The Guarantee Of Legal Issues, Real Estate Sale

Commercial housing's advance booking loan security, named mortgage in real estate transactions, can not be involved in formal Chinese laws or regulations, and its legal characteristic is arguable, but this system is applied commonly in real estate transactions for its practical reasonability, providing an important financial channel and key sale mode for real estate development companies.Recently, Chinese central government issued a series of policies regarding commercial housing's advance booking, from restricting to prohibiting the transferring of the futures commercial housing; the chapter of assignment intended as security (sicherungsuberigrung) in the draft of property law, which was declaimed to give commercial housing's advance booking the formal statute, was deleted in 16th session of standing committee of the 10th NPC; 15th August, the people's central bank advised to cancel the system of commercial housing's advance booking for the consideration of financial risk.The system of loan security in commercial housing's advance booking was challenged by the practical reasonability and theoretical legality at the same time.After reviewing the mortgage system in Britain, U.S.A, and Hong Kong, observing the origin, development, and legal characteristic of this system in China, combining with present situation of Chinese real estate market, the author put forward legislative advice about assignment intended as security.Under the current structure of Property Law and Guarantee Law, it is not feasible to take commercial housing's advance booking into property law in the form of assignment intended as security. Theoretically, it will conflict with the traditional principle of strict foreclosure; second, it will leave the legal system of chattel guarantee unused. Practically, it will lose flexibility and practicability as the untypical guarantee mode and go against the will of government to consolidate the commercial housing's advance booking.So, the author thinks it is not appropriate to take the commercial housing's advance booking loan security into Property Law in the form of assignment intendedas security. But the experiences of Hong Kong and other countries in continental law system can be used for reference to regulate commercial housing's advance booking loan security system. Firstly, commercial housing's advance booking loan security should be limited in the period of futures marketable housing , thereinafter the real estate mortgage should be applied. Secondly the process of loan of the period of futures marketable housing should be regulated seriously, the government supervision should be strengthened and the manner of public summons should be improved.