be wholly let to a major business. To guaranty uniform management of the major business, small-size merchant stores are not insulated from each other by wall, and the parties agree that the contract shall not terminated until the period expires. Investors are promised fascinating investment yielding rate and are committed that the small-size merchant stores shall be bought back by the developer. Equity merchant store is considered as small investment, lo\\ risk and high yielding, thus a new favorite for investment. It is also condemned as a trap of which real estate developers take advantage to gut fund for finance. In recent years, equity merchant stores spread up, and administrative agencies take various attitudes toward it. This thesis voices the author's in-depth analysis and comment on the relevant issues of sale of equity merchant stores and title registration, after-sale exclusive lease, delegation for management, investment yielding and buy-back sale, lastly, the author manages to propose some measures for its improvement.On issues of the transactions of equity merchant stores and title registration, this author holds that small-size merchant stores which are not actually insulated to have independent and close space do not conform to the characteristics of exclusive parts of apartment ownership, therefore, they are not suitable for sale and they ought not registered as independent units for ownership and that the object of the transaction of equity merchant stores ought to be shares of the mall instead of particular non-independent small-size merchant stores.On issues concerning after-sale excusive leasing, this author points out that after-sale excusive leasing does not necessarily violate administrative regulations and it ought not be banned regardless whether it is legal or not, that law-dictated right to terminate contract is an indispensable remedial measure against breach of contract, the parties can not deprived of thisright by standard contracts, thus the agreement on it is invalid, the lesser is entitled to assert his right against the sub-lessee in the case that the lessee breaches his contract with the lesser, however, the sub-lessee undertakes no more than his contractual obligations.On issues concerning delegation for management, this author thinks that investors' delegation for management exists only in name, as their actual agreement on the contract is not in conformity with the nature of delegation contract, it also deviates from the stipulations of the existing contract law, and because the agreement has some characteristics of delegation, trust and lending, the nature of the legal relationship is difficult to define, however, there is no sufficient ground in the existing law to void the contract on the basis that the delegatee is incapable to be entrusted to arrange the finance.On issues concerning investment yield, this author agrees that investment yield is crucial in promoting equity merchant stores. Ads on it, especially highlighting remarkable investment yields and no risks, are misleading, thus violates administrative regulations. Generally speaking, the type of contracts decides the principle of allocation of risk, and investors are protected according to the type of contracts they signed. In the author's opinion, whatever the contract manifests, the investment yields are their true mutual assent, therefore, the type of the contract ought not to make difference in protecting investors' interest. Because that the developer benefits enormously from such ads, it ought to be presumed that the developer pledges the value of the merchant stores advertised, moreover, and that the developer may not take advantage of a third-party corporation to shrug off its liability, the developer ought to be accountable for investment yields. There is no sufficient legal basis for the allegation that it is invalid to promise high yield rate. The parties are estopped from asserting lack of consideration as a defense, especially in the first several years, they ought to reasonably foresee their risks and earnings, therefore, their agreement on investment yields ought to be strictly observed. In the latter period, the yielding rates may be adjusted in accordance with the circumstances.On issues concerning buy-back sale, the author opines that buying merchant stores back at their original prices by the developer is substantially buy-back sale, as buy-back sale is expressly banned, the developer is administratively punishable, however, his civil obligations shall not be discharged, and the developer shall not refuse to buy back merchant stores on theground that his commitment is illegal.Lastly, the author briefs comments and analysis on equity merchant stores and distinguishes the term of equity right from that of ownership right, and proposes its improvement measures. This author thinks that the operation of equity merchant stores is exceedingly irregular and with endless inherent controversies. Equity right does not equate to the concept of ownership right, investors need not aim the transaction at getting the ownership of the merchant stores, but ought to secure their interest with proper rights, and asset securitization is an appropriate means. With reference to the system of real estate investment trust in the U.S.. difficulties of investment and financing in real estate may be better overcome, thus serves every party right and each wins.