Pre-sale Legal Issues

Thanks to the sustained, healthy and rapid economic development in China, housing preselling becomes a major selling channel of real estate. What's more, it is regarded as "China's fifth largest inventions" by partial foreign media. On the one hand, it can help the real estate developers quickly raise the necessary funds and facilitate the flow of cash, at the same time, it flourishes the real estate market; on the other hand, certain risks are brought to people who purchase in advance. It is possible for them to buy desirable housing, live and work there; however, it is also possible that real estate developers' failing to build housing or housing defects will cause disputes. In result, it will get buyers' life into trouble and do harm to the healthy development of the market economy. Therefore, to be or not to be, that's a controversy. This paper aims to analyze the problems that exist in the process of housing preselling through theory and practical cases.PartⅠ: Analysis on the status of housing preselling and its features. Housing preselling causes much controversy; whether it should be repealed or not has been the focus. Housing preselling embodies the long-dated behavior of the transaction, expectations of the pre-sale subject matter, and risks of people who purchase in advance as well as relatively strong state intervention.PartⅡ: Analysis on the concept of housing preselling contract and its characteristics. Its main idea is that housing preselling contracts is an estate deal contract. Under the circumstances that pre-sale housing is not yet completed, the housing does not exist actually; people who sell in advance make an agreement with people who purchase in advance that within a certain period, the complete housing will be delivered to them who pay the price. It embodied the long-dated quality of object, the specific quality of subject, the strictness of quality, the legal quality of content and non-systematic quality of rules.Comparative analysis on the quality of the housing preselling contract. It indicates that housing preselling contract is not a booking contract, an installment contract, a time-bargain contract, or a time limit attached contract.PartⅢ: (1) Analysis on the quality of housing preselling offers through a typical case study. It is said that offers are booking contracts; the signing of this contract aims to sign the root contract; it is called "booking for negotiations" in the doctrine. (2) Analysis on the earnest money issue through one case study. It is said that earnest money here belongs to the covenant earnest money. Earnest money penalties are also analyzed.PartⅣ: Registration notice is discussed in this part and four proposals are put forward for the shortage of relevant rules in China's "Property Law". (1) The detailed content of Register notice of housing preselling should be matched with specific rules; (2) The weak effectiveness of the registration notice should be improved by adding items of guarantee and bankruptcy protection; (3) The application of the registration notice should be expanded appropriately; (4) The deficiency of guarantee in registration notice procedures should be improved by making it more clear and reasonable.