On The Legal Issue Of The Conflicts Of Interest In The Mortgage Of Buildings Under Construction

Real property mortgage plays an important role in the economic life as a major financingmeans. Because mortgage of buildings under construction is adopted by our country’s legalsystems and buildings under construction itself has a great value and feasible financingfunction, this sort of mortgage is now widely used and becomes more and more important.However, there are many conflicts of interest between the subjects caused by the legalinstitutions regulating this area. The existence of such conflicts affects the subjects’acquisition of benefit and catches much attention of both practical and academic circle. Inorder to construct an integral legal institution of mortgage of buildings under construction andmake valuable suggestions which can solve the problems arising in practical world, it isnecessary to figure out the basic rationale balancing the subjects’ conflicts of interest andexclude the exact barriers appearing during the implementing the said legal institutions. Thereare many works to do to achieve this goal. Firstly, this dissertation puts the mortgagee of themortgage of buildings under construction in the core status of the institution, and thendiscusses the existing rules balancing the subjects’ conflicts of interest and points out theproblems in these rules. Secondly, it summarizes and analyzes the experience of the relativedepartments of many areas. Finally, it proposes many practicable recommendations to resolvesuch problems.This dissertation counts up to40thousand words and consists of four parts besidespreface and conclusion.The first part focuses on addressing the basic theories of the mortgage of buildings underconstruction. This part first defines the concept of it and then points out that this type ofmortgage has legal specialness in the object of the mortgage, the mortgage contract and theregistration of mortgage. Secondly, this part outlines the development of the legal institutionof mortgage of buildings under construction in our country. Thirdly, it analyzes the object ofthe mortgage, the subjects and the content of the mortgage contract.The second part generalizes the kinds of conflicts of interest arising in the mortgage ofbuildings under construction. This part first indicates the real estate enterprises have threemain capital sources (domestic loan, self-financing, other financial contribution) by analyzingthe data published by the State Statistics Bureau. According to the analysis, this dissertationrecommends that the subjects involve in the mortgage of buildings under construction includes the mortgagee who has the right to use the land for construction purposes, theconstructor of the buildings and the subjects who become the buyers in the advance sales ofcommercial housing except the mortgagee and mortgagor of the mortgage of buildings underconstruction. According to the emerging sequence of the conflicts of the interest, thisdissertation not only outlines the appearance of the conflicts between the mortgagee of themortgage of buildings under construction and the mortgagee who has the right to use the landfor construction purposes, the mortgagee of the mortgage of buildings under construction andthe constructor of the buildings, the mortgagee of the mortgage of buildings underconstruction and the subjects who become the buyers in the advance sales of commercialhousing, but also figures out the appearance of the conflicts among the mortgagee of themortgage of buildings under construction, the mortgagee who has the right to use the land forconstruction purposes and the constructor of the buildings and the subjects who become thebuyers in the advance sales of commercial housing, and then addresses the causation of thesaid conflicts.The third part analyses the existing balancing rules. Basing on the classificationsoutlined in the second part, this part makes a study of the balancing rules regulating theconflicts of interest between the two or among the three of the said subjects in detail and findsout the problems caused by the rule. After that, it researches different solutions proposed bythe relative departments in many areas of our countries and summarizes the advantageous anddisadvantageous of them.The forth part makes some recommendations which can effectively modify the balancingrules in order to build an integral legal institution in light of the former three parts ofaddressing. These recommendations consists of integrating the department in charge of theregistration of mortgage, constructing the institution of the registration of project cost,modifying terms of the contract for the advance sales of commercial housing, establishing andimproving the website which publishes the information of the real state markets.The innovations of this dissertation are the practical analysis of problems arising in thisarea. Based on the analysis of the data of the capital sources published by the State StatisticsBureau, it figures out the subjects involved in the mortgage of buildings under constructionand classifying the types of the conflicts of interest centering on the mortgagee of themortgage of buildings under construction and then uses the classification as the analyticalframework. Under this framework, it continues to analyze the balancing rules stipulated in the relative laws and points out the problems caused by the said rules. And then this dissertationreviews and compares the different resolutions proposed by the relative departments in manyareas of our country in detail, summarizes the advantageous and disadvantageous of them.The last part of this dissertation makes some practicable recommendations to modify theexisting rules based on the former summary. Because of the author’s limitations, lacks ofpractical experience and the restraint of the length of this dissertation, the analysis may be notdeep enough and the recommendations may be superficial. However, the author of thisdissertation will continue to work on it as to make a more valuable contribution to this issue.